06/19/2003 03:12 PM

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How Much Can We Give...? Page 1

"In America, there are powerful marketing devices to sell products like Coca-Cola and hamburgers. All I want to sell is good eyesight and there are millions of people who need it."
                                                 Dr. Govindappa Venkataswamy

by Bill McDonough

Commerce can be a powerful catalyst for social change. While many in the social sector still "shun trading" like the aristocrats of old, an emerging group of innovators are developing exciting new business models that use the mechanisms of the marketplace to serve the greater good.

Employing the speed and vitality of capitalism, these social entrepreneurs are building enterprises that effectively deliver positive change. They are delivering high quality health services to the greatest number of people at the lowest possible cost, while serving needy children and elders virtually for free. They are providing loans to entrepreneurs too poor to qualify for traditional credit, allowing them to start small businesses. They are tapping into local renewable energy sources-sun, wind and water-to generate inexpensive power, support self-sufficient communities and spur sustainable economic growth.

The practitioners of these new business models are transforming conventional notions of profit, value and wealth. Instead of old-school capitalism's narrow focus on the bottom line, which typically shrinks business activity into short-term profit making, social entrepreneurs are cost-effectively creating ecological, social and economic revenue, both in the short-term and for future generations. In doing so, they are beginning the work of building a truly regenerative economy whose benefits are shared by all.

How Much Can We Give?
When the legacy of an enterprise-its long-term value to the world-drives the business agenda, it unleashes the power of commerce to create a wide spectrum of positive effects. This is perhaps best understood by the new social entrepreneurs, whose value proposition is not "How much can I get for how little I give?"-the mantra of the old capitalism-but instead, "How much can we give for all we get?" Rather than focusing on the quarterly bottom line, this new question suggests a rich, inspiring pursuit of life-affirming wealth and productivity.

"How much can we give for all we get?" is fundamentally a design question. Asked throughout the design process it guides entrepreneurs toward products, facilities and business models that grow ecological and social revenue while generating economic health. The goal is good growth for all. Instead of simply seeking to reduce the negative impacts of economic activity-the reductivist's attempt to be "less bad"-we can develop businesses built on a wholly positive agenda that aims to enhance the human footprint, leaving behind wetlands and clean water, prosperity and nutrition, fertile farmland and healthy children.

Consider the business model developed by the Indian ophthalmologist, Dr. Govindappa Venkataswamy. At age 55, after a distinguished career as one of the most admired cataract surgeons in India, Dr. V, as he is known, began to wonder how he could deliver sight-restoring operations to a many more of those in need.

"In America, there are powerful marketing devices to sell products like Coca-Cola and hamburgers," Dr. V told Fast Company's Harriet Rubin. "All I want to sell is good eyesight and there are millions of people who need it."

Indeed, in India there are 20 million people without sight, most of whom suffer from cataracts. To serve them, Dr. V opened Aravind Eye Hospital, a twelve-bed clinic in his brother's home in Madurai, India, and offered cataract surgery for free. Today, Dr. V runs 5 hospitals that perform more than 200,000 operations each year. Since opening his first hospital in 1976, the Aravind clinics have given sight to more than 1 million people.

If you think free surgery sounds like a bad business proposition, think again. At Aravind, a cataract operation costs about $10; the same operation in the United States costs nearly $1700. Aravind keeps costs low, writes Rubin, with specially designed equipment that allows surgeons "to perform one 10- to 20-minute operation, then swivel around to work on the next patient-who is already in the room, prepped, ready, and waiting."

Using this effective system, Dr V's hospitals give sight to more than 500 people each day. Roughly one third of the patients pay nothing; one third pay 65 percent of cost; and about 30 percent seek out Dr. V and pay market rate for his services "because the quality of his work is world class." After nearly 30 years of operation, Aravind has a gross margin of 40 percent and has never depended on donations. It has done so, writes Rubin, by inventing "a service so perfect that it created its own marketwithout any significant resources, and with a paying clientele that represented far less than half of its customer base."

"We were not thinking of amassing money as our goal," says Dr. V. Instead he asks, "How can my work make me a better human being and make a better world?"

Spreading the Aravind Model
Not everyone has Dr. V's gift for eye surgery, but the business model he created allows his vision to be applied worldwide. That's exactly what the social entrepreneur David Green is doing. After helping Dr. V expand the Aravind model for eye hospitals, Green asked himself what he could give to the world, and decided to offer affordable medical products and services to developing countries. Working with Dr.V, Green started Aurolab, which pioneered the manufacture of high-quality, low cost intraocular lenses to serve Aravind's needs and is today the second largest provider of intraocular lenses in the world.

Green's current project is aimed at providing affordable, state of the art hearing aids. Hearing impairment is the world's most common birth defect, affecting some 250 million people in the developing world. According to the World Health Organization, half of those with hearing impairments would benefit from hearing aids, which creates a need for 32 million hearing aids annually. Hearing aid companies only produce 6 million annually, of which only 12 percent are shipped to developing countries. Clearly, there is a pressing need for an affordable alternative.

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