Muhammad Yunus: The Unlikely Disciple

The Nobel Peace Prize winner's drive to help the poor through microfinance is a shining example of Drucker's principles in action

by Rick Wartzman

There is no shortage of people who exemplify Peter Drucker's principles and practices—a multitude of middle managers and top executives responsible for many millions, if not billions, of dollars in economic activity. Yet the most Drucker-like of all may well be a man who launched his enterprise with a series of transactions totaling 27 bucks.

Nobel Peace Prize winner Muhammad Yunus, who pioneered the concept of microcredit—providing the poorest of the poor with tiny loans to start their own moneymaking ventures—is promoting a new idea these days. He calls it "social business," and in his just-released book, Creating a World Without Poverty, he contends that it promises to relegate destitution across the globe to where it belongs: inside a museum.

His notion is to foster a whole class of companies capable of competing in the marketplace but whose primary aim is to meet a clear social need, not to maximize profits.

These firms are meant to earn money. But they pay no dividends. Instead, explains Yunus, "any profit stays in the business—to finance expansion, to create products or services, and to do more good for the world." (Microsoft (MSFT) Chairman Bill Gates recently shared a somewhat similar, though not identical, vision in Davos, Switzerland (BusinessWeek, 2/4/08), with his plea for "creative capitalism.")

And what might Drucker have made of all this?

Any business, he asserted in Management: Tasks, Responsibilities, Practices, "exists for the sake of society." In The Effective Executive, he added: "An organization is not like an animal, an end in itself, and successful by the mere act of perpetuating the species. An organization is an organ of society and fulfills itself by the contribution it makes to the outside environment."

No Political Boxes

This is not to say Drucker pushed for corporations to focus specifically on the needs of the indigent as Yunus has. But I think he would have greatly appreciated Yunus' model, for it is an overt expression of Drucker's conviction that "psychologically, geographically, culturally, and socially," the business community must be part of the wider community.

Interestingly, it's tough to stick Yunus in any particular political box. His Grameen Bank "supports less government…is committed to the free market, and promotes entrepreneurial institutions," he pointed out. "So it must be far right." At the same time, Grameen is "committed to social objectives" and does not advocate a system of pure laissez-faire; rather, it would like to see policy incentives that encourage "businesses to move in directions desired by society." Yunus noted: "All these features place Grameen on the political left."

Surely, Drucker could relate, once suggesting that, as he sought out the proper balance between continuity and change in society, he could see himself "sometimes as a liberal conservative and sometimes as a conservative liberal but never as a 'conservative conservative' or a 'liberal liberal.'"

Motivated By More Than Dollars

Drucker, too, would have no doubt been sold on Yunus' basic premise: People are motivated by a variety of impulses—not simply a desire to get filthy rich. The existing system, said Yunus, has "created a one-dimensional human being to play the role of business leader.… We've insulated him from the rest of life, the religious, emotional, political, and social. He is dedicated to one mission only—maximize profit."