Innovation is the primary activity facilitating economic development and productivity. It refers to the creative process by which individuals, groups, or organizations generate and implement new ideas into finished goods or services that contribute to dynamic economic growth (Kogabayev and Maziliauskas 2017). The outcomes of innovation often include increased employment opportunities, improved productivity, higher profits, and reduced cost of doing business. Notably, innovation is never a one-off process, instead, it is an ongoing and cumulative phenomenon joining individuals and organizations to a common goal. It results in the continuous improvement of existing technologies, business processes, and decision approaches. At the core of an innovative approach to business are a creative mind, an in-depth understanding of current challenges, and a profound and unmistakable entrepreneurial vision. The innovator develops the new idea into a finished product or service through an implementation process. Over time, the individual improves his or her work and the final product through further development.
“Social innovation” is similar to “general innovation” in that it also transforms simple and creative ideas into finished products or services. However, unlike “ordinary innovation,” “social innovation” focuses on creating products and services that give communities high value (Oeij et al. 2019). In addition to this, social innovation empowers people and drives change that leads to sustainable inclusion. Because it offers practical, reliable, efficient, and sustainable solutions to communal problems, most people, including experts, consider social innovation a noble undertaking inspired by altruism and a humanist ideal. Most social innovators do what they do for the greater good of the community; they are less interested in making profits than helping people improve their health and economic circumstances. Indeed, some social innovators start as activists, while others create new technologies or repurpose the existing ones to improve people’s livelihoods. Since social innovation happens for the greater good of the weaker and vulnerable people, its aim is not to produce profits for private individuals.
Environmentally and socially responsible innovation is essential for businesses’ sustainable performance. It achieves this by giving entrepreneurs the ideas on utilizing available resources without wasting them as this could lead to depletion and the eventual closing down of business. When entrepreneurs are socially and environmentally innovative, they ensure that their companies do not pollute the environment or take advantage of weaker community members (Wittmayer et al. 2019). Instead, they create a system that allows for environmental conservation and equitable sharing of natural resources, making people feel contented and obliged to support the business, leading to its sustainability.
Some businesses and non-profit organizations worldwide have addressed a social or environmental issue innovatively, leading to sustainability and profitability. One such institution is the Grameen Bank, established by Muhammad Yunus in Bangladesh in 1983 (Iqbal, Nisha, and Rifat 2020). It is a community development and microfinance bank specializing in the provision of small loans to individuals who are too poor to qualify for loans from traditional banks. Most commercial banks worldwide have difficult conditions that individuals have to meet before they can secure a loan. For instance, they have to demonstrate an ability to repay the loan by showing they have been undertaking large financial transactions through their banks. Secondly, the applicant has to have some form of security or collateral, including guarantors, before getting the requested amount. Grameen Bank came with a different model to this traditional approach. Its founder believed that even the world’s poorest could effectively manage their finances and grow if financial institutions gave them sustainable conditions.
Following the Grameen Bank’s success, many other entrepreneurs worldwide implemented the same idea, having realized it was possible to make a tidy profit lending to the poor. The vast adoption of Muhammad Yunus’ model around the world illustrates the innovativeness of his initial idea. Notably, the Grameen Bank’s innovative aspect is creating a system that allows them to lend money to the poor at a reduced risk (Chowdhury and Somani 2020). For Grameen, this innovative system is the realization that, in addition to not having money, poor people also lack access to information and resources that privileged individuals have. Thus, the bank creates and implements tools that address poverty’s interconnected roots in a sustainable and scalable way. Therefore, the bank extends loans to the poor and follows them up with information to help these individuals manage their finances and overcome poverty. The approach has worked seamlessly, allowing Grameen Bank to grow and achieve profitability.
The Grameen Bank’s social aspect focuses on the world’s poor, a majority of whom cannot transform their economic prospects without help. The bank targets the poor and marginalized with both financial assistance and information to help them grow. The bank may also extend other resources to these individuals whenever possible. Specifically, Grameen Bank gives poor women and farmers a better way to manage finances and grow crop income. The bank believes that economically disadvantaged people have enough willpower to overcome their circumstances if they access financial insights (Faizah and Husaeni 2019). Grameen Bank also uses technology as a change tool that is designed to be scalable and sustainable and remains data-driven, evidence-based, and human-centered at its core. Not surprisingly, this organization is among a few social institutions that have achieved both sustainability and profitability. The bank has remained true to its mission and vision and is always in touch with the people to understand their needs and fund their financial growth.
The Grameen Bank has continued to register impeccable performance on the social, economic, and environmental dimensions. Socially, Grameen Bank is performing well; it has transformed many Bangladeshis by offering them financial advice and microloans to grow themselves. Economically, the bank has become profitable and currently employs more than 20,000 people in more than 2,000 branches in Bangladesh (Bhuiyan et al. 2017). Environmentally, the bank has helped smallholder farmers improve crop production and income generation by connecting them with advanced and approved farming technologies. Perhaps, the main challenge that the company faces in its work is meeting the needs of a growing customer base. Almost all poor Bangladeshis now depend on the bank for economic development. Unfortunately, Grameen Bank has limited resources and cannot offer its services to all the people who deserve them. Over the years, it has tried to increase its community outreach by opening more branches across the country, but this strategy is yet to fulfill all potential customers’ needs.
An alternative way to reach more people is by establishing new partnerships in Bangladesh and other parts of the world where poor people lack access to finances and information reside. The collaboration between Grameen Bank and other financial institutions, government organizations, or non-profit organizations will go a long way in increasing the program’s effectiveness and reach. The main challenge with partnerships is that it can be expensive and hard to coordinate the concerted effort. However, with enough commitment and support from world governments, it would be easy to expand Grameen Bank to reach all poor people.
Reference List
Bhuiyan, A. B. et al. (2017) ‘The experiences of the Grameen and Islami Bank microfinance on the poverty alleviation in Bangladesh’, Journal of Islamic Economics, Banking and Finance, 13(3), pp. 64-81. Web.
Chowdhury, T. A. and Somani, S. (2020) ‘Performance evaluation and impact of Grameen Bank on social development and women empowerment in Bangladesh.’ International Journal of Social and Administrative Sciences, 5(1), 54-73. Web.
Faizah, S. I. and Husaeni, U. A. (2019) ‘Economic empowerment for poor women using Grameen Bank model in Indonesia.’ KnE Social Sciences, 3(13), 880-913.
Iqbal, M., Nisha, N. and Rifat, A. (2020) ‘A comparative integration study of performance metrics in microfinance: Grameen Bank vs. Cooperative Bank.’ International Journal of Information Systems in the Service Sector (IJISSS), 12(3), pp. 55-73.
Kogabayev, T. and Maziliauskas, A. (2017) ‘The definition and classification of innovation.’ HOLISTICA–Journal of Business and Public Administration, 8(1), pp. 59-72.
Oeij, P. R. et al. (2019) ‘Understanding social innovation as an innovation process: applying the innovation journey model.’ Journal of Business Research, 101, pp. 243-254.
Wittmayer, J. M. et al. (2019) ‘Narratives of change: how social innovation initiatives construct societal transformation.’ Futures, 112(2019).