01/30/2013 05:10 pm ET | Updated Apr 01, 2013

Muhammad Yunus Teaches Danes How to Save Their Welfare State

Danes are supposed to be the happiest people in the world but to this rather ostentatious claim, most of them are likely to say "phooey!" We're not necessarily happier than others, they'd say, merely sensible with realistic expectations. Now their famous welfare state -- existing comfortably in parallel to a capitalistic economy -- is in trouble and in typical Danish fashion, they're starting a dialogue between the public and private sectors to sort things out.

The first meeting was by invitation only and convened 150 participants from corporations, NGOs, universities, small businesses and the public sector. The magnet was the daylong participation of Muhammad Yunus, the controversial professor of economics who founded Grameen Bank and developed the concept of microcredit. The Nobel Laureate didn't come just to speak, however, but also to listen. By the end of the day, most of the participants went home feeling vitalized and enthusiastic about the potential applications of social entrepreneurship to solving deficit issues in the welfare state economy.

The one-day conference was sponsored by the Danish Ministry of Foreign Affairs that administers foreign aid and sponsors development cooperation. Denmark is only one of five nations in the world that lives up to the UN target of granting 0.7 of GNI (gross national income) to development assistance and they monitor their projects carefully. Last year a delegation of Danes were in Bangladesh to evaluate some of the programs and on one occasion they found themselves on a tiny island in the Ktai Lake where they visited a farm improvement project. The farmers they met were living in extreme poverty without electricity or infrastructure so it was more than surprising when one of them took out a mobile telephone to take a photograph of their Danish guests. When asked how many of them had mobile phones, 40 hands went up. They explained that a small solar charge in one of the huts provided power for the phones, and that these small communication devices had revolutionized their lives. Now they could check the prices of vegetables in nearby markets in order to get a better price for their produce. Now they could get medical advice when needed. Now they could keep in contact with each other and the world outside.

How could poverty stricken villagers in a remote area acquire mobile telephones? Grameen Bank in partnership with the Norwegian company Telenor sold the villagers the telephones at an exceptionally low cost. "This is just one example how Professor Yunus solves problems," said the speaker who introduced him at the conference. "As the very personification of 'thinking out of the box,' he goes beyond the obvious and examines the problem from an entirely new perspective." Then he applies entrepreneurial principles to find a solution.

Professor Yunus has seven principles of social entrepreneurship: (1) use the business to overcome poverty or solve a problem related to health, education, technology access or environmental protection. (2) all solutions must be economically sustainable. (3) investors get back their investment only. No dividends are given. (4) profits stay with the company and are reinvested for expansion and improvement. (5) all businesses must be environmentally sensitive. (6) all workers get a market wage with better working conditions. (7) everything should be done with joy! "Super happiness is better than just being happy," Yunus says with a glint in his eye.

That the mission of social business is to solve problems rather than generate profits seemed excessively idealistic to some of the conference participants. "Why does it have to be either/or?" someone asked. "Why is it ok for you to make profits if you're selling beer but not ok if you're selling an especially nutritious yogurt to a low income school district?" What followed was a discussion about profit margins. "How much is enough?" someone asked. Some of the participants suggested that the concept economic growth needs review because sustainability and endless industrial growth are not compatible. Some of the Danes suggested they were too dependent on the welfare state to solve everything. Examples of private entrepreneurship meeting Danish social needs included a telemarketing company that employs blind workers and another company that specializes in graphic design that employs handicapped workers on flextime. The handicapped that might be receiving welfare support are an under-utilized resource that social businesses could engage.

Denmark's welfare state is stressed and it will need imagination and resolve to solve its problems. As a man in his '70s, Yunus has faith in the young, especially those who are graduating today from business schools. He believes, however, that business colleges should offer a separate degree in social entrepreneurship where the importance of a strong business model is taught but not the idolatry of profit. He believes that social business is relevant in developed societies and like an increasing number of public intellectuals, thinks entrepreneurs have a bigger chance finding solutions to problems than politicians do.

One of the more remarkable things about this conference is that 150 Danes would convene and agree to speak English to one another for eight hours. Generally speaking, Danes do not like to speak English in social settings for more than a short period because they feel it interferes with hygge. Arguably the most important word in the Danish language, hygge is a noun, verb, adverb and adjective, meaning "aren't we all so glad that we're here together and that we're Danish!" It is evidence of their esteem for Professor Muhammad Yunus -- possibly the only person in the room who did not speak Danish -- that they would stress themselves all day so they could communicate with him. He was there. They had his attention. And they wanted him to hear and evaluate their ideas about fixing Denmark. They might not all have agreed with him but they wanted his participation.