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Revolution Through Competition
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A New Theory

Wed, 10/17/2007 - 15:50 — Tom Vander Ark

The new buzz phrase in philanthropy is ‘theory of change.’ It's a logic model of the world or at least a sector, a set of assumptions about how positive change occurs. Most foundations ascribe to an old theory that is slow and often inefficient:

      Demonstration > advocacy > policy > investment > benefit

Sometimes foundations (without enough money to fund big demonstrations) rely on research or concept papers in an effort to effect policy change. Policy driven reform is difficult, lagging not leading, and incremental (e.g., CAFE standards for cars, No Child Left Behind in education). It may result in some entrepreneurial activity fueled by investment and policy change, but this approach relies more heavily on compliance than incentives. And, in many cases, it takes two decades to demonstrate, advocate, legislate an incremental change.

Prizes reverse the traditional approach:

      Prize > entrepreneurship > investment > breakthrough > benefit

Prizes produce a rapid response on the part of teams and investors. Breakthroughs create or reshaping markets. Public policy is changed by the force of entrepreneurship and the change in public perception brought about by the competition.

Prizes in the social sector will prove to be a powerful change agent by producing innovation, changing behavior, and reshaping public policy faster and more efficiently than traditional approaches.

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Comments

Wed, 10/17/2007 - 18:47 — RFriesen

Why do prizes change outcomes?

Tom, I appreciate the question on the “theory of change.” I believe there a huge gap between our current practices to resolve basic human needs (i.e. “No Child Left Behind” should be required reading, all 400 pages, for shock value) and our ability to tap the creativity that can make huge strides in the human condition.

Let me exaggerate for a moment. It used to be that all human knowledge resided at the top of a hierarchical triangle. The people on the bottom would send information up to the top, the smart people at the top would, in their wisdom, issue decrees (No Child Left Behind) and the marching orders would be sent back down to the people to implement.

This approach is costly for a number of reasons.

1) Knowledge and information is moving so much faster then it used to, that the information that reaches the top is always out of date
2) Technology has increased the complexity of choices, overwhelming even the brightest. All decisions are overwhelmed with unintended consequences.
3) The decrees from the power at the top are broader than its effective feedback mechanism.
4) The power at the top corrupts without awareness
5) Structures that are created become permanent without a mechanism to dissolve once they are no longer effective, or worse yet, stand in the way of progress

With the complexities of modern life, simple rules can encourage effective solutions. The field of complex adaptive systems is pointing the way.

http://en.wikipedia.org/wiki/Complex_adaptive_systems

The advantages of moving from hierarchical structures to adaptive process are many. The real knowledge, skills and information are not located at the top of the triangle, but in each of us.

1) With simple rules, we move solution creation to the people who have diverse information, wide range of skills and immediate feedback on their behaviors.
2) Process are created though voluntary association. Those that succeed become institutionalized. Those that fail are abandoned by the participants.
3) All participants are given immediate feedback by those affected by their behaviors
4) The pool of knowledge is increased as you drop down the triangle
5) The pool of knowledge is more diverse, allowing for more “reality” to shape the pool of knowledge
6) Power is diffused, reducing corruption
7) Unintended consequences are limited in scope and duration
8) People become motivated to solve problems creatively
9) This process respects the value of the individual which gives they system increased integrity
10) Catalysts for change become more effective because of fewer structural impediments are in the way
11) Reduction in the use of force, intimidation and restrictions as a way of shaping behaviors

Thus the XPRIZE is able to leverage relatively small amounts of money by tapping the resources that have been structurally limited in our current political and social systems. This process could also re-frame the questions we ask.

Richard Friesen
rich@friesenconsulting.com