Vision & Strategy
What is the challenge we are trying to address?
There is no functioning marketplace for solutions to complex social challenges. The nonprofit sector is the closest thing to a marketplace for solutions, but it is dramatically underperforming.
This $2tn+ market is not aligned on standards, resulting in widespread confusion between good and bad strategy.
This results in millions of under-capitalized and generally under-resourced organizations without strategic or tactical cohesion working on the world's toughest problems.
We summarise this situation as the challenge of Capital, Talent, and Reporting.
The challenge of Capital
Responses to complex challenges are usually vastly undercapitalised by many orders of magnitude. Teams trying to tackle complex challenges do not get the resources they need.
Teams usually struggle with seed funding to start things. They then find themselves lacking growth funding to support talent development and without ongoing funding which would give them a stable runway to develop and grow.
The challenge of Talent
The nature of the challenges we are trying to tackle are complex in nature.
Unfortunately our training is largely in solving technical problems and not complex challenges. One consequence of this is that many of our organisations are designed for solving technical problems.
Strategies are only as good as the teams behind them. This also means that strategies often fail because the organisations and teams behind them lack experience with complexity and are not fit for purpose.
The challenge of Reporting performance
How do we know a strategic response is effective? How do we know when a team is effective?
Currently there are no shared standards for reporting performance. As a result it is incredibly hard, in many cases impossible, to know if a strategy or a team is succeeding or not.
Without a shared standard for reporting investment decisions are arbitrary and ineffective. Without being able to track the performance of teams we support, we cannot tell what they need or how well they are doing.
How will we achieve our mission?
Our ultimate goal is creating a new marketplace for financing and training teams committed to tackling complex challenges around the world.
The purpose of this marketplace is incentivizing teams to meet the standards for effective strategic responses to complex challenges.
This new marketplace will list teams that provide a demonstrable track record.
Our work in the first three years will focus on putting in place the standards for this marketplace. We will do this through creating seed funds that provide the initial incentives for teams to meet our standards.
What is our strategy for the capital challenge?
Our approach to creating this new marketplace will be to create two new types of fund. One a supply side strategy called a 10 in 10 Fund and the other a demand side strategy called The Social Hedge Fund.
Supply Side Strategy: The 10 in 10 Fund
A 10 in 10 Fund provides seed funding to teams. Each Fund focuses on a specific challenge, a battle-tested process, with impact criteria, a clearly defined geographic and demographic focus.
This creates a supply of teams with the commitment, skills and experience to implement effective strategic responses to complex challenges.
Demand Side Strategy: The Social Hedge Fund
All Teams that are financed via a 10 in 10 Fund are eligible for accessing 10x more capital via a Social Hedge Fund.
We will establish 10 Social Hedge Funds, one for each global Challenge we aim to address.
Each of these Social Hedge Funds will initially be capitalized at $10M. Teams “graduating” from the Social Labs Funds will be eligible for long term financing and support (3 years+).
Each graduating Team will have a track record and will be required to continue filing quarterly performance reports (similar to a quarterly stock market filing). Teams will be required to meet a set of performance criteria to continue to be listed. Teams failing to meet this criteria will be delisted.
Our goal is to establish the first Social Hedge Funds in 2021 once an ample supply of listable teams has been created.
What is our strategy for developing talent?
Getting really good at tackling complex challenges requires practice.
The skills required cannot simply be learnt in a classroom. This would be a little bit like studying cooking theory in a classroom instead of actually getting your hands dirty in a kitchen, or like studying football tactics in a classroom over practicing in a field.
All teams supported through 10 in 10 Funds are required to complete two six-month cycles of practice.
This involves working with a diverse group of 35 stakeholders to test 5-6 responses to the Challenge.
For the wider context of this practice see The Rise Of The Prototyping Paradigm.
“Graduating” requires the successful completion of these two cycles, with a minimum of 10 responses or “prototypes” tested in the real world, delivering real world impact.
This “learning by doing” is supported through Complexity University.
In later years we envision a supply of Complexity University “graduates” will form or join teams financed by our Funds.
What is our strategy for reporting performance?
At the heart of our approach to reporting performance is our impact framework - Capitals Return On Investment (CROI). This framework provides teams and organisations with a tool to evaluate impact and ROI.
CROI aims to solve the problem of how investors in both internal and external teams can have confidence that teams are delivering a return on investment.
Our intention with CROI and associated reporting is to create a shared reporting framework that can be deployed across multiple teams and across multiple organisations.
Our focus in prototyping the framework is to ensure that it is a practical tool that can be used to generate shared performance data.
We use a multiple capitals model where there are six classes of capital where outputs can be generated:
Human Capital or new capacities
Social Capital or increased trust in the system
Intellectual Capital or new knowledge and information
Physical Capital or new products, services or infrastructure
Financial Capital or new stocks (and flows) of financial capital
Natural Capital or ecosystem services (such as trees or cleaner air)
Finally this framework is designed for teams working in contexts that are complex, with high volatility and uncertainty.
Join our Impact Reporting Developers Programme if you would like to work with us on developing CROI.