Using future markets for social entrepreneurship?

  • A McKinsey & Co. report on prediction markets quotes James Surowiecki: “I wouldn’t be surprised to see prediction markets used in many more companies than today, not least as a tool to forecast sales. Consumer-facing companies should be particularly interested.”
  • Knowledge Management gurus Tom Davenport and Dave Snowden jumped into the fray to cool easy enthusiasm.
  • An article in the New York Times introduces the concept of futarchy. According to Robin D. Hanson, an economist at George Mason University and a fan of alternative institutions, futarchy is “a form of government enhanced by prediction markets. Voters would decide broad goals of national welfare, but betting in speculative markets would determine the policy steps to achieve those goals.”

When I read this post, I could not help but wonder if future markets could be applicable to social entrepreneurship. The first bullet point spoke to the use of such markets to predict the changing consumer preferences for companies. It would seem as though such information would be useful for understanding the evolving needs and desires of BoP customers as well. Can future markets be modified to be applicable to the BoP? Or is modification necessary, can we use them out of the box today?

Likewise, for social investors prediction markets could figure out what innovative approaches to specific problems are most likely to be effective and help guide them in their investing decisions. Anyways, just some food for thought. I need to think further about this, but I am sure you will hear more from me about this in the ‘future.’

Does Development 2.0 exist?

In order to better put my previous post on the Great Indian Developer Conference in context of this blog, I read earlier a post today by

On the one hand, there are those who see Web 2.0 tools as an enhancement of traditional collaboration and outreach capabilities. On the other hand – and to my mind more intriguing – there are those who believe that Web 2.0 is heralding a new business paradigm.

Quaggioto leans towards the latter of the creation of a new pardigm, which he considers a much more interesting perspective.

The latest voice to be added to the choir of advocates for a disruptive new paradigm is, quite fittingly, Anthony Williams – author of Wikinomics. His vision for NGOs 2.0 is remarkably similar to some of the ideas presented in this blog. For instance, the proposal to use Second Life for collaboration between donors and recipients, or the idea of launching a development market to tap into the wisdom of the crowds.

Tsunami Microinsurance

From PSD Blog — World Bank Group:

A new health insurance plan will enable the poor in India to buy health insurance for less than 10 cents a month, and it will cover natural disasters including Tsunamis.

The new program is a partnership between and aid group, CARE International, and a private insurer, Allianz. It is expected that over 200,000 customers will buy insurance within a year. According to Allianz, the communities have been involved in designing the new policies, which will cover death, medical treatment for injuries in accidents, help with funeral and hospital expenses, as well as paying wages during illness.

2008 Global Development Marketplace Competition (DM2008)

The competition’s focus is Sustainable Agriculture for Development. This was brought to our attention by PSD Blog.

Here is the information provided on the competition’s website:

Applications are accepted through March 21, 2008 and will undergo rigorous review by more than 200 development experts. About 100 finalists will be announced in June and will be invited to World Bank headquarters in Washington, DC in late September to vie for grants in person at the DM2008 Marketplace event.

This competition offers a unique opportunity to turn your innovative idea for sustainable agriculture in developing countries into reality. If selected, your idea could receive up to US$200,000 in grant funding for implementation over two years.

Key Dates:

March 21, 2008: Deadline for all proposals

June 23, 2008: Finalists announced

July 28, 2008: Finalists’ proposals due

September 24-25, 2008: Marketplace & Knowledge Exchange

The proposals must address one of three sub-themes, which are after the jump.

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Social Capital Index Unveiled by

The other day, we posted an article by PSD Blog suggesting that the new development paradigm still suffers from the same shortcomings of the old guard. Today, we have come across one initiative to help address those concerns, as has released a new Social Capital Index that intends to be a tracking tool for investors to monitor and compare various blended value investments.

We have launched the Social Capital Index, a timely tracking of investments in the social capital market, including social enterprise, (health, education and workforce development) fair trade, digital inclusion, and some clean tech and microfinance investments. Over time we will be able to size the Social Capital market and its growth trajectory in each sector

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New Idea, Old Problems

The World Bank’s PSD Blog posted yesterday on how despite the novelty of social entreprenership and its potential to change the way development operates, it still suffers from teh same pitfalls that plague traditional development models. The report cited suggests that we still have some ways to go before we can officially label the emergence of the social investment pardigm as Development 2.0.

However, the analysis of 24 online social markets leads the authors to conclude that, whilst they are “relentless innovators” that succeed in attracting a new donor base, their transformative power is hindered by an all too familiar problem to “old” development players – the lack of reliable performance data and a common reporting framework.

Whilst 83 percent of surveyed markets believed performance data to be important to encourage donations, only 68 percent report on progress of the offerings on a regular basis, and a mere 27 percent provide any kind of formal evaluation. “One searches in vain for well-defined criteria for assessing the performance and impact of the organizations listed in the markets” and “the information available to[…] social investors for making their decisions falls far short of any acceptable standard of systemization.” Perhaps even more tellingly, only 14 percent of the reporting presents some form of beneficiary validation – which, arguably, could be one of the greatest advantages of using interactive media vs. more traditional approaches (think about Amazon-style ratings provided by donor recipients).

The entire report can be found here.