Translation is key

September 26, 2007 at 2:14 pm 1 comment

a translation facility is a key piece of missing infrastructure, due to the nature of the way beliefs and language are held in this social capital market compared to the traditional capital market. the model of belagio as I see it is analyze infrastructure gaps and set about to set up the plumbing to make capital flow across those gaps. but there is a reason that this market has not evolved along the same lines as the traditional capital market.

the traditional capital market has been constrained to manage to a single variable (bottom line, computed in various forms; the one I used was most money coming in at the highest sustainable margin) while this blended value, social capital market has arisen with the third dimension of impact added to the traditional efficient investing frontier formulation of just risk and return. Impact has multiple, interconnected dimensions. When you want an impact on water, if that’s your hot button issue, you do create or at least factor in the impact on food security, health, education, etc. That makes your impactß capable of multiple definitions, and the nature of the problem changes by who is defining it. It’s a market arising in the world of wicked problems.

That higher level design element means that starting from a base that aims to emulate the traditional capital market is inherently flawed; people will not agree on definitions, and they will hold those definitions with more than rationale fervor. tThey arise out of their theory of change, the way they want the world to turn out, what they want to do in the world, their hopes, their fears, the things that make them take tireless action against intractable problems.

tTherefore; a translation facility between the emerging pieces of social financial market infrastructure is essential; we won’t get agreement that would let these exchanges clear each other’s trades without a united nations of exchanges that lets each of them preserve the elements that are beyond pure financial return that they hold most dear. So we need to create linguistic bridges across these islands that are arising above, or could arise above the water. that recognition of the different nature of the problem of friction in this space. You can’t expect to eliminate it or get consensus as I did in defining the category of internet marketplaces; people standardized on my definitions and taxonomy. (incorporated into mary meeker’s second internet report at morgan stanley, etc.)because it allowed for better analysis of business models and comparables to eliminate friction from analysis.
Such consensus is not attainable in this space, and that’s ok, it’s the nature of the multidimensional wicked problem addressed that mandates that difference. That difference needs to be incorporated into the overall system design.

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Entry filed under: metaphor, socialcapitalmarket.

The stuff of thought Pricing ecosystem services

1 Comment Add your own

  • 1. kevindjones  |  September 27, 2007 at 3:47 am

    i hope thiey think about this approach in Belagio next month when they start looking at Mark Campanale’s Social Stock Exchange

    Reply

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