The Trojan Horse; A Classic Social Fraud

by Dan Robles on 01/19/2009

three-john-does-in-oklahoma-city-george-oswalt-300x202 The Trojan Horse; A Classic Social Fraud Periods of change in any market open the doors for abuse as control systems often lag behind the waves.  This is especially true for social capitalism where the social contract is changing rapidly and the enforcement mechanisms are largely non-existent.

All markets must have effective vetting mechanisms in order for the market to be viable.  If the game is not fair – real investors and real entrepreneurs don’t walk, they run…away.  While much fraud is obvious and predictable, the most damaging is the type that nobody sees coming but can destroy the standard of trust for everyone, forever, like the Trojan horse.

Hypothetical Case Study: A self-proclaimed innovation consultant runs a blog out of anywhere USA.  They have a catchy domain name and their ranking is unusually high for a 5 month old blog with splashy but infrequent articles.

In the spirit of the X-prize, the blogger promotes an Innovation Contest offering $60,000 dollars worth of his company’s “Marketing Consultation” services as a prize to the next innovation that will change the world! … as judged by a “panel of experts”.  The blogger encourages all entrants to send their social network to vote up their innovation as this will weigh heavily into the judging.  Many people submit their work and diligently mine their Facebook and Linkedin networks for the vote.

The contest ends and the winning idea earned zero external votes but it is in an industry that is very popular in mainstream media and slated for government stimulus.  However, it is clearly not up to par with many of the other entrants.  Upon inquiry, the blog author does not specify the criteria for judging, he does not itemize the prize, he does not publish his “panel of experts” and he does not post any dissenting opinions or inquiries submitted to the moderated comments.

A few days later, a press release appears on Google news; “$60,000 dollar innovation contest prize awarded for breakthrough in targeted industry”.  Leading tech media pick up the story and the “consultant” is hailed for defending the struggle of the unsung heroes of the innovation economy.  It appears to the contestants that the consultant is promoting himself at their expense.

So, what’s wrong with that?

First; for all of the innovators who submit themselves to judgment and expend their social capital on votes, the integrity of the contest must be bullet-proof.  The definition of the objective, the judges, and judging criteria must be specified absolutely. Otherwise, good ideas will not be shared.

Second; if potential sponsors of a legitimate X-prize-type contest are challenged in their sincerity to promote world-changing innovation, and instead are accused of self-promotion and media bias, a tremendously valuable resource of the innovation economy will be squandered.

Finally; if a person’s social networks are mobilized to vote in any type of contest – they must know that the time they invest will be respected and valued or they will no longer participate in other contests.

To this day, the clever ruse of the Trojans remains the fraud of choice for new market technologies. It has also marked the standard of trust that we hold forth in our relationships and invitation to our inner circle. Sharing of one’s friends is a deeply intimate act of faith and trust many times greater than sharing one’s ideas. The caregivers, those who hold forth the willingness to nurture that trust, must be qualified as stewards of the public endowment of social capital, creative capital, and intellectual capital.

Social Capitalism depends heavily on the function and performance of communities. A “paranoid bias” could be vastly damaging – possibly constraining the next great paradigm of economic development from achieving critical mass.   Social Capitalism is not a game, it’s serious business.

{ 1 comment }

Paul July 2, 2009 at 2:37 am

Excellent article, I enjoy every article I read here. Thanks,
and keep bloggin!

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