For a long time I've been using the phrase 'theory of change' to express the idea that a project is essentially a social experiment, and that M&E is about testing the hypotheses implicit in the social experiment.  Recently I was challenged to succinctly ellaborate what I thought embodied the 'theory of change' approach.  The following points provide an overivew of the concept, and the practical and philosophical elements, as I see them:

THEORY OF CHANGE

Broad Concept

• International aid projects exist to create social change.  Any project implicitly aligns with a ‘theory’ about how desirable social change might be achieved—a ‘theory of change’. 
• To bring about social change, human actors interact within a social system through time.
• A role of project design is to articulate the ‘theory’—the temporal sequence of relationships, and how these are expected to influence desirable change.
• A role of M&E is to test the ‘theory’—to judge the extent and merit of the changes fostered by the project.  These judgements are required to satisfy demands for accountability (‘to prove’) and learning (‘to improve’).

Philosophical Aspects

• The ‘theory of change approach’ recognises that, by definition, social change takes place through the interaction of human actors.  No humans, no change.  This is an ‘actor centric’ or ‘interpretist’ perspective.
• Any ‘project’ is conceived as a ‘social experiment’ within which the ‘theory of change’ is tested.  This tends to foster greater curiosity in the efficacy of the design (and less defensiveness among designers and implementers), and hence, greater reflection and learning about what works and what doesn’t work.

Practical Aspects

• The design logic explicitly recognises the temporal sequence of relationships that effect the desired change: implementing team --> direct beneficiaries (‘boundary partners’) --> ultimate beneficiaries.
• Outputs, Outcomes and Impact are defined in terms of changes effected by, or experienced by, each of the classes of human actor (respectively: implementing team, direct beneficiaries, ultimate beneficiaries).
• M&E explores the role and experience of each class of human actor in the change process; and explicitly captures evidence of when change has been less than anticipated (i.e. where risks have been borne out).