The Ingenesist Project

The Next Economic Paradigm

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The Next Economic Paradigm; Part 3: Knowledge Inventory

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On April 6, 2009

In General Information

Welcome back to the New Economic Paradigm Series.  The objective is to develop an innovation system that emulates the financial system.  In order to do this, we look for the social component that could best duplicate the function of the closest corresponding financial system component.

Part 2 discussed the currency of trade.  Part 3 will discuss the inventory of knowledge assets.

Most companies have an inventory of every nut, bolt, rivet, or panel that they need to build something tangible.  In innovation economy, we will need to have an inventory to assemble knowledge assets so that we can build something tangible and support the currency.

Your resume is like a book about you.  Conversely, every book that you have read has become part of your knowledge inventory.

Every experience you have had, every conversation you have participated in, every new idea that tried, successful of failed, is part of your knowledge inventory.  The things that you like to do, things that you do not like to do, and things that you do not know are part of this inventory and the way it is organized in your consciousness.

The Dewey Decimal System is a way to catalog information in books. Keep in mind that The Dewey System is archaic; however, it does provide us with some key insights:

From our earlier definition; to organize information is to organize a proxy for knowledge and innovation.

The decimal classification structure has a great advantage for the computer and mathematical analysis.  Additionally, tens of thousands of librarians are fluent and most people in the US have at least a minimal familiarity with it.

For a quick review, the body of written information is divided into 10 main categories.  Each main category is divided into 10 more categories and each of those are divided into 10 categories – and this can go on forever.

It is useful to note that the Dewey Decimal classification has a bias toward the three factors of production for the innovation economy; Social capital, creative capital, and intellectual capital:

Most resume reading programs just pick up key words, so why have any other words?

Your resume can be a series of Dewey numbers instead of words and computers can tag the numbers as they do key words today. For example:

302, 307, 330, 607, 17, 500, 519

If your mind were a library and you attempted to map it all out, one would see that everything is related in some way – intuitively, this is what defines you. If we looked into your world, we would discover a huge network of experiences, books read, lessons learned, and people encountered.

We would find a system of knowledge rather than random facts that you have organized.  Your likes and dislikes would be reflected in what you do and do not want to do. Everyone is different – nobody is the same.  Everyone innovates, everyone has knowledge, and everyone shares information.

If we add some mathematical symbols and Boolean logic, perhaps we could capture the system of knowledge a little better. Your resume may now look like this:

{20,12};[302 AND 307], (330):[607 AND 17] OR [500/519]

Now need to make this look like money.  Before our knowledge can behave like a financial instrument we need to add one additional factor – the quality of the knowledge.

In American society there is a persistent ideology of winners and losers; there can only be one winner and the rest are losers.  We rank things in a very linear way; 1st, 2nd, 3rd, etc.  Our culture is to protect one’s position at all cost, shield away all attackers and decimate our competition.  This way of thinking was effective in the industrial economy, but today it keeps us from understanding how knowledge actually exists in a community.

We need to switch to a bell curve distribution for knowledge assets because it better reflects reality and eliminates unproductive competition; there are no winners or losers, just different markets.

There is a perfectly legitimate market for a Porsche as there is for a Toyota.

Statistical distributions are used extensively in finance to value financial instruments; we need to do the same now for our knowledge assets. To make financial sense out of our random world, we must classify knowledge assets on a bell curve.  Consider the following resume:

{20:95%,12:80%};[302 AND 330]70%:(607 AND 17)80% OR [500/519]90%

This person is a specialist in Social Interaction and economics at the 70th percentile related to educational research at the 80th percentile. She (or he) has a Background in applied mathematics and physics at the 90th percentile. She (or he) is a trained ethicist at the 75th percentile, philosopher, and artist specializing in musical theory and orchestration at the 50th percentile. Fluent English and Spanish

Now, we have a system of numbers and symbols represent the knowledge of the person in a tangible manner.

Keep in mind that this is only a demonstration, however, we see some key advantages:

1.    The Inventory is Infinite and expandable to any field of knowledge
2.    Paints a picture of knowledge and not simply a list of information about a person.
3.    Machine enabled, programmable, and readable.

Now, all of the tools, methods, and equations in the world of banking, finance, and insurance can be used to combine, amalgamate, and diversify knowledge assets in an innovation market.

Your resume can now be combined with other resumes to represent the collective knowledge of a community.  This expression carries all of the information that an entrepreneur needs in order to estimate the probability that the community can execute a business plan.  We will discuss predictive characteristics extensively in future modules.

In the next section, we will talk about the institutions that exist in our communities through computer enabled society which will keep this game free, fair – and most importantly, equitable.

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The Next Economic Paradigm; Part 2, Currency

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On April 5, 2009

In General Information

Welcome to part 2 of the New Economic Paradigm series.

In part 1 we determined that money represents human productivity and the only way to sustainably create wealth was to innovate.

Then we identified the flaw that money lives in a complex and integrated system while Innovation does not, rather, innovation is isolated, random, non-integrated and subservient to the financial system.

This module discusses the currency of the innovation economy.

A Currency is anything that serves as a medium of exchange, a stored value, and a standard of value.

We  all know that Dollar denominated money is a medium of exchange – but it does not represent gold or silver or even oil, it represents human productivity.  Money, and therefore all financial instruments store value related to human productivity.

When we look into society throughout history, everywhere people are trading information and ideas with each other at some velocity.  The Internet and social media (machine enabled society) has sped this process up to incredible rates.  All of this information adds up to something because obviously things get built and stuff rolls off assembly lines.  Furthermore, people act on information obtained from each other to produce things.

The currency of trade for the next economic paradigm must represent this “stock exchange”

Intuitively we know that information, knowledge and innovation are profoundly related to each other.  In fact, if you don’t have one, you can’t have the other two.  Our currency of trade must represent all three; information, knowledge, and innovation.  Therefore, we need to redefine these terms in a manner that relates them.

First we must define ‘information’. That’s easy, information is facts and data.

Next we need to define ‘knowledge’ in terms of information: Any good teacher can tell you that information must be introduced in a certain sequence and at a certain speed in order for the student to learn. Knowledge is therefore proportional to the rate of change of information.

For the purposes of this analysis, we will use the following definition:  Innovation is defined by the rate of change of knowledge where knowledge is defined by the rate of change of information.  For example; everyone has had an ‘Ah-Ha!’ moment during a brain storming session, or after making a mistake, or after witnessing a profound event. The AH-HA moment represents a very high rate of change in our knowledge that occurs in a very short period of time.

According to this definition, every idea,  conversation, dream, design, sketch, or discovery experienced and shared between two or more people is an innovation.

Math students can see that this definition sets up a differential equation that we can use to model the innovation system computationally – something that cannot be done with the current definitions.

Now let’s look at the “economic outcome” part

The factors of production for the industrial economy are land labor and capital.  Entrepreneurs allocate these three factors in different combination in the formation and growth of corporations.  If any of these factors of production are missing, dysfunctional, or corrupted – the corporation stops producing.

We have learned that in the knowledge economy, the location of knowledge work is highly mobile – so “Land” does not have the same significance for making things as it did 100 years ago.

What about labor? Knowledge workers analyze situations, manage many variables, and create unique solutions.  They do not really produce identical knowledge pieces like a machine operator or a production worker.  Everything they see and do becomes part of their relevant knowledge set: 24/7/365. The idea of an 8 hour day and pay-by-the-hour are no longer relevant.

Capital is money needed to build future structures, buy machines and to pay wages. Today, money provides access to information. The current economic meltdown demonstrates that where the information is corrupted, the money is corrupted – and so becomes everything connected to the money.

We now see that many old economic principles do not work quite as well in the new economies. Yet, the Land, Labor, and Capital theory is still the foundation of much of today’s corporate, academic, government, financial, and social thinking.

Using our definition for innovation, we can see that the innovation economy will emerge from the rate of change of the knowledge economy.  Today we are witnessing an astonishing growth in social media and a breakdown of traditional media for the dissemination of information.

The factors of production for the new currency are Intellectual Capital, Social Capital, and Creative Capital.

Intellectual Capital is also called Human Capital – and suggests that concentrations of educated and motivated people attract investors to employ them and invest in the communities where they reside.  This investment attracts other intelligent people who in turn attract more investment thereby creating a cycle of economic growth

The Social Capital Model suggests that people acting in communities can create better solutions, greater accountability, and more economic growth than management, governments, or bureaucracy can induce on their own.  Examples of Social Capital include Civil Rights Movement, community watch organizations, Democratic Government, Social Networking, and notably, recent political changes events.

The Creative Capital model, suggests that engineers and scientists think more like artists and musicians than like production workers – their ideas come 24/7/365 – and that an environment of tolerance, diversity, and openness promotes creative output.

A Currency is anything that serves as a medium of exchange, a stored value, and a standard of value.

In the current financial economy, the currency is a dollar.  The rate of change of the currency is called appreciation, depreciation, or “interest”.  The rate of change of interest is the growth rate or compounding. These are very familiar conditions in finance and the basis for a company’s stock price.

In the innovation economy, information is the currency.  Knowledge is the rate of change of information, and innovation is the rate of change of knowledge.

This will become a very familiar and useful relationship in the innovation economy.

For example, innovation is difficult to measure directly.  However, we can measure the rate of change of knowledge as a proxy for innovation.  It is difficult to measure knowledge.  However, we can measure the rate of change of information as a proxy for knowledge.

In finance and calculus, these are called derivatives.

In the next module we will discuss the inventory and accounting system for an innovation economy.

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Next Economic Paradigm; Part 1

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On April 3, 2009

In General Information

Technological change must always precede economic growth. We are going about the process of Globalization as if economic growth can precede technological change. This is the singular flaw of market capitalism that needs to be reversed.

The Next Economic Paradigm will be an Innovation Economy. Unfortunately, this will not be delivered by corporations, Government or Academia. There no single person, country, ideology, or philosophy that can meet the challenges of the future alone – everyone will be required to participate because everyone has a stake in the outcome.

The Ingenesist Project outlines a very optimistic future. The problems ahead have a relatively simple solution that can be implemented today using existing tools and infrastructure. These tools acting in the right system can have profound impact on future economic growth and the sustainability of our resources.

The Ingenesist Project identifies a core problem:

This is the human productivity chart. Every time humans invent better ways of doing things, they become more productive. Where more people are more productive, the economy gets bigger. This is a fact.

About 50,000 years ago, humans began to make tools using tools and innovation increasing exponentially. Tools made hunting and gathering easier. As farming developed so did the emergence of cities. When people could produce more than they needed, they had time to think about things like philosophy, art, astronomy, written language. This led to a scientific revolution that continued to make new observations about the world. These observations were applied to systems that made people still more productive. The industrial revolution followed. Industry produced a lot of information. The ability to process that information using computers led to the information revolution. Soon people began seeing new trends among the information, facts, and data. This ability largely defines the knowledge economy that we see today.

Obviously, There were economic “eras” in the past and there will be more in the future; of this is not the end of human economic development. Something else will happen after the knowledge economy. This next economic paradigm is not easy to see.  Many people have a sense that civilization is changing – it must change.

Looking at the productivity chart, we notice a few interesting trends.

  • Every level of economic development was derived from the prior level of economic development.
  • That transformation was achieved by integrating the tools that were developed during the prior economy.

The two greatest tools in the knowledge economy are the Internet and Social Media. The Innovation Economy must integrate these tools.

Now, this is the Human Gross Domestic Product Chart. This is obviously very similar to the productivity chart except that the bottom axis is labeled with Global Gross Domestic Product over the same time period. The global GDP of 50,000 years ago was about 200 Million in current dollars.

Today, the Global GDP is about 65 Trillion Dollars.

If this curve was to continue, and it can, the next level of economic development could easily value in the Quadrillions. However, this cannot happen without some adjustments to the current system:

The only way to create more money is to increase human productivity and the only way to increase human productivity is to Innovate. This is the guiding principle of an Innovation Economist.

The problem is that the financial system is highly organized while the “Innovation system” is nearly random.

Economic growth with “money” as the scorecard lives in a complex, global and highly integrated system where billions of dollars circle the globe daily at the click of a mouse.

By contrast, human innovation lives in the patent system which is extremely slow, static, and prohibitively expensive. Of course, innovation certainly happens in places like Silicon Valley, Government Laboratories, Universities, and let’s not forget the proverbial “Steve’s Garage”; but these sources are not integrated and they do not behave like a system – except at the mercy of the financial system.

Innovation is market driven, markets should be innovation driven.

It is clear; there is no Innovation system to match the financial system in speed, efficiency, and integration. The objective of the Ingenesist Project is to specify an innovation system that integrates the tools of the knowledge economy into a structure that mimics the financial system. If it looks like money, it will behave like money and people will trade it.

The Next Economic Paradigm must duplicate the same 5 essential components as today’s economy.  These 5 components interact with each other as a system.

The 5 Essential Components of an Economy

1. A Currency to store value

2. An Inventory to account for the storage and exchange of value

3. Institutions that are supposed to keep the game fair

4. Entrepreneurs to do the “fuzzy math”

5. Business Plan or philosophy such as “Capitalism”

If any of these pieces are missing or corrupted, the market will fail. All 5 of these elements must be operational and integrated in order for a market to be efficient.

In the next several articles, we will go through each of the 5 elements and develop the corresponding knowledge system that will be integrated as we create the structure of the Innovation Economy.

If you give people a game they can win, they will play it all day long. In this regard, human behavior is highly predictable.

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What Comes After the Knowledge Economy?

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On March 25, 2009

In General Information

The Ingenesist Project was featured in this video for Social Media Connection Broadcast Network produced by Jay Deragon. This is the first of many videos that we will be producing in order to explain what the Ingenesist Project is and why it is so important.

The Innovation Economy is the next level of economic development following the knowledge economy.  It will not be induced by corporations, Wall Street, or even the Federal Government.  This is something that we must create for ourselves as a social movement.  Social Media will play a pivotal role in this next economic paradigm.

Please watch this video and send any comments, questions, or ideas for future broadcasts about the Ingenesist Project.

I would like to thank all of our contributors for their endless support.

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Are we competing with the truth?

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On March 21, 2009

In General Information

The blogs are going wild, the headlines are snappy, and late night comedians bristle with glee.  First it’s a $165M payout to AIG executives, now it’s AIG’s $75M lobbying campaign and payout to the politicians who were supposed to vet them in the first place – and the majority of the beneficiaries were Democrats!

Far greater crimes have been committed in the financial meltdown, but this one is catching fire and it’s trying to burn the house down.

As if fanning the flame, Obama loosens the reigns on the Freedom of Information Act, publishes bailout beneficiaries, identifies stimulus projects, opens doors to Iran, health care, education, and forces earmarks front and center. He is taking political bullets from all corners, but so is everyone else – nobody is safe.  Not even Rush Limbaugh; now neutralized and tossed in the surf like a beached whale.  People flood to social media, traditional media fails. When everyone is to blame, the finger points backwards.

So the competitors are actually cooperating; with the right information everyone has the incentive to make the game fair (and the highest probability of surviving).

By far the most important job in any sport is a referee.   The referee wears the black and white stripped shirt in order to contrast with visual information in the field of play.  They blow a whistle in order to contrast with the audio information in the field of play. They stop the game if the rules are violated in order to contrast with the dynamics of play.  If a violation is too close to call, they consult the slow motion replay.  Both sides agree to play fair and to obey the referee or else they get thrown out of the game. Contrast is good.

Obama is relentlessly pushing as much information onto the playing field as he is pushing money.  Could it be that information and money are related in some inherent way?

Innovation is the science of change and economics is the science of incentive.  Information, knowledge, and innovation are profoundly related.  High rates of change of information yield higher rates of change in knowledge inducing still higher rates of change of innovation.

There is nobody to blame except the truth.

What Obama is doing is irrelevant to a manufacturing economy because market forces are a sufficient vetting mechanism for product quality.  It is also irrelevant to the knowledge economy because that is destined to be outsourced.

However, Obama’s actions are definitive for an innovation economy.

Not unlike the financial meltdown; the only ones who don’t see it coming are the ones who don’t want to.  Are we competing with the truth?

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I Am Capitalist and So Are You

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On March 16, 2009

In General Information

In case you have not noticed, it is largely in the best interest of one group of people to keep another group of people poor, weak, and disorganized.  I’ll let the reader connect these dots as they see fit, however, the fact is that is how capitalism works – there must be a merchant class and there must be a working class.  And even after all the inequality that this arrangement implies, capitalism is still the only game in town for creating and distributing wealth.

As the burden of supporting the capitalist system is increasing with interest on debt that can never be funded, the pressures on the working class will enter a phase of rapidly diminishing returns.

The Poor:

The inherent conflict is that the working class will always seek to maximize their wages and the merchant class will seek to minimize those wages.  Inadvertently, there is a suppression of information, and therefore education, to the working class.  The result is a net loss of intellectual capital.

The Weak:

The inherent conflict is that the working class is assigned the tasks of carrying out the wishes of the merchant class even if it is not in their own best interest.  Inadvertently, conformity becomes a survival strategy for the working class.  The result is a net loss of creative capital.

The Disorganized:

The inherent conflict is that the working class will organize themselves into collectives as a means to match the relative power of the merchant class.  Again, inadvertently, if people are held below a certain economic threshold, they will fail to organize because their concern is greater for simply feeding their family.  The net result is a loss of social capital.

Diminishing returns

The result of the net loss of social capital, creative capital, and intellectual capital is the inability to create new wealth. While these conditions were once the exclusive domain of less developed countries especially under communism, similar conditions are now arising in the United States under capitalism.  That is, before Social Media was used to enrich, empower, and organize.

I am a capitalist:

The tools of the old merchant class trade are eroding. As the financial crisis envelopes the United States, more and more people are turning to Social media.  Traditional media is over commercialized, polarized, and gentrified while the audience can now control their bandwidth, seek multiple opinions, and become highly diversified. The draw to social media is nothing less than extraordinary even among those who still have jobs.  When people are released from the clutches of the merchant class, they wake up, look around and inspire each other. The innovation economy is upon us.

Innovation Economics

The paradigm shift is really quite subtle.  It behaves as a function of the human embodiment of innovation.  For example; most of us do not wake up every day aspiring to improve the Ipod, the Wii platform, the better mousetrap, or any other inanimate object for that matter– instead, we seek to improve ourselves, and by extension, those around us. This is the self embodiment of innovation – something improved with an economic outcome. To improve one self is to innovate; social capital, creative capital, and intellectual capital are the factors of production and social media is the corporate structure.  I am Capitalist and if you have read this far, so are you.

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Social Capitalism Predictions 2020

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On March 16, 2009

In General Information

The purpose of this video is demonstrate the scope of influence that Value Games may have in communities.

Each of the following predictions suggest disruption to a current way of storing and exchanging value.

With disruption comes opportunity.

If you are a developer, entrepreneur, or angel who wants to become a co-founder for anyone of these predictions, let’s build the associated Value Game together.  Some are currently under development.

Ultimately, social, creative, and intellectual capital will emulate land, labor, and financial capital of legacy economics.

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The Fertilizer Economy

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On March 15, 2009

In General Information

The bad, the good, and the ugly

The bad news is that United States has a global comparative advantage in producing bullshit. The good news is that we may actually be able to till it into fertilizer for the Innovation economy.

America’s financial crisis was caused by money created from money which was in turn a derivative of wild-eyed speculation in assorted proxies for real productivity, including real estate.  Stock prices were supported by imperfect information in a Tickle-Me-Elmo culture while broker fees are embedded in every conceivable transaction.

America has become a world leader in hype, marketing, lawsuits, and fantasy. None of these industries actually produce anything yet nobody can say they are not immensely creative, induce sweeping social movements, and their propagation demands extraordinary intellectual resources, flexibility, and adaptability.

The Theory of Comparative Advantage

It is not efficient for, say, Ghana to produce rice and Vietnam to produce cocoa. If they each produce their natural endowments and then trade the differences, fewer resources are expended to produce more goods.  This theory is the basis of global free trade and the efficiencies are irrefutable so globalization is here to stay.

Meanwhile, the literature on the subject of innovation agrees that innovation is maximized as a function of endowments in social capital, creative capital and intellectual capital.  Silicon Valley is widely held as the poster child for emerging from the deep social movements of the 1960’s attracting an inflow of diverse people where high tolerance, creative art and music were abundant in close proximity to intellectual centers of Stanford and Berkeley.

Comparative Advantage for Innovation:

By the theory of comparative advantage, if a country does not possess a comparative advantage in intellectual capital, creative capital, and social capital, they would not hold a comparative advantage in an innovation economy.

For example; China has a huge endowment of intellectual capital and throughout history they have been an inspired creative force.  However, the current government thwarts social capital.  Therefore, whereas China has a comparative advantage in a manufacturing economy, they would not necessarily have a comparative advantage in an innovation economy.

Many other countries have endowments of intellectual capital as well as democratic governments, but cultural norms may still constrain diversity related to gender roles, social classes, lifestyle tolerance, or the acceptance of “outsiders”.  As such, they may have comparative advantage in a knowledge economy, but the relative deficiency in creative capital would inhibit a comparative advantage in an innovation economy just as quickly.

The Fertilizer Economy:

That said, the United States has a vast abundance and tremendous economies of scale in social capital, intellectual capital, and creative capital in comparison to any other country in the world.  The problem is that these assets are sequestered behind the corporate veil, suppressed from true wealth creation by the priorities of a financial system built to produce nothing except analyst expectations.  Like sugar calories, lots of energy is delivered, but sustainable health is not.

The harvest in the wind

The brokers, speculators, and marketers are not bad people – in fact, they are brilliant.  They are simply stuck with the wrong set of incentives.  The Ingenesist Project dramatically changes the incentives and promises a far better allocation of intellectual capital, social capital, and creative capital.  By making such assets tangible outside the construct of the Wall Street, the comparative advantage of the United States in an innovation economy will be astonishing.

Where there is fertilizer in the wind, Wall Street will lead. Where there is a harvest in the wind, Wall Street will follow.

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Putting the System Back into Social

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On March 12, 2009

In General Information

Social Media is a demanding master with the uncanny ability to determine the absence or presence of checks and balances.  As a self correcting market, what you do not say can have a greater impact than what you do say.

Of Profit and Peril:

There are great perils in getting social media wrong and great profit from getting it right.  Kids posting negative images can be haunted forever.  Corporations hawking wares can erode their brand. Egocentrics touting their own magnificence can find themselves isolated.  Yet every day, people are controversial, people are selling stuff, and there are is no shortage of egomaniacs in social media space – what are they doing right?

Family Values:

Corporations and individuals are finding out that the social media space requires a much larger degree of disclosure than traditional media simply because markets are most efficient in an environment of perfect information – that is, when the buyer and the seller have the exact same information as the other when negotiating a transaction.  Only then can the magic of supply and demand arrive at one correct “valuation”.

By contrast, an inefficient market of imperfect information cannot arrive at a true price, rather, somewhere in a range of prices.  This is defined as volatility.  When the price is unknown, transactions fail to occur, and markets devalue.  Volatility is the enemy.

Perfect Strangers:

As entrepreneurs have increasingly perfect access to information, it is no longer a successful dominant strategy for corporations to withhold information.  The corporation no longer competes with their nearest competitor; they compete with perfect information in the reputation market.  So what may seem like the wisdom dance of an enlightened industrial complex is really a shrewd and long overdue acknowledgment that perfect information is in the best interest of everyone.

Neighborhood watch organization:

The next step for Social Media will be the most powerful manifestation of perfect information ever to be crowd sourced; systems of checks and balances.  Where checks and balances are in place, information improves.  If not, information decays.

An easy way to determine the presence or absence of checks and balances is to remove one element form the relationship and see if the other two become disassociated.  Inversely, one way to creating checks and balances is to associate two elements by means of a third:

Triangulation:

1. Information, knowledge, and innovation;  Without one, the other two have little value.
2. Social Capital, Creative Capital, and Intellectual Capital; Without one, the other two have little value.
3. Openness, communication, and accountability; Without one, the other two have little value.
4. Trust, self expression, and connections; Without one, the other two have little value.

Etc.

Putting the System back into Social

The difference between success and failure depend your ability to systemize the social media presence.  Sound confusing?  It shouldn’t be. When you think about it, there rules are not much different between managing social media relationships and off-line personal and business relationships.

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Is The Banking System Corrupted?

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On March 9, 2009

In General Information

The following video series is one of the most important videos that you can watch right now. These were published in 2006 but it’s the best place to start understanding the current crisis. It will also give you an understanding of what Barak Obama is doing and why.

Finally, after viewing these videos, you will have a greater understanding of what money is, what the future holds, and why the Ingenesist Project is therefore so Important.

Part 1/5; Cartels Robbing the Public

Part 2/5; How Money is Created

Part 3/5; Money Is Debt

Part 4/5; Monetary Reform

Part 5/5; Warning About the New World Order.

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Creative Credit Crisis

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On March 1, 2009

In General Information

“Luke, use the Force”

Creativity is a mystery to many – like an invisible force that drives the universe but can only be seen in retrospect.  If so, then Hollywood is the master of retrospect.

Most movie viewers think that the credits at the end of a movie are for their benefit.  Then they get frustrated when the print is so small and scrolling impossibly fast.  Actually, the credits are for the benefit of Hollywood. This is their knowledge management system.  They know how to communicate the Force.

“Toto, I’ve got a feeling we’re not in Kansas any more”

Being listed in movie credits is by no means an easy task. Every creative job from lead actor to hairdresser has a category. It often takes many years, serious peer review, and marketable success.  However, once listed in the credits you become a managing partner, shareholder, and a currency in the Hollywood creative capital inventory.  This inventory is captured and categorized in the Internet Movie Database (IMDb).  This is their resume system.

As a credited creative worker, you are forever on public display; a good movie credit reflects well on your credits and a bad movie may reflect poorly.  You need to be somewhat selective over what projects to work on.  Likewise, everyone will check the credits of others that are working on the project.  Everyone cooperates fully and in the best interest of the production.  It is in everyone’s best interest to be correctly allocated in the creative capital pool.

“Here’s lookin’ at you, kid”

It’s all about who knows you. The Producers proactively seek and test the “secret sauce” for communicating drama, comedy, action, etc.  They reflect on past projects then attempt to capture strategic combinations of creative capital assets for future projects.  The project becomes the people. The people celebrate each other on award nights and through tangential media. They adopt technology, share ideas, and diversify readily.  As a result, creativity and innovation are quite predictable.

“You’re going to need a bigger boat”

Contrast this to the traditional American Corporation – the ones that we expect to float us out of this financial meltdown through vast new wisdom, creativity, and innovation.  Most are top-down command and control operations with many layers of management that all have the power to say “no”, but not the power to say “yes”.  Instead of arriving at the best decisions, they often arrive at the least-worst decisions.

“Theater is like a box of chocolates”

Now, reflect on this nascent social media industry unfolding all around us.  Readers harvest new ideas on public display from all over the world and apply them to local products.   Such products, by definition, reflect the goals, aspiration, talents, and interests of the people who create them.  The content improves information shared by many sources.  Content of merit with enough credits can elevate the author to the status of “thought leader”.  But something is still missing.

“What we’ve got here is a failure to communicate”

Social media needs a definite product that the whole industry can rally around – that product is ‘communication’.  Social media must produce, improve, and deliver communication. Very few problems are created by communication but many problems are solved with communication.  Communication improves information, knowledge and innovation.  Solved problems are defined as innovations. It is a simple matter of how we organize ourselves;  as a creative industry or as a control industry.

Credits:

Star Wars

Wizard of Oz

Casablanca

Jaws

Twitter

Cool Hand Luke

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Innovation Bonds: 3 Million Jobs

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On February 26, 2009

In General Information

Another approach for spending a Trillion dollars (backed by debt) would be for the government to issue innovation bonds (backed by innovation) to fund new enterprise.  Surely the World still greatly admires and respects American Ingenuity (social capital, intellectual capital, and creative capital) and would likely buy such a financial instrument instead of more of our debt.

The final frontier; your backyard

The Last Mile of social media is a vastly unexploited resource with an astonishing wealth creation potential.  The Ingenesist Project (TIP) specifies a structure for an innovation economy through the application of 3 simple web applications deployed to social media that will ignite “The Last Mile”.

Already, people use social media to harvest great ideas from around the world.  The Ingenesist Project will enable global ideas to be applied in local economies throughout our communities.

Running Numbers:

The sweet spot for Last Mile social media is (2-6) people living within a (1-6) square mile area. Assume an average innovator density is about (1) person per square mile.  The United States is a little more than (3) million square miles.  If only (1) of the thousands upon thousands of potential applications of Last Mile social media were implemented across the country, then (3) million jobs would be created.

Dan’s List; Leave a Tip

Here is a list of (10) hypothetical business ideas that a buddy and I dreamed up over lunch using TIP methodology for inducing an Innovation Economy.  Each of these ideas has a working revenue model.

1.    Zertify: This company is a last mile/vetting social media application where neighbors “Zertify their Zillow Zestimates”.
2.    Start Up Neighborhood (SUN): is a last mile social media application where neighbors get together to innovate and create new businesses.
3.    ScatterWatt: is a last mile social media application for decentralizing power generation aggregating local clean power generation systems (rooftop wind, solar, greenery).
4.    ComPrac: is a last mile/vetting application of social media that forms and organizes communities of practice for the purpose of mentorship and cooperation in innovation.
5.    CombinePac: is a last mile/vetting application of social media that combines communities of practice strategically for the purpose of tangential innovation
6.    TopUse: is a last mile social media/vetting application that makes best use of already disturbed lands saving undisturbed lands from exploitation.
7.    CodeVitae: is last mile/vetting service that translates CVs and job descriptions into universal decimal classification system for computerized analysis, normalization, and improved allocation.
8.    Proximizer: A last mile social media application that reallocates knowledge assets for best proximity to home space for carbon credits.
9.    CarbonCops: is last mile social media application to register, certify, and implement carbon savings ideas.
10.    VetBucks: is a last mile/vetting site for the verifying expenditure of public funds.

Improving Information for Fun and Profit:

The degree to which information is improved in a market is the degree to which the innovation adds value.  As such, monetization becomes a relatively simple matter.  Furthermore, the options that are created will have a multiplier effect in the communities as neighbors learn what knowledge assets are available with which to cooperate in their communities and where their knowledge assets can be deployed productively. New ideas generate more new ideas as the markets will seek to fill in the blank spots and support more structure for innovation economy.

An Endowment for their Grandchildren:

While the leadership elders are to be respected for their wisdom and accomplishments, they have very little comprehension of the economic growth potential of social media. It is understandable that they may overlook this opportunity.  The capitalization of social media lays in the hands of the young people who know exactly what to do if given the opportunity.  Why not give them a shot at getting the books in order?  Call it their inheritance.

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If It Ain’t Broker, Don’t Fix It.

By

On February 25, 2009

In General Information

The function of the innovation economy is to improve information.  This has the derivative effect of improving knowledge which, by definition, fuels more innovation.   Monetization is easy if we simply improve information between any buyer and any seller in any market, anywhere.

…If it is, please do

For example, the job of a broker is to mediate the transaction between a buyer and a seller.  There are real estate brokers, mortgage brokers, stock brokers, etc.  Unfortunately, it is not always in the best interest of the broker to provide perfect information to both sides of the transaction.  Rather, the broker provides the minimum amount of information needed to complete the transaction, within which they build their commission for rendering such filtration services.

Any B-school undergrad can tell you that a market is most efficient when the buyer and the seller have exactly the same information as the other when making a transaction; this is called “perfect information”.  As such, “supply and demand” can do its magic.  Resources of production can be perfectly allocated in the glorious capitalist system.  The financial meltdown has shown us that the more complex the product is, the greater the deficiency in perfect information becomes.

The Holy Grail:

The great opportunity for social media is the ability to improve information in almost every transaction conceivable and create wealth.  The next generation of social media strategists will rise to tremendous heights in this domain of the Innovation Economy. However, the Holy Grail of information improvement is the knowledge asset market itself:

For example: Corporations have a great deal more information about employees than employees have about corporations.  People are encouraged to compete with each other, not to cooperate, for that carrot on a stick. They are trained to keep their salary a secret.  The “job statement” is in a secret code language that is only understood inside the company, not in the general work force.  Managers “broker” information by filtering it on the way up and on the way down the corporate structure.  It is little wonder that corporations are having a tough time with the social media stuff.

When the layoff comes, the outsourcing begins, or the life change happens, the resume is often no better than a bingo card in a key word lottery.  By the way, customers have even less information than the employees. Peanuts anyone?

The mothers of Invention

The knowledge market is the mother of all imperfect information markets.  Social media is a single iteration away from greatly improving information in all knowledge markets. Nothing happens without applied human knowledge, as such, the potential capitalization of the next generation of social media applications is as big as the market itself – and it will challenge the very structure of the traditional corporation and associated filtration services.

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Got a Life?

By

On February 23, 2009

In General Information

Geographic Compatibility:

In the early 1990’s, traffic in Los Angeles was so horrendous, it could take hours to travel a dozen miles.  Commuting was a nightmare and the last thing anyone wanted to do was sit in more traffic.  As a single professional, every time I met a prospective lady friend, I had that elemental question in the back of my mind – and so did she: are we Geographically Compatible (GC)?

The sweet spot:

I recall many a magical conversation ending with that mutual inevitable shrug of the shoulders; a secret code for “have a nice life”.  In Los Angeles, GC peaked in the sweet spot of 1-6 miles.  After that, GC diminished roughly proportional to the square of distance with 20 miles as an absolute maximum.  Any more was no closer or farther than, say, Nashville.

The cost of ownership:

Today, not only must we contend with traffic and the cost of owning a car, we must attend to a warming planet were every gallon of gas burned spews 19 lbs of CO2 to the atmosphere.  In addition, we have a deepening deficit of the most valuable asset in our lives and the lives of those around us; time, bandwidth, productivity, sleep, money, innovation; it’s all the same convertible currency.  All are wasted equally behind the wheel of an automobile.

Social Experiment:

With this in mind, I did a little experiment.  I went to Linkedin and conducted a search for everyone within 6 miles of me.  All that they offered was a 10 mile range and with keyword search too.  The results were very interesting; not ideal but not too shabby.  I tried the same with Facebook, and the best I could do was search by zip code.  It was very awkward and the profile search feature only allowed me to query my existing contacts.  I am guessing that there is some sort of security issue that restricts this type of searching.  Too many nuts, flakes and stalks in that granola, I suppose.

Not unlike the LA dating scene, the future of innovation economics, global sustainability, quality of life, social support structure, family values, and money management will rely increasingly on GC; and the constraints will not end soon.  Social Media must understand the monetization potential of GC and develop robust applications to support it.

If that is not enough convincing, try this:

‘The Jane Jacobs externality’ named after a transformational sociologist of the same name, suggests that concentrations of educated and skilled people attract companies and investment to a geographical area.  The presence of such investment attracts more educated and skilled people to that area; also referred to as “intellectual capital”.

Harvard Professor and Author, Dr. Robert Putnam concluded that people acting in groups can produce far more economic growth faster and better than corporations and government combined. This is called “Social Capital”.

Carnegie Melon Professor and Author, Dr. Richard Florida, suggests that artists and engineers think more similarly 24/7/365, than managers and production workers.  This is called “Creative Capital”.

Factors of production:

All three; intellectual capital, social capital, and creative capital are wholly and utterly dependent on GC.  These are the factors of production of an Innovation Economy.

Evidence of these effects can be demonstrated by the civil rights movement, woman suffrage, neighborhood watch, Silicon Valley, Seattle, Greenwich Village, Austin Texas, Boston, Hollywood, Chicago, NYC, and many more locations where ‘wealth’ is located.  What came first, the money or the people?

So, what part of monetization is Social Media having difficult with?  The sweet spot is 1-6 miles, so get the hint and get it fast. Meanwhile, billions upon billions of magical conversations end with that inevitable shrug of the mouse; a secret code for “have a nice life”.  I say, get a life.

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Who Owns Your Content?

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On February 21, 2009

In General Information

The epiphany:

Something very interesting happened when Facebook changed their terms of service.   People who use the Facebook platform (for free) organized themselves using the (free) platform to threaten the core validity of the same (free) platform.  This could not happen in any other industry.

Saving face?

Ownership is largely characterized by the ability of one party to restrict the access of another party.  Judging by the results of this uprising, it seems that for all practical purposes, the users own their content and their impressions no matter what the TOS says.  This is a very strong argument for the tangibility of social, creative, and intellectual capital.

Ownership Economics:

The fact that people own and care for their content is what makes Facebook work.  Ownership is an extremely powerful force that drives intense participation and  innovation.  People will attend to their property, improve it, make it valuable, and create value for themselves and those around them.  Really, when was the last time you washed a rented car?

Historical perspective:

Most history books present the Homestead Act of 1862 as the product of a wise and benevolent government seeking to reward worthy citizens of a great young nation for populating the vast Western territories.  But that is not really true. Most of the land was already occupied by squatters who arrived disheveled, found a nice spot, built their small cabin, and farmed or hunted to sustain themselves.   They could not be evicted or charged with trespassing because a “jury of their peers” was also composed of squatters.

Problems arose when squatters could not borrow money to improve the land because they did not hold a title to it.  Legitimate landowners could not value their property if the land next door was untitled.  Border disputes resulted in gun battles.  Stealing was rampant. The children of squatters could not inherit the land without proper title. There was little incentive to produce anything beyond sustenance. When services and capital projects were required to support the increasing population, there was no tax base.  Not unlike Facebook, this new frontier could not be monetized.

Wisdom in Government; not always an oxymoron:

Perhaps the greatest moment in government came with the realization that it is impossible to change the behavior of people, rather, the best strategy would be to accommodate what they are going to do anyway.  So they legalized the squatters and gave them deed to their land. The occupants could sell or capitalize as they wished.  Investment capital flooded the region and entrepreneurs improved the land and created enterprises.  The government could then collect taxes proportional to the productivity of the citizens. The result was the development of the Western States as economic powerhouse that we know today.

Use it or lose it:

A very similar opportunity is presenting itself to Facebook and now the road to monetization should be crystal clear.  They should go out of their way to create terms of service that protects the rights of each and every member to own and control their content in its entirety, forever.

Next, Facebook should develop applications that allow advertisers to bid for impressions directly with the users compensating them for their time.  Users will build profiles that attract those seeking opinion, knowledge, feedback, wisdom AND SALES related to their products.  Users should be able to control every aspect of their content including any means that they can dream up to legally create revenue from their social capital, creative capital, and intellectual capital.  Facebook should develop a knowledge inventory of what users know and make it available to others like a “Public Library or knowledge assets”.  Then they should develop applications to match knowledge surplus to knowledge deficit, etc. Let the trading begin.

The answer in their face:

If smart people can make money using Facebook just by doing what they are going to do anyway, they will flood the system with the most tangible forces in nature; social capital, creative capital, and intellectual capital. If Facebook can’t figure out how to monetize the asset staring them in their face, they will soon encounter a more powerful competitor – their own users.

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Social Media; The Engine of New Economic Growth

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On February 19, 2009

In General Information

Click image to activate

Business Models of the Future:

The great new social media business models of the future will be in the areas of “The Last Mile of social media” and “Social Vetting mechanisms”.   I have written about these two elements in the past.  However, this article will attempt to focus on how the future engine of economic growth can use social media platforms to power social capitalism.

The Last Mile:

The Last Mile of social media is where the rubber meets the road.  I can chat with people all over the world on Twitter and Facebook, but nothing happens until I walk out of the house and meet real people in real time to create a real business that really increases real human productivity.  If I can accomplish that, monetization is simple matter.

If everyone is harvesting ideas from all over the world, Last Mile technology is the key to bringing these ideas to the ground.  The new social enterprises will develop, support, enable, and service the structure for innovation in neighborhoods and communities.

Feel the Burn:

To understand the power of this paradigm; there is little doubt that the leader of the free world was elected by the Last Mile.  That is huge.  Now, when the Last Mile is in trouble with mounting layoffs, foreclosures, and wealth destruction, eyebrows are raised, headlines make the first page, and everyone is wondering what will happen in to the Last Mile.  In 1992, this author saw Los Angeles burn over a whole lot less than what’s coming down the pipes today.  This is not a game, this is very serious stuff.

Social Vetting:

Social Vetting, on the other hand, is less understood, but like a tornado there is nothing subtle about the forces that it can impart against the darkness of secrecy.  All markets become more efficient in the presence of an effective vetting mechanism, as such, monetization is a simple matter.  Conversely, the absence of vetting is the root of all corruption – as we are now painfully aware.

Begging for Mercy:

To understand the power of this paradigm; Facebook was recently brought to its knees by Social Vetting.  First, a social watchdog group noticed the change in the terms of service and set the dials on “viral”.  Facebook users organized immediately and lay siege to the core validity of a 3.5 billion dollar new media titan.  Within hours, Facebook was backpedaling. The 300 billion dollar marketing industry, ravenous for viewer impressions, was sent back to the drawing boardroom.  Meanwhile, legacy media spin took pot shots at Facebook’s inability to monetize the value it claims to create.  Again, this is not a game, this is serious business.

Role play

In each of these examples social media responded effectively to an existing injustice.  This presents the dire question:  If the Last Mile and Social Vetting can have such a profound effect in the REACTIVE role, what would be the underlying dynamic if applied in the PROACTIVE role ?

The Engine of Economic Growth:

Consider this: Social media has no problem scaling up, rather, it has a problem scaling down.  The Last Mile and Social Vetting represents the compression cycle of the new economic engine.  The spark of innovation ignites the secret sauce to scale upward.  With a repeatable cycle, we can literally create an engine of economic growth cycling from down-scaling to up-scaling, and back to down-scaling, and so forth, forever.  Each combustion cycle literally pumps value into an economic system.

Master of Puppets:

I’ll let the reader now ponder the cause and effect sequences of this proposition.  But I will leave one hint: Wall Street becomes the servant, not the master.  As such, monetization becomes a simple matter.

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The Global Financial Crisis; The End Game

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On February 18, 2009

In General Information

The year is 2024, no burning cities, no mass hysteria, no bread lines; the economy is on an exponential growth curve.  It took a while, but the financial crisis of ended in an anticlimactic sort of way.  Sure, lots of hedge fund bankers became unemployed, some went to jail, and many companies once deemed titans of industry have disappeared, but nobody seemed to notice much anymore.

Government debt has been eliminated and Wall Street has become the steward of what has become an Innovation Economy rising from the ashes of debt economics.  The transition, in fact, was surprisingly smooth.  Social Network applications such as Facebook, Linkedin, G+, and many more, developed a clever way to make knowledge tangible outside the construct of Wall Street and the traditional corporations and people began trading knowledge like currency.

When inflation hit, the dollar started to fall in value, people began trading a different currency called the rallod (dollar spelled backwards).  The rallod was backed by future productivity resulting from innovation rather than future productivity supporting debt.  When the dollar finally crashed, it pegged to the rallod and the economy began to grow again with an astonishing, yet peaceful, transfer of wealth and power to open sourced self-regulating communities; i.e., society in general.  The vicious cycle of debt economics was reversed just in time.  It’s still hard to believe what happened.

Today the engines of economic growth are tens of thousands of hot new start-ups that exist in the form of “Value Games” related to specific technology areas rather than the old corporation model.  They automatically cluster around a technology and spin off other start-ups at an incredible rate in a strange nesting arrangement called the “tangential innovation” market.  Most innovation is open sourced because the “Patent” (and protectionism in general) is no longer the center of the innovation finance universe, rather, the “secret sauce” of social, creative, and intellectual capital is the most valuable asset today.

About 15 years ago, something resembling the human genome project mapped all knowledge in the form of social, creative, and intellectual capital that exists in society to a very high granularity.  An API standard was created to represent knowledge assets like packets of code that are processed by a community algorithm. The CV/resume is an old bar joke now. Thanks to a visionary government, 1st amendment protections were built into this inventory with anonymity laws and privatized TOU; creators own what they create.

An open source percentile search engine was created to enable entrepreneurs to build unique collections of knowledge assets and predict the probability that various combinations of these assets could successfully execute a business plan.  High diversification induced hyper-innovation around technologies and the resulting innovations are spun out to be reabsorbed by different and diverse communities of practice in continuous iterations forming a virtuous vortex of new systems, methods, and solutions.  Sketched out, these arrangements looked like electrical “integrated” circuits.  Wealth creation is intense.

Since the knowledge inventory has mapped all knowledge and the Percentile Search Engine calculated probabilities and scenarios, the Innovation bank formed to make most worthy and optimal matches between knowledge surplus and knowledge deficit in a community.  Since the probability of innovation success has become predictable, innovation risk is now diversified away.  Innovation insurance products abound. With near-zero innovation risk the cost of venture capital has approached 5-7 % instead of 500-2000% of less than a decade ago.  Banks now issue innovation bonds on the public market to finance innovation in society.  For an investment of such high return and such little risk, participation is near universal.  This created another virtuous circle; the more innovation that occurs, the more money is created.  The more money that is created, the more innovation occurs.

Instead of having jobs, many people in a geographic area are pinged by the Percentile Search Engine which calculates the likelihood that their interaction together will increase the probability of successful execution of a business plan when combined with other knowledge assets.  Instead of earning wages, people collect micro-royalties specified by contracts on capital asset sub-sections. These micro-royalties add up to substantial residual income enjoying a multiplier effect as their work continues downstream over their lifetime. The government funds social security through it’s own innovation ventures. Service workers such as police, teachers, fire fighters, nurses, local merchants, etc., are key beneficiaries because of their impact on the community is directly associated with productivity.

Many of the senior knowledge workers have determined that they can earn more money by taking an equity position in their students, and the students of their student.  Unlike a decade ago, pyramid schemes in innovation economics are sustainable and generate astonishing profits.  Mentors have entered the landscape in vast numbers and apprenticeships have become abundant.  The income potential for the “creating creators” boggles the imagination.   Again, a virtuous circle has formed between the mentor and the student. In aggregate, wisdom is being retained, refined, and transferred efficiently throughout social networks.

University “degrees” have disappeared in favor of unique combinations of knowledge assets that are continually SEO’d for best Percentile Search Engine Placement.  People do not compete directly, rather, they compete with the Percentile Search Engine in the local market place by cooperating among each other.  As owners of their knowledge assets, the entrepreneurial spirit is ubiquitous.  No individual has either a monopoly or an identical knowledge set as anyone else.  Everyone has perfect information about the knowledge assets in a market.  People are pinged for different reasons at different times for different rates depending on supply and demand.  Continuous education is a social event in itself, often mistaken for recreation!

Even the poorest areas of the planet are getting into the action because, by definition, the parts of an economy with the highest potential for technological change correspond to opportunities that return the highest dividends in an innovation economy.  Arbitrage opportunities between master and oppressor have disappeared worldwide.

Like a neural network, the economic system of tangible knowledge is self-correcting, fault tolerant, and self-regulating.  Governments across the globe tried to stop the social network driven innovation economy – but they eventually gave up.  It was like trying to stop water; it flowed between the cracks and simply eroded the barriers.  The most incredible outcome is that innovation now reflects long term social priorities instead of short term Wall Street priorities.

Oil production has been replaced by superconducting wind turbines, global temperatures have stabilized, all cars are electric or “water leakers” (as the hydro’s are affectionately known), many diseases have been cured, and the list goes on.  It is hard to believe this happened in only 12 years.  Then again, the Internet had only been widely used 15 years prior to 2009.  Did I mention, we’re finally sending a multinational expedition to Mars…

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The US Financial System – Tail Wagging Dog

By

On February 10, 2009

In General Information

The financial system is not the problem.  The Innovation System is the problem – or did you notice that we do not have an “innovation system”?  Finance and Innovation in the US has engaged in the dangerous dance of tail wagging dog.  Innovation is as Wall Street does; not the other way around.  This is wrong, this is very wrong.

Doers, not shakers

[Our economic strength is derived from the doers, the makers of things, the innovators who create and expand enterprises, the workers who provide life to companies and, with their earnings, support families and invest in their future… This is what drives economic growth.] – Barack Obama

These are sobering words.  It make one wonder how everyone else makes a living; the brokers, the agents, the middlemen, the gatekeepers, the spinners, the flippers, the money managers, and everyone else in the game with their hands “in the flow of money” dragging the system into a tailspin.  Many of these people publicly criticize the working class, who have finally run out of steam, for gumming up their game.

It is also amazing that the engineers, educators, technologists, medical professionals, and public servants could produce so much for so long; enough to feed everyone else – except, as of recently, themselves.

[The financial system is central to this process, transforming the earnings and savings of American workers into the loans that finance a first home, a new car or a college education, the credit necessary to build a company around a new idea.] – Tim Geithner

Meet the Master:

The financial system is supposed to be the servant, not the master.  Innovation takes time, effort and resources before the payback can be realized.  For this reason only, the financial system bridges that time gap to allow for increased future productivity to generate new wealth for use by all.  That is the only reason why the financial system should exists.  But somehow we have gotten it backwards.

We got it backwards:

Technological change must precede economic growth.  We are going about the process of globalization as if economic growth can precede technological change.  The invention of the wheel, wedge and the pulley came before the invention of the Collateralized Debt Obligation (CDO) – there is no excuse for this oversight. This is clearly unsustainable and the process must be reversed.

An easy fix, almost:

The Ingenesist project specifies 3 web applications that will allow social capital, creative capital, and intellectual capital to become tangible outside of the bloated and failing financial system.  These applications will make innovation success predictable.  If success is predictable, then cash flows are predictable.  Using the same calculus as Wall Street, the cash flows can be combined, diversified, and split up into innovation bonds with superior returns that can be issued to fund new and sustainable innovation enterprise. Problem solved.

3 steps away from a quantum leap:

This can be done today playing by the rules and using existing technology – 3 simple applications.  That is how close we are to achieving the most important evolutionary step in human history.  The Government needs to empower the people to release themselves from the shackles of debt created by those who create little else.  For this reason, Obama is on the only correct path – buying time so that this important social media technology can mature.

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Necessity Is The The Mother of All Stimuli

By

On February 10, 2009

In General Information

So who exactly is paying for this? The next economic stimulus package will not come from the halls of Washington or the boardrooms of Wall Street, but from the streets of America.  The objective of The Ingenesist Project is to induce a crowd sourced innovation economy by integrating Social Media with three web applications. It’s all about to become extremely exciting.

Social Media Grows Legs

There only remains three tiny applications yet to be developed and deployed to social media that will allow human knowledge to become tangible outside the construct of a corporation, and therefore, independent of Wall Street.  Social media technology is very close to duplicating nearly every function of the corporation outside of the traditional corporate structure.  America’s most valuable asset is not money, it is social capital, creative capital, and intellectual capital, and it’s about to stand up, brush itself off, and walk away from the mess left by the excesses of greed and power.

The Evolution of a Species:

1. Social Media will be used to develop a knowledge inventory in a computer code based on, say, the Dewey Decimal System.  Suddenly, human knowledge will become organized like a library and searchable by computer in very high resolution.

2. Boolean logic will be applied to the knowledge inventory and the resume will be replaced by a high resolution computer readable descriptive code.

3. Communities of practice will normalize (bell curve) their knowledge domain. At this point, knowledge will appear in the same form as a financial instrument and can then be treated as a tangible asset.

4. A percentile search engine will calculate the probability that a various collections of knowledge assets can execute collections of innovation business plan scenarios.

5. An Innovation Bank will match most worthy knowledge deficit to most worthy knowledge surplus and keep a record of the “secret sauce” of success feeding back to the search engine.

Wall Street Calculus:

Using the same equations as Wall Street, the Innovation Bank will predict the probability that a venture will be successful given a set of knowledge assets.  The Innovation Bank can then predict the future cash flows associated with the venture. Now, thousands of ventures and their predicted cash flows can be combined, diversified, and diced up into innovation bonds having superior returns over any other investment.  Investors will flood the Innovation System with cash.  This cash will be used to fund more innovation investment and the cycle will continue.  Everyone takes an equity position and innovation reflects social priorities rather than Wall Street priorities.  This changes everything.

This can happen today with existing infrastructure.  The only thing needed is a social movement; that’s what Americans are best at.  Where does this leave Wall Street, failing businesses, and all their debt?  The funny thing about knowledge assets is that they can walk if necessary.

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The First Mile in Social Media

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On February 6, 2009

In General Information

The Last Mile….

Back in the early days of Broadband, the cost of sending a signal across the Pacific Ocean was negligible compared to the cost of delivering that signal to everyone in town – the problem was called the called “The Last Mile”.

Predictably, companies battled it out in the Dot-Com Wars with a flurry of IPOs and hostile takeovers clambering to fill “The Last Mile” void.  Then the issue largely disappeared.  I guess the cable TV folks figured it out because that is who I send my money to for the speedy bits.  Last week I was chatting with the FiOS folks burying fiber optic cable near my mailbox.  They said it’s going to get faster.

…of Social Media….

Social media currently suffers from “The Last Mile” syndrome.  Social Media applications have enabled me to make friends in India, Israel, Colombia, Mexico, Japan, and everywhere in between. I can shout out to 3 million people with the click of a mouse, but not the wonderful family living a few houses down the street.   I met them while chatting with the FiOS folks who were burying fiber optic cable near our mailboxes.

…is where the rubber meets the road

I really enjoy my online friends and the sharing of information makes me smarter and introduces me to new ideas.  But these ideas are not very productive until I apply them to something that actually touches the ground, like the FiOS cables.  The secret to finding a business case for social media can be found in “The Last Mile”.  It would seem that innovators and entrepreneurs would be strafing each other to fill this vastly under served market and lucrative market segment. This is where the money is. Hello, is this thing on?

But the scalability is lost.

I have found a few applications like Meet-up, Biznik, Ning, Neighborex, Start-up Weekend, etc., but they are just not catching fire like the calculus suggests that they should.  The problem is that the scaling is lost.  The advertising revenue model carried over from radio and TV requires millions of impressions to be viable.  The demographic of “The Last Mile” are groups of 2-8 people living within a few miles of each other – a corporate business model just does not exist to serve “The Last Mile”.

The First Mile…

Meanwhile, the old one-way advertising model is dying off quickly and the two-way advertising paradigm is sending all the major corporations and media outlets to the drawing board looking for the social media strategy.  Corporation are now expected to provide real value to a community, but they can’t figure out how to scale that value. The Irony is that most of those same corporations were started by 2-8 people living within a few miles of each other.  Maybe we should call it “The First Mile” and then re investigate the role of Social Media.

…holds the the secret sauce…

In the future of innovation economics, patents will not be the most valuable object, rather, the secret sauce that comes up with the innovations that will be the most valuable.  Corporation can employ social media to provide a practical and repeatable program that empowers a community.  Corporations can strategically assemble local entrepreneurs into spin-off entities. Corporations could license their IP, open-source their technologies, share internal strategy, and provide executive coaching that helps community teams to form new corporations discovering tangential and future markets.  Corporations should teach people what they do best – making money.

…where the scalability is found.

So where is the scalability?  Hey, let me hop on my new FiOS line with my 8 friends from down the street and we’ll just shout out to our 24 million global neighbors – and we’ll get back to you.

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Oh, What a Semantic Web We Weave

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On February 5, 2009

In General Information

Innovation Economics:

is the conscious practice of investing in innovation as a method for driving economic prosperity.  Innovation is the science of change and economics is the science of incentives.

Money is fictitious:

Money does not represent gold or silver, it represents your productivity.  The value is held in the productivity, not coins or bank notes.  Debt represents future productivity and savings represents past productivity. It’s very simple.

So if the word “money” and the word “productivity” mean the same thing, they should be interchangeable. Right?

As a test, try the following:

Every time you hear someone use the word “money”, simply insert the word “productivity”.  Try it with the kids, your boss, the news broadcast, or your favorite politicians.  If their statement still makes sense, then it is likely a logical statement.  If the statement is confused, reversed, or makes no sense whatsoever, then this is where we need Innovation Economics.

The Reversal:

  • “Mom, can I have some [productivity] to buy an ice cream cone?”
  • “We don’t have enough [productivity] to invest in R&D”
  • “There isn’t enough [productivity] in the budget so we must cut education programs”.

The Confusion:

  • “It concerns me that Facebook has yet to find a [productivity] model that seems likely to secure its future.”
  • “Icelandic [productivity] collapse is heard around the world”
  • “Global Warming costs too much [productivity] to solve”

The Ridiculous:

  • “Wall Street Executives earned excessive [productivity] in 2008”
  • “State of Washington opens more liquor stores to raise much needed [productivity]
  • “Lawmakers from both political parties have criticized banks for failing to use the taxpayer [productivity] for lending to help stabilize the hard-hit U.S. economy”.

It’s really fun to play this game when you start getting bored with the endless dribble of spin.  You can even go backwards; hear “productivity” and insert “money”. Pour yourself a glass of wine, sit back to the nightly news and you may start noticing some interesting trends.

Discussions related to engineers, infrastructure, airplanes, teachers, doctors, police and firefighters, etc., tend to get The Reversal. Discussions related to innovation industries such as social media, environment, and social causes tend to get The Confusion.  Discussions related to gambling, marketing and advertising, money shuffling, law suits, Wall Street, and various forms of speculation, are simply The Ridiculous.

It will make you wonder why we would need a Web 3.0 Semantic Web.  We really need a Web 3.0 de-Semantic Web.

(Picture from Charlotte’s Web; a story about a dinner pig who makes friends with a spider who comes up with a plan to save the pig by writing words in her web.  All the town’s people thought that the pig was special and his life was spared. The farm animals knew that it was really the spider who was special – she was an innovation economist)
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The Résumé Must Die

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On February 4, 2009

In General Information

Résumé: A French word for separating the body from the brain

We are entering a renewal in the work force.  The global imperative is for the United States to become an innovation economy now.  This is an entirely different animal than the Industrial revolution; I have long argued that the résumé system is by far the most archaic knowledge management “currency” of trade in use today.

The entire premise of the résumé is destitute, if not destructive, in the modern world.  Words on a computer screen are a very low level ‘media form’ being used to describe a very high ‘media form’; social, creative, and intellectual capital.  It’s like using crayons to design an aircraft.

If the key words are so important, why have any other words?

A manager always hires people that remind them of themselves.  They estimate the future success of a candidate based on their own limited, and often static, past experiences.  The world is moving so fast and has become so complex that no manager can possibly know enough to capitalize the future based on a viable statistical sample of past experiences – we’re all holding on for dear life in a hurricane of change.   The problems and opportunities of the future are so huge, so important, and happening so amazingly fast yet the allocation of human resources is worse than random for a candidate pool.

While the Ingenesist Project discusses a solution at great length, I’ll just stop complaining and share a few comments (self titled) that I’ve picked off some recent Human Resources Blogs:

***

1. And our future goes with it:

“Most recruiting systems I’ve seen screen out innovators. Any résumé that is unique, different or convention-defying gets surreptitiously put in the junk pile.”

2. Start by looking in the junk pile:

“The Innovation Economy requires that the talent that creates the most value for an organization must rise to the top.  Innovators are playing an increasing role in creating shareholder value – one might argue that they create the most shareholder value these days – and figuring out how to find and attract this very different breed of talent is one of the most critical initiatives you can launch within your organization.”

3. What part of “share holder value” are we having difficulty with?

“The most innovative people I have ever met don’t follow conventions in their experience or in their résumé.  Or, they get bored very quickly when they can’t innovate or are forced to focus on operations, and efficiency.  Most might look like (and even be) job hoppers”

4. Here is my favorite comment – I wish I could hug this person:

“I think it takes more than a résumé to screen an Innovator in or out. As blogs, blog posts, social networking, more powerful search tools, personal websites, the emergence of video on the web, talent platforms that offer CRM, etc. etc. etc. continue to become additional tools for an employer to consider in making a hiring decision, is the résumé still a currency for a candidate?”

***

We have an inventory and CAD model of every nut, rivet, and panel that goes on an airplane – why would we try to build anything without one?

So Please, let’s evolve out of the revolutionary times and develop a real community knowledge inventory.  It must be computer enabled and based on a taxonomy that everyone knows and understands.  It must be read, analyzed, sorted and vetted by social networks and communities of practice. It must integrate with  knowledge assets from anywhere in the world.   A self-perfecting algorithm must be developed for a predictive percentile search engine in a pull system that seeks, matches, and deploys the ‘secret sauce’ of success, specific to any application, anywhere, any time – and fast.

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To Awaken a Giant

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On January 23, 2009

In General Information

“Our workers are no less productive than when this crisis began. Our minds are no less inventive, our goods and services no less needed than they were last week or last month or last year. Our capacity remains undiminished”.

– Barak Obama

.

The gloves are off:

Mr. Obama’s statement is profound; in a single stroke, he liberated social capital, creative capital, and intellectual capital from the oppressive arm of the financial markets.  This sends a strong message to entrenched and corrupted financial operatives that they no longer hold a monopoly on American productivity.

The factors of production carried over from the last century; land, labor, and capital, can be now be challenged by social capital, creative capital, and intellectual capital as factors of production for an Innovation Economy.

The third option:

Q. So how exactly does a country meet a 50+ Trillion dollar obligation?
A. It depends on the social agreement.

First, we could default and let the system crash. Second, we could endeavor to pay it back by committing the next several generations to servitude of the debt.  Or, there is the third option that nobody talks about.

Create a new currency.

Almost every country has done it.  Mexico replaced the old “Peso” with a “New Peso” (worth 1000 old Pesos).  Europe created a new common currency.  Chinese Yuan is a “bridge currency” that gets them from point A to point B. Each of these examples is different, but they have one very important element in common; they are utterly dependent on a social agreement.

People must agree to exchange the new currency on the streets.  Social agreement, creative agreement, and intellectual agreement drives entrepreneurship and all must be achieved completely or “black markets” will form undermining the entire system.

The Tipping Point

We know a few things about currency outcomes.  If inflation occurs, people with “cash” will lose it, while people with “debt” will see it deflate.  The US can erase the deficit by inducing inflation and deflating the debt if production capacity remains undiminished. People, organizations, and governments that have exactly as much cash as they have debt will see no net loss or gain.  In fact, the entire world’s financial system is worth exactly as much as it owes to itself – minus the value of social capital, creative capital, intellectual capital and natural resources – now, set free. 

Social Agreement

As inflation progresses, there will be a point where a critical mass of the “social agreement” will hold the same amount of cash as they hold debt – their net loss will be zero.  That’s when the system can reboot.  obviously there will be serious consequences to any of the options, but this time, unlike any other time in history, social media will be the vehicle upon which the social agreement is catalyzed and not necessarily mandated by policy makers.

The Obama Factor

“Starting today, we must pick ourselves up, dust ourselves off, and begin again the work of remaking America”

Mr. Obama is right – the outcome depends on us. We cannot expect government or corperations to attend to all of our needs because we are the ones who individually and collectively own and control the factors of production that will support the next currency. The road to opportunity has been cleared and the invitation has been cast.  We must now reach deep into our imagination and define the new business system where social capital, creative capital, and intellectual capital are directly tangible in a new global economic imperative; the Innovation Economy.

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The Relationship Economist

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On January 21, 2009

In General Information

The Office of the Relationship Economist of the United States:

President Obama said in his inaugural address;

“Our workers are no less productive than when this crisis began. Our minds are no less inventive, our goods and services no less needed than they were last week or last month or last year. Our capacity remains undiminished”. 

This is true; so what changed?

Mr. Obama’s statement is profound; in a single stroke, he divorced human knowledge, talent, creativity, and intellect from dependency on the financial markets.  In one short statement, he reversed the old world order where economic growth drives relationships rather than relationships driving economic growth. Mr. Obama has made people tangible as financial instruments in their own right.  The language needed to change, only then could the relationships change and therefore, the economics.

Calculus: The Science of Change.

Change is everywhere.  The only thing certain is change itself. We vote for change we can believe in, we are aware of climate change, and we see the world constantly changing all around us. Each of these sentiments is an expression of the mathematical discipline of Calculus

Calculus got a bad rap with most of us in High School. Calculus has boring charts, funny symbols, strange sentences, and objects flying around in a frictionless space – nothing could be further from reality, so it seemed.  In reality, however, nothing could be simpler.  Early civilization noticed that seasons change over time. Farmers noticed that plants changed over time. Isaac Newton noticed that the speed of the apple changed over time as it fell.  Copernicus noticed that the location of the planets changed over time, etc.  We all notice and respond to change.

Economics: The science of Incentives:

Bankers noticed that the value of money could also change.  To lend money out for future repayment, there is a likelihood that something will change; good change, bad change, or no change. So, in order to avoid bad change and to keep good change, the lender charges “interest” on the money.  Interest represents the change of money over time – but not the reality of the change itself. Consequently, the change of money induced incentives for people to behave differently and this changed reality. For better and worse, reality reflected the incentives rather than the incentives reflecting reality.

The Language of Change:

Today our language is changing at an incredible speed – most words associated with the human condition have changed in definition over only a few decades ago. The words “relationship”, “society”, “marketing”, “innovation”, “media”, “democracy”, “productivity”, and many others, all have expanded meanings.  Now we need to create new words to describe new realities; Computer enabled society, Social Capitalism, Web 3.0, relationship economy, innovation economy.  What is the incentive?

Relationship: The Science of Communication

Now here is where Calculus gets complicated: If words are changing and communication is connected to the words, then communication is changing too.  If communication is changing, and productivity is connected to communication, then productivity is changing too. If productivity is changing, and the economy is connected to productivity, then the economy is changing too.

The Relationship Economy:

Just like money, the change in our relationships induces an incentive or disincentive to behave a certain way.  For better or worse, incentives will reflect reality rather than reality reflecting the incentibes.  That’s a game changer.

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Social Clipping and the Amazing Disappearing Economy

By

On January 14, 2009

In General Information

In the early 1990’s, the NAFTA Mutual Recognition Document (MRD) for engineering professionals was the first modern attempt to treat knowledge like a financial instrument. Unfortunately it failed because of a tiny little flaw that I call ‘social clipping’.

Most trade agreements that followed were modeled after NAFTA and, as such, inherited the clipping flaw.  The flaw is that ‘products’, but not the knowledge assets that created them, are mobile in a global economy.

The MRD handed the knowledge economy to Mexico on a silver platter; but they turned it down.  The government did not want to give their engineers “wings” because they were afraid that they would fly away.  Instead, Mexico chose to sell their extraordinary young engineering talent off cheap to meet quotas promised to Asian, European, and American companies to relocate huge manufacturing plants to the country. Today, Mexico competes with China in a race to the bottom of a manufacturing economy and almost no indigenous design industries.

Two-way street:

Back then, the protesters raged about an influx of cheap foreign engineers to the US.  But many US engineers saw that Mexico needed everything that engineers make – roads, bridges, infrastructure, etc. The needs were endless and the objective was clear; to increase human productivity in Mexico was to create real and sustainable wealth.  Maybe then, the citizens would not need to fly away.

These infrastructure projects could have been funded because the Professional Engineering License behaves like a financial instrument mitigating project risks (so that nothing “disappears”). Only then banks would lend and insurers would insure.  The transfer of knowledge and accountability to Mexico would have been extraordinary; the relationships, profound; their development progress, astonishing.

The Disappearing Economy

But the MRD died by clipping.  Mexican Engineers would have been required to take the same engineering examinations as US engineer.  The government refused citing concern that they could not pass. So, in 1994-1997, this author directed a large comparative education project sending over 250 engineers to the US professional engineering examination (EIT).  The Mexican Pass rate was extraordinary – they were easily comparable to the US pass rate in most subjects and flat-out superior in mathematics.  There was nothing wrong with Mexican engineers, or the culture; there was something wrong with the financial system that keeps them invisible.

Knowledge is Power

As the story goes, Mexico has a family oriented culture where hierarchy is often based on seniority; a common examination may favor recent graduates.  It would be inappropriate for a young engineer to have authority over a more senior engineer.  Dig a little deeper and the real problem was power. In Mexico, power is concentrated among very few people.  It would have been unacceptable for transparency to exist.

We are facing a similar situation in America today.  Power has been steadily consolidating over the years.  A huge and fast stimulus package will enter a financial system with a shortage of vetting institutions. There is a strong pull toward ‘business as usual’ – creating J-O-B-S; not necessarily more entrepreneurs, engineers, or mentors, and certainly not empowering whistle blowers.  In the knowledge economy, Americans salaries are pegged to off-shore outsourcing. This is a game that we can no longer win playing by the rules.

Social clipping

As we have seen with less developed nations; when people are held below a certain economic level, they fail to organize for innovation, social change, entrepreneurship, and value creation because they are too busy trying to pay off debt and feed their families.  Social capital, creative capital, and intellectual capital are muted; that’s when the magic of innovation disappears. That’s social clipping.

America must move on to the next level of economic growth.  The Innovation economy is a game we can win playing by new rules. Government must trust the people, empower social media, and not clip our wings with an outdated economic model.

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