The Ingenesist Project

The Next Economic Paradigm

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A New Conversation About New Value

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On July 25, 2012

In General Information

Most people who know me, understand my tendency to go into “Professor Mode”; or deep dive into the Calculus of financial instrumentation; or just geek out on macro-sustainability issues.  Communicating to the public about what we can and should do next, is NOT my specialty. To this, I trust my friends.

In celebration of friendships, we are coming together around the conversation of The New Value Movement and the a plan to launch an open source development project that will facilitate an alternate economy backed by so-called “intangibles”. If you will be in the Seattle Area on this date and have a deep knowledge or interest to share in this subject, please contact me through this blog post.  Thank you

***

A New Conversation About New Value

The New Value Movement is a worldwide meme that recognizes that not all valuable things can be articulated with dollars – and that vast stores of value remain economically invisible as so-called “intangibles”.  These include social, creative, and intellectual capital as well as environmentally sustainable enterprise.

A New Class of Business Methods

The Ingenesist Project is developing a new class of business methods and metrics that convert intangible assets into tangible assets, which then become visible in an alternate economic system in an expanded form of currency:

  • Curiosumé – An analog to digital converter for knowledge assets
  • The Value Game – A novel business method for converting intangibles to tangible
  • WIKiD Tools – The capitalization and securitization of New Value ‘currencies’

A new Conversation about financial systems

This 3-hour meeting seeks to develop a narrative that will bring the possibility of the New Value Movement to a broader audience.  Secondary, this narrative seeks to attract the development community to participate in an open-source development project that could augment the existing financial system of value scarcity with one of value abundance.

Meeting of the minds

We are seeking 10-12 people with knowledge in relevant areas to help us set the course for an alternate economic system backed by New Value Currency.  Please consider sharing your intellect, creativity, and wisdom with this important project.  Some familiarity with ZGE is requested (and can be provided in advance).

For more information about The Ingenesist Project:

Please visit our website http://ingenesist.com , visit our YouTube Channel, visit our blog, or review the site map for various articles and videos related to the “New Value Movement”.   Feel free to contact me through this blog for a review of ZGE

Thursday, August 23, 2012

6:00 – 9:00 PM

The Hub Seattle

Temp Location: @BGI Seattle Campus

Please RSVP 

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The Rango Prophesy

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On July 2, 2012

In General Information

When I asked my friend and highly respected Seattle consultant Joe Brewer for advice, he simply says:

“Tell an Epic Story”

Rango is a hapless Chameleon in a classic “fish out of water” tale and unlikely hero who finds himself in a “Dust Bowl” meets “Spaghetti Western” hardship scenario. His only preparation is an active imagination and a lot of luck.

All of the characters are similarly encrusted desert animals doomed to a life of subservience to a central banker in an economy where water is the currency of trade.

The Mayor of the town first appears as an almost spiritual leader who provides his flock with hope that their suffering will soon be relieved on the day when water flows again from the shrine of the Holy Spigot.   The analogy to modern religion is hard to miss.

When Rango arrives and accidentally stumbles upon an act of valor, he is anointed sheriff of the town.  Meanwhile, the mayor is, in fact, the person causing the hardship by secretly constraining the supply of the water so that he can buy up all of the failed farms for commercial real estate development.

Upon providing guidance to the new sheriff, the mayor inadvertently slips that proverbial libertarian battle cry  “whoever controls the water (currency) controls the people.”   This sparks suspicion in Rango, who then ventures off on an adventure with some of the town folk to find out what is happening to the water.

After plenty of twists, turns, predators, mistakes, and a whole lot of ironic/comical symbolism, Rango and his gang finally learn that the mayor simply shut off the valve tapping the Las Vegan water main.  Once Rango’s gang opens the tap, water becomes abundant again and the protagonists meet their appropriate demise (suitable for young viewers).

The metaphor for the real world is a no brainer, for most reading this blog anyway.  Bankers artificially control the currency tumbling communities into bankruptcy, unemployment, and despair.  Meanwhile politicians, corporate interests, and legislators conspire to offer fasle hope to the wallowing masses as each person, one by one, hands over their fortunes and freedoms to the powerful elite.

Of course the plan is foiled when a group of brave citizens form alliances with their previous adversaries acting in unison toward a common goal.  It then becomes readily apparent that an “abundance” of productive currency, such as water, is precisely the solution to ridding desert society of crime and corruption thereby enabling peace for all – not the other way around.

This is the story that I want to tell.

There is a very simple task at hand – find the main line and open the valve.  Human knowledge, like water is constrained behind artificial barriers called “intangible” asset accounting.  To build an accounting system that makes knowledge assets “tangible” will open the floodgates of the most valuable currency civilization has ever known.  Not surprisingly, the protagonists will meet their appropriate demise –  suitable for young viewers, of course.

 

 

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How To Overhaul GDP

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On June 20, 2012

In General Information

Self-imposed exile, or land of opportunity?

Gross Domestic Product (GDP) refers to the market value of all officially recognized final goods and services produced within a country in a given period.  Simon Kuznets first developed the concept of the GDP for a US Congress report in 1934.  He immediately said not to use it as a measure for welfare. He later elaborated:

“Distinctions must be kept in mind between quantity and quality of growth, between costs and returns, and between the short and long run. Goals for more growth should specify more growth of what and for what.”

Sheer Madness at best

Today, the concept of Gross Domestic Product is vastly flawed to the point where the tail now wags the dog.  GDP now determines what we produce, who produces it, where it is produced, when and how it is produced.  Further, GDP snuffs out vast amounts of intangible value simply because it cannot be measured as GDP.

Global Policy is not enough

Recently, The G-20 meetings resolved to a very interesting point; to redefine GDP by a new set of metrics.  This will be a long hard journey if done solely in the political domain.   However, if we can make a business case for it, the entrepreneurs will jump on board.  Then, and only then, can the landscape change as rapidly and drastically as will be required to turn civilization around equitably and peacefully.

Corporate Policy is not enough

The irony is that those who perpetrate GDP metrics may be those who would benefit the most from dumping it.  In the following article from FastCompany, How Intangible Corporate Culture Creates Tangible Profits, companies who learn to transform intangible assets to tangible value become more competitive over companies that do not.  The article cites Southwest Airlines as the first airline to strip down all “tangible” amenities, yet they succeed by replacing them with intangible value such as superior customer experience.

Policy, Corporations, Culture and Entrepreneurs need to act as one:

Interestingly, the FastCompany article talks a great deal about culture.  They also use the terms; “information, knowledge, innovation, and wisdom” liberally throughout the text.  This is very inspiring to us at The Ingenesist Project because we use similar language to design and deploy business methods in industries as diverse as Aviation, Construction, and Philanthropy that readily convert between tangible and intangible value.

For Example:

  • The objective of Zertify is to replace the competitive incentives among communities and replace them with a knowledge inventory that matches mentors to protégé.  Teachers and students do not compete, they collaborate in order to be successful.
  • The Value Game creates an environment where one acting in the best interest of their collaborator, acts in their own best interest of value creation.
  • Our Exoquant algorithm provides a direct relatedness between information, knowledge, innovation, and wisdom.

The New Value Movement

When we talk about the New Value Movement, we are trying to specify a new class of business methods that can literally “manufacture” the things that people actually need without any distinction between tangible and intangible.  People need a game that they can win playing by the same set of rules. People need food as much as the need love – there is no walled garden of human needs, except the planet we share.

Then we can measure what people actually produce with it

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Gyroscopic Effects And The Tangibility of Intangibles

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On June 7, 2012

In General Information

Countless examples abound where the forces of INTANGIBLE assets align is ways that allows them to detach from their shackles and float like a gyroscope. Invisible internal forces allow new social entities to organize, travel, produce, and consume seemingly without structure or anchors. Yet they influence the most tangible of assets in their path.

Next Economic Paradigm

The next step is to harness this social energy toward sustainable productivity.  Then, and only, then can we arrive at the new economic paradigm (albeit one that may be largely unrecognizable from what we know of today).

The United States has a skills crisis

Millions of smart, motivated, and skilled people are out of work. Meanwhile companies complain that they cannot find the skills that they need to fill open positions.  Predictably, the arguments rage polarized; companies are unwilling to train, the education system is unwilling to teach, etc.  But I don’t think that is the problem.

A Function of Time

The lag time in the traditional competitive cycle remained the same; measured in months for a marketing campaign, or years with a product development cycle, or even decades as with an aircraft program.  Government is also slow to act with election cycles, public debate, and assorted diversions. Likewise, education system curricula can take 3 to 5 years to go through the release process.

Like car crashes, bubbles pop when the system is too slow to respond.

Meanwhile machine enabled social technology is developing so fast that companies do not have time to respond in competitive manner.  Everything becomes a bubble as companies find themselves playing in a game that can crush them at any moment by any number of forces; financial, economic, political, regulatory, public relations, wiki leaks, Facebook, YouTube, Smart Phones, etc.  Even strategic partnerships can unnecessarily and irrevocably tie an institution to the possible misfortunes of associates, with no prior predictability or analysis – until it is too late.

The Tangibility Of Tangibles

The corporate structure that is supposed to be the MOST TANGIBLE assets that an institution can hold is what effectively nails them to the floor.  The bottom line is exactly that, the bottom of the value barrel.  Companies that cannot see past the bottom line, can only see the bottom – and that is where they are staffing today.

The Value Game

Although developed independently, The Value Game (described here, here, and here) resembles a form of Michael E Porter’s 5 forces of corporate competition – except moving at hyper-speed to generate internal forces like a gyroscope.  Players have neither the time nor the incentive to compete with each other, rather, they compete with a game that produces both tangible and intangible assets in a common accounting system creating new value at an astonishing speed.

Of course, the corporation will not disappear any more than industrial revolution eliminated the agrarians. However, you can bet that the differences will be equally profound.

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The New Value Tool

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On June 5, 2012

In General Information

The New Value Tool is a repetitive simulation of The Value Game (described here, here, and here) that may be used to determine in advance the true value that may be created when people interact with each other around a shared asset.

The Social Charter

This should not be too difficult to envision since The Value Game plays out daily in the modern corporation where workers acting in the best interest of the corporation (the shared asset) interact with each other in various departments to preserve the asset rather than consume the asset – this is how corporations create social value; through the employment of people and the social utility of their products.

Obviously, corporations that fail to fulfill their social charter likewise fail to sustain value creation in a community.  Those that do, tend to thrive in the Internet Age. The objective of the New Value Platform is to enable communities to organize, as do corporations, except without the burden of corporate governance or the priorities of outside investors.

Drag, Drop, and Dream

The New Value Tool is simple to use; just drag and drop from the Zertify Personal Knowledge Inventory into The Value Game and see what the Exoquant dashboard tells you about your simulation. It may take some practice at first to see how to make the numbers move, but soon it will become intuitive which scenarios create lots of New Value – and will likely sustain themselves in practice.  Scenarios that do not, will likely fail in a particular community and ought not be ventured to practice.

Community Algorithm

Exoquant provides a very simple algorithm relating the creation of data, information, knowledge, innovation and wisdom that govern the Value Game.  However, the weighting of these elements is a component of the “fuzzy math” that entrepreneurs bring to the game.  The empirical data resulting from the application becomes property of the players (community) as their “Secret Sauce” of value creation in their own uniquely optimum economic game.

On the path to a Social Currency

The New Value Tool May become an important system for analyzing existing ventures for optimum social value creation as well as predicting how collections of knowledge assets in a community can optimize their social value in collaboration with each other.  Eventually, the predictability of the outcomes will improve while diversification of projects will eliminate risks such that a social currency can be capitalized and securitized.

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Where Competition Has Met It’s Match

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On June 4, 2012

In General Information

(update; as of November 2012, The Monitor Group headed by Michael E. Porter, the subject of this article, declared bankruptcy ending an era of C-Suite omnipotence strategy thinking.  This article compares competitive strategy to collaborative strategy)

***

The B-School staple “Porter’s 5 Forces” has been the mainstay of corporate competitive analysis since it’s creation in 1979 by World regarded Harvard Business School Professor, Michael E. Porter. Porter developed a model of industry analysis in his seminal book,  Competitive Strategy: Techniques for Analyzing Industries and Competitors. 

In short, a competitive company’s position in a market is threatened by five main forces acting on the corporate asset:

  • new competition,
  • substitute products or services,
  • bargaining power of customers,
  • bargaining power of suppliers,
  • intensity of competitive rivalries.

Any changes in these 5 forces would be cause for the company to re-evaluate their place in the market … thus leading to healthy consulting practices for strategists the world over.

The Rate of Change

In the 1990’s critics began to argue that Porter’s 5 Forces thesis assumes that the forces are static and non-related.  At the time, the world was becoming more dynamic and more interrelated. For example:

  • Buyers, competitors, and suppliers can interact, and even collude.
  • Value cannot be created in the long run by constantly introducing barriers to entry
  • Participants in a market have the ability to plan and respond to competitive behavior.

As a result, they added another Force called “complementors” while introducing rudimentary game theory to explain the role of strategic alliances to the analysis.

Constant Change

Now in the year 2012, we routinely assume that all players can instantaneously access the same real-time dynamic market information from the cloud.  We readily accept that all players will collaborate massively with whomever they want from anywhere in the World.  As a result, we must assume that all five forces will change constantly and rapidly in real time.

Now imagine how 1990’s game theory would manage conditions where the company AND their competitors must continuously re-evaluate their position in a market under the circumstances of continuous change.  In effect, nobody has the ability to compete with each other, they are competing with the game, therefore, they are cooperating to keep the game in play.

Is Collaboration Underrated?

If any player tries to introduce a barrier to entry, THEY risk get knocked out while the game continues without them. In fact, value is created by applications that remove barriers … and brokers are punished. All of these factors cause the game to self energize and improve as players preserve the asset rather than consume it.

The Value Game

It should not be surprising therefore that Porter’s 5 forces now resemble what we call the Value Game that we have described here (and here, and here).  In the ultimate manifestation, however, The Value Game will play automatically through multiagent algorithmic game applications where tangible and intangible assets would be accounted equally in a Value Game. Individual would own, manage, and deploy their secret sauce of knowledge assets through their personal API that interfaces with the game that is most relevant to their highest abilities.

Where competition has met it’s match

Remember that little regarded fact of Capitalism: Markets are efficient where there is perfect information.  This means that if everyone involved in a transaction has the exact same information as everyone else, the true supply can meet the true demand.  Nobody ever said that this must be accomplished through competition especially if collaboration can do it better.

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A Value Game For The Aerobics Instructor

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On June 1, 2012

In General Information

In yesterday’s post, we outlined The Value Game for University Outreach where the graduate was the shared asset and the school administration, the alumni association, the entrepreneurial community, and the wider community were the players. Now let’s presume that the shared asset is a small business owner specializing in aerobics instruction.

Using the same players:


A Value Game For The Aerobics Instructor

Suppose that a popular aerobics instructor has 20 students and charges 40 dollars for an 8 class sessions. The local health food store will place 10% coupon on store purchases against the 40 dollar tuition for the duration of the class. If the student bought 400 dollars worth of food from the health food store in 8 weeks, their tuition for the aerobics course would be free.  If they spend more, then the aerobics instructor is paid more.

The health food store already spends 10% of sales on advertising.  As such, the coupon is a superior incentive because it provides 100% ROI on the store’s ad spend.

Social Value Outcomes:

  • The health food store gains loyal repeat customers without advertising or spamming
  • The aerobics instructor earns an entrepreneurial wage making similar coupon arrangements with other health services, sporting goods stores, hotels chains, airlines, adventure tourism companies – anyone whose best interest it is to support her clients’ aspiration. They too benefit from loyal customers (anti-Groupon)
  • The Alumni Association would represent a network of clients, business owners, and database of persons likely to provide contacts, references, coupons, and advice to the aerobics instructor
  • The University can provide gym space, sponsorship, health education classes, and collect data such as; which coupons produce the highest yield for a given alumni product or service and player profile.

The Value Game Filters:

This particular value game automatically filters out the players that are not appropriate for the client.  In effect, the donut shop, tobacco store, or video game outlet would not likely benefit from playing this particular value game as their offering would reflect poorly on social values of the instructor and their coupons would not perform well enough vs. traditional advertising.  Instead, these products would find their own value game, if any.

Social Value Index (SVI)

The Social Value Index is a public statistic that compares the economic value (cost/benefit) of the socially integrated value game with the cost/benefit of the disaggregated advertising/spamming model which robs people of their time, passions, and quality of life.

Data as a shared asset

The SVI provides data that rewards this entrepreneur for doing what she is most passionate about; being knowledgeable and supportive of available health resources. The SVI rewards the store for enabling entrepreneurs in exchange for loyal repeat customers.  The Social Value Index rewards the network of alumni who align with their members (aerobics instructor) to deploy social currency to a community instead of spamvertising. The SVI rewards the University Outreach effort for organizing critical data, information, knowledge, innovation, and wisdom in the community.

At the end of the day: 

The Value Game is important because it allows entrepreneurial business plans that would not normally be viable under a purely monetary model, become highly viable when intangible Social Value (New Value) is added to the bottom line.

 

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The Value Game For University Outreach

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On May 31, 2012

In General Information

The question that persist for many college and university administrators is what actions must they take to optimize all of their relationships in a manner that reinforces their own value to their community.

The Value Game is an ideal solution for this type of scenario (if you are unfamiliar with TVG, please visit this primer link).  The first step is to identify the asset. The recent graduate is the university asset because they are the customer and the product being advanced.  After all, the life worth of that graduate will reflect upon the institution that prepared them for professional service.

Next, we identify the players that will interact with that graduate over the course of their lives.

A* = The Graduate

  1. The graduate will interact with their Alma Mater
  2. The graduate will interact with their alumni association
  3. The graduate will interact with Their broader community
  4. The graduate will interact with corporations and entrepreneurs

Now, Let’s review each of the relationships and the economic incentives that drive them:

A-1: The graduate relies on the university reputation with players 1,2,3 as an extension of their own capabilities.

A-2: The graduate relies on the influence and success of prior graduates who hold an affinity towards each other in fraternal social networks.

A-3: The graduate will interact with their community for friendships, residency, recreation, and support.

A-4: The graduate will rely on strong and equitable employers / entrepreneur base where they may self-actualize as productive citizens.

Now, let’s review the relationships and incentives that each of the players has with each other:

1 – 2,3,4: The university has an interest in preserving the community because a motivated and educated workforce attracts opportunity far and wide in the form of business, travel, tourism and economic growth (Jacobs Externality).

2 – 1,3,4: Alumni seek to preserve the value of their alma mater because of the direct reflection upon their careers.  It is in their best interest to support the university, it’s graduates, employers and the wider community.

3 – 1,2,4: The community relies on the university graduates and alumni to provide equitable and fair innovations that provide sustainable living standards.

4 – 1,2,3: Employers compete globally for talented, stable and engaged employees and service providers who are attracted foremost by a vibrant entrepreneurial economy and sustainable communities.

Data, information, knowledge, innovation, and wisdom

The Value Game is now played by university administrators who direct university facilities, influence, and resources to bringing at least 2 of these four groups together.  Each time there is an interaction, the university will capture the data associated with the interaction.  That data can be compiled to form information which gives the university administrator knowledge about what their next action must be.  University feedback to the community will tell all of the players what interactions create the most social value upon which all players will innovate in their best interest.

As the game continues over time, the university gains the wisdom to understand the values of their assets and surrounding community. The community will act in the best interest of the other players as a means of acting in their own best interest (Social Capitalism).

Data is the ultimate shared asset

Over time, the University will become the physical “Search Engine” for data, information, knowledge, innovation, and wisdom in a community instead of just a vetting mechanism for book learned material. The University can now deploy this wisdom to their own internal programs and curricula as well as becoming an external reference source for government, industry, and economic development.

*(The University of New Haven is in no way affiliated with this post except I (the author) am a graduate of the UNH Engineering school (go Chargers!) and needed a realistic example that probably would not sue me – thanks guys)

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The Value Game Primer

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On May 30, 2012

In General Information

This reference post serves as an introduction to The Value Game (TVG).   The Ingenesist Project will be posting Value Game Solutions to many specific scenarios that our readers and clients propose.  Having this post as reference will help those new to The Value Game catch up quickly.

The following 12 minute video gives some historical perspective of The Value Game as we have applied to the aviation industry (see SocialFlights.com).  This video also expands the idea to any shared asset and provides important insight as to how to generalize The Value Game across the economic spectrum.

Introduction to Value Games

  • The Value Game is a new class of business methods that manufactures New Value.
  • New Value represents all value that is not normally convertible to U.S. Dollars; i.e., creativity, community, sustainability, resilience, compassion, trust, etc
  • Currently, The Value Game begins and ends with dollars, however, all New Value created within the game is denominated in “social currency” which has no physical manifestation.
  • The Value Game converts between Social Currency and Dollars; i.e., business plans that are not viable in dollars may become viable when social currency is included in the bottom line

Building A Value Game

  • The Value Game starts by identifying any asset, tangible or intangible, that a group of people would share.
  • The next step is to find 3 or more communities that have a vested interest in the asset
  • The New Value Entrepreneur is able to discern which communities and which assets will interact successfully in a Value Game.
  • In general, once a value game is started, it will improve itself since only those who have a vested interest in the asset will continue playing.
  • Players that are inappropriate for the given asset and related communities, will drop out or find another value game
  • All players will eventually find and play value games that correspond most closely to their natural interest and passions.

The New Value Entrepreneur

Just like with any business venture, it is up to the entrepreneur to identify and engage all of the right components required to build any enterprise; this is no different for Value Games.

  • The objective of the new value entrepreneur is to organize three or more communities to interact around a shared asset
  • The interaction among these communities acts to preserve the asset rather than consume the asset.
  • Each community acting in the best interest of the other community is, in fact, acting in their own best interest.

The material that references this post will help identify what types of assets are suitable for value gaming and what types of communities would make worthy participants.

The Ingenesist Project is currently building Value Games for clients in aviation, construction, education,  affinity groups, and social service communities.  Please let us know how we can serve your New Value creation enterprise.  

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With Respect To Time

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On May 18, 2012

In General Information

Yesterday’s post “This is what I believe” I make the following 4 statements:

  • Information is proportional to the rate of change of data with respect to time
  • Knowledge is proportional to the rate of change of information with respect to time
  • Innovation is proportional to the rate of change of  knowledge with respect to time
  • Wisdom is proportional to the rate of change of innovation with respect to time

In clinical terms, this is called a “Differential Equation”

I always get a lot of questions about these.  Most people’s eyes glaze over as their expression goes blank with far off images of high school Calculus class.  Few people realize that these relationships are so common and so intuitive that we are all  performing “Calculus” in many of their thoughts, words, actions, opinions, observations, and conclusions about the world around us.

But, just in case there is any doubt about the pervasiveness of differential equations in our culture and thinking, listen to the experts:

***

“Move fast and break things” – Mark Zuckerberg

The idea here is that it’s OK to fail because this is how learning happens (rate of change of knowledge) but make sure you do it fast (with respect to time) because the objective is to innovate, not to not make mistakes.

honor your creativity and you don’t ever ignore it or go against what that creative image is telling you. – Lady Gaga

Here she is referring to the proportionality component of creativity. The magnitude of the inspiration (rate of change of one’s knowledge of a matter) is greater than all other thinking moments, but it is constrained in time (with respect to time).

“The Googly thing is to launch [products] early on Google Labs and then iterate, – Merissa Mayer, Google VP

Marissa is talking about Wisdom.  While innovation is proportional to the rate of change of knowledge, wisdom is proportional to the rate of change of innovation.  The speed at which Google can innovate is how Google creates wisdom of what to do next.

***

Here are a few more. See if you can spot the differential equation:

“What Mark worries about the most is the lack of change, the lack of innovation” – Sheryl Sandberg, COO Facebook

“Every new thing creates two new questions and two new opportunities.”– Jeff Bezos, Founder of Amazon.com

“It’s always about timing. If it’s too soon, no one understands. If it’s too late, everyone’s forgotten.’” – Anna Wintour, Editor in Chief, Vogue Magazine

“All technology starts as a spark in someone’s brain”. – Nathan Myhrvold, Intellectual Ventures (hint: sparks travel at the speed of light)

“As people innovate and learn faster, they help generate new ways of performance improvements for everyone while progressing toward their own higher goals” – John Hagel, The Big Shift

Differential Equations are used to describe a vast array of phenomena in our physical universe.

These include the the forces of particles in motion, diffusion of medicine through cell walls, the decay of radioactive substances, and effects of gravity on bodies, weather, energy, chemical reactions, even the creation of money itself.  It should not be a shock then that bankers, CEOs, politicians, and all “investors” are not actually concerned with money, they are concerned with the rate of change of money with respect to time.

The question now becomes, why would their NOT be an algorithm for human values of knowledge, innovation, and wisdom when there is an algorithm for everything else with respect to time.  

Additional information can be fount here: Exoquant; an algorithm for Social Capitalism 

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This Is What I Believe

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On May 17, 2012

In General Information

  1. There is a tiny flaw in Market Capitalism that can be easily corrected
  2. Technological change must always precede economic growth; we are going about the process of globalization as if economic growth can precede technological change.  We got it upside down, that’s all.
  3. Anything that can be made by allocating scarce land, labor, and financial capital can also be made by allocating abundant social, creative, and intellectual capital.
  4. For every dollar of tangible value, there is at least 100 dollars worth of  ‘intangible’ value that is really just ‘invisible’.
  5. The global debt is trivial in comparison to the invisible value that exists with no accounting system to represent it.
  6. There should be no economic incentive for anyone to make anything other than what they are most talented, interested, and passionate about.
  7. Nobody knows everything.
  8. Everybody knows something they can teach any other person.
  9. Students, by definition, hold an equity position in their teachers.
  10. Therefore, teachers should hold an equity position in their students – this will fix a lot of things.
  11. Nothing economic happens until two or more people get together and build something.
  12. Competition is over rated.
  13. Collaboration is under rated.
  14. All monetary things are valuable but not all valuable things are monetary.
  15. There is a perfectly legitimate market for everyone.
  16. A new currency will be the last thing that happens, not the first.
  17. You can’t eat Gold
  18. Information is proportional to the rate of change of data with respect to time.
  19. Knowledge is proportional to the rate of change of information with respect to time.
  20. Innovation is proportional to the rate of change of knowledge with respect to time.
  21. Wisdom is proportional to the rate of change of innovation with respect to time.
  22. If you want to create wisdom, go increase the rate of change of innovation.  If you want to create innovation, go increase the rate of change of knowledge, etc. Now, flip over the series 15-18 above.  See, you’ll do just fine.
  23. Money represents past, present, or future productivity – otherwise nobody would work for it (think about that ).
  24. Therefore, a currency backed by debt and a currency backed by innovation would become the mother of all hedge funds.
  25. Securitization is a miracle of scale if done correctly, a disaster of scale if not
  26. Time is the only valid basis of a currency.
  27. My singular objective and greatest aspiration is to make “intangible” value tangible.  I am confident that my children – and yours – will know what to do next.
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Growth Beats Austerity 100 to 1

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On May 15, 2012

In General Information

Bridge Over Troubled Water - by Cairn

Suppose a team of 10 engineers designs a bridge that spans a body of water connecting two small towns and cutting 1 hour off the alternate route for 14,000 people per day.  Over the 75-year life of that bridge, those 10 engineers are responsible for 380 Million hours of increased productivity.

At 25 dollars per hour per person whose time is saved, 10 engineers create nearly 10 billion dollars of NEW VALUE.  As such, only 100 engineers and a 10 bridges could create the same amount of New Value as Facebook is worth in an IPO.

Now compare the Old Value of the engineers.

Suppose that during the course of those same engineers’ careers, they could each borrow (capitalize) around 1 million dollars in personal debt for cars, homes, credit cards, and family education – debt that they would need in their lifetime.

By the miracles of the fractional reserve system, their 1 million dollars may be multiplied into 10 million dollars of new money available to the financial system for distribution.  As such, those same 100 engineers would be worth approximately 1 billion dollars as economic beings in the Old Value economy.

100:1 Ratio

So in review, 100 engineers are worth 100 billion in New Value versus only 1 Billion dollars in Old Value.  Of course, I purposely picked an example that would make the numbers come out all nice and orderly, but the most important point is that New Value leverages Old Value by several orders of magnitude.

Only two possible outcome of the global debt crisis.

1. The first is for all the countries of the world to get together and lop 3 zeros of the global accounts balance sheet and reboot.  As such; 40 Trillion dollars becomes a quaint and manageable 40 Billion dollars.  If it happens quickly, that’s called hyperinflation.  If it happens slowly, that is called Austerity.

2. The second outcome is currently raging in Europe today with austerity protests toppling governments in France and Greece with the idea of growth vs. austerity.  New candidates are promising to “grow” the economy out of its crisis.  While this may be a bold and populist idea that is sure to spread, nobody knows exactly how it will be implemented without triggering number 1.

The New Value Movement:

By making so called “intangibles” tangible, vast amounts of  New Value can be added to global accounts balances which could stave off wholesale collapse of the financial system.  This will not be without hardship for some people; social priorities must drive Wall Street priorities, not the other way around.

We don’t have a financial crisis, we have a value crisis.  One thing is emerging as a certainty, new value leverages old value by several orders of magnitude  and The Value Game provides the capitalist model to access this astonishing wealth creation  – in case anyone is wondering.

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The Facebook Basket of Goods

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On May 14, 2012

In General Information

Facebook does not produce anything.  Facebook sells personal information to advertisers. This is not to say that Facebook is not worth a lot of money, but it certainly deserves a little perspective.  In order for Facebook to be worth anything, people must be doing things, making things, and organizing things – otherwise, there would be no need for the utility that Facebook provides.

Consumer Value Index

In order for people to do things and make things, there needs to be basic infrastructure like energy, clean water, telecommunications, food,  roads, bridges, and airports.  There needs to be housing, education, and health care.  There needs to be an effective and fair legal system, equitable political representation, and civil decency.

Debt or Human Potential

Facebook adds value to the human productivity potential that already exists.  It is precisely that invisible human potential that seems to be worth most of the money that Facebook commands.  When we estimate a value of 100 Billion dollars for Facebook –  an astonishing 99 times their advertising revenue – we estimate that the market believes that intangible value exceeds tangible value by a factor of 100:1; versus, say, Apple at 16:1 or Google at 20:1

Nothing economic happens until people get together to make something

Charles Munger, CFO of Berkshire Hathaway uttered these deeply foreboding words at a conference at Seattle University in reference to the Enron debacle;

“it’s bad enough when we lose the accounting profession, but dear God help us if we lose the Engineers”.

Suppose a team of 10 engineers designs a bridge that spans a body of water cutting 1 hour off the alternate route for 14,000 people per day (connecting 2 small towns).  Over the 75-year life of that bridge, those 10 engineers are responsible for 380 Million hours of increased productivity. At 25 dollars per hour per person whose time is saved, 10 engineers create nearly 10 billion dollars of NEW VALUE.  As such, only 100 engineers could create the same amount of New Value as Facebook is worth in an IPO.

You are worth what is measured

We need to ask ourselves what is more efficient; making things that act as a proxy for the things that we are trying to sell, or measuring the real value of things that we make.  Perhaps Facebook would be worth 10 Trillion dollars on such a balance sheet.  Maybe Facebook would be worth nothing if true value were in fact measurable. Who knows?

Well, that’s exactly the problem – nobody knows.

Facebook acts as a proxy for human productivity, just like money is a proxy for productivity, but with no intrinsic value itself.  Perhaps this explains their Wall Street convertibility.  However, if we backed Facebook with New Value of human potential, rather than a basket of debt-able goods, perhaps we would not have a financial crisis to deal with, just a value crisis.

I wonder what Charlie Munger would say

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Gambling With New Value

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On May 11, 2012

In General Information

What if the origin of political division in this country could be traced to a simple glitch of the generally accepted accounting practices?  Let me explain:

The Economist magazine recently wrote an article in favor of airlines unbundling fees; Ancillaries; You Know They Make Sense

“By charging fees, once neglected baggage service departments have become star revenue performers for airlines. Department managers can now justify new technology and equipment. Where before, baggage service only represented a cost, it now provides millions in revenue”.

In other words, charging money for baggage essentially transfers this service from the liability column to the asset column of the accounting statement. As a liability, it can only atrophy under the weight of austerity measures.

And Then The Carousel Starts Spinning

What happens next is quite remarkable.  The airline PR machine twists this into a veiled statement of American individuality, claiming “freedom is about having choices” and touting themselves as the protector of all that is good and great in America.  Then, they BLAME the traveler for expecting that mustachioed Soviet-era entitlement to unlimited [baggage] service.

Just give it a French name 

“Passengers will continue to complain about being nickel-and-dimed, but it may be that they are making false comparisons … “When a la carte shopping is successfully implemented, it’s not an evil method. Quite to the contrary, it’s the ultimate compliment to the consumer—it acknowledges their right to choose.”

Roll in the legislators

The resemblance to political discourse about a whole myriad of issues is uncanny and would make anyone suspect a larger conspiracy.  But what if the problems are real simple? What if the genus of political division in this country could be traced to a simple but widespread accounting anomaly?  There is no accounting system for human values.

For example; consider the fact that Motherhood does not count in American Gross Domestic Product, but Day Care services do.  So in order to stimulate economic growth, legislators subsidize day care so a parent can go to work while in the same breath witholding services if the mother “fails” to work. Don’t forget to always blame the customer when things don’t go right.

Gambling With New Value

Similar paradox never seems too far from key social issues such as education, health care, Internet privacy, Immigration, International Trade,  Homeland Security, even Banking and Finance Reform:

From Fox News coverage of the JPO Morgan 2 Billion dollar loss:

The basic problem is that regulators have been working for the last two years to define the difference between hedging and gambling, and can’t. Either the rules would be too severe and shut down banking, or would permit reckless risk taking that could take down a huge bank, and potentially put the taxpayer on the hook to pay off depositors through the FDIC.

A hedge acts on both sides of the accounting balance sheet while a gamble does not.  What if that’s what it’s all about; all the fighting, and slander, and division, and prejudice, and injustice, and violence, etc., caused by a simple accounting system problem.

When we do not have an accounting system for human values, we can only gamble with them.  To hedge, New Value must be must be tangible.  The problem is simple; it is a failure in the accounting system for New Value Movements.

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The Reality Platform

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On May 10, 2012

In General Information

Today, we do not have a financial problem as much as we have a value problem.  The challenges that face our civilization are far too great to be solved on an “Advertising” platform.  Whatever happens next, it must start with a Reality Platform.

2012: A Space Odyssey

Back in the railroad days, a platform referred to the surface upon which passengers stepped in order to enter or exit the train.  Later, the platform became a computer operating system.

In 2012,  the “platform” refers to one of the big four space stations on the Internet; Google, Amazon, Facebook, and Apple.  On the backend, they each sort products and people into their appropriated categories.  On the front end, they deliver the consumer to the product and vice versa.  Everything is done electronically; wherever possible, even the product is electronic.

A Platform for Reality

Compared to the Big Four – which collect data behind secure walls, analyze with proprietary algorithms, then serve up  content that is most beneficial to the platform (not necessarily the user) –  The Value Game is revolutionary. In one application of the Value Game, a company called Social Flights collects four separate streams of data, converts the data to a single usable form, then shares the data back to the separate streams.

For example; an airplane operator submits data regarding the inventory of their aircraft.  The hospitality industry submits data relative to their inventory of support services,  Travelers submit data relative to their likely destinations, and event organizers submit data regarding their events.

Music is a combination of rhythm, sound frequency, and timbre

Social Flights captures all of these streams, organizes the data and feeds it back to the market in a more usable form.  Aircraft operators learn the optimum use of their aircraft resources.  Hospitality and tourism learn how to best allocate their inventory.  Event planners  learn to access their markets for attendees. Finally, Travelers learn the exact door-to-door cost AND TIME to achieve their objectives.  All the connections are made WITHOUT advertising.

Social Value is literally “manufactured” because it is in the best interest of each player that the other Players are successful.  Communities become vested in each other – not unlike an ensemble.

Advertising extorts passion

Today, nearly all social organization is now funded – and influenced – by advertising. People do not wake up in the morning aspiring to follow the Kardashians. If left alone, people aspire to follow their friends, to pursue their natural interests, and develop their natural talents.  The sole objective of the advertiser is to convince people to do something other than what they aspire to do naturally.

Manufacturing Social Value

The Value Game is a real and valid social value manufacturing engine. The same system deployed to aviation can also be used for any shared asset or experience; cars, roads, infrastructure, corporations, education, and even government, all with the New Value data platforms that are under development.

The problem can never be the solution – we need a new platform.

***

*2001: A Space Odyssey is a story that deals with a series of encounters between humans and mysterious black monoliths that are apparently affecting human evolution,

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The All You Can Eat Option

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On May 9, 2012

In General Information

The proverbial “all-you-can-eat” business model works great for some products and not-so great for others.  The opportunity, of course, is to be able to transform non-viable business methods into viable one’s using social media tools and data.  In this article, we explore how the AYCE model can be improved.

Netflix for the Sky

The Netflix model for movies has been touted as one of the greatest business innovations in the modern era of technology – not because it is new, but because it works.  Now, consider that the AYCE model has been applied to transportation, club membership, and telecommunication (cell phone data plans), etc.  Some work better than others….

I found this recent article about American Airlines experience with the AYCE model – which became their worst nightmare.  In 1981, you could buy a lifetime all access pass to first class travel on United Airlines for 250,000 dollars. While touted as a good way for AA to raise a lot of quick money, it proved to have long term liabilities that far outstripped the performance of the fund raising.  Today, a small carrier called Surf Air is now trying to use a subscription based system on a limited circuit using executive turboprop aircraft.

What is the comparable human behavior?

AYCE models impact human behavior in often unpredictable (read “unprofitable”) ways.  We’ve seen the unlimited plan for cell phones becoming a thing of the past.  Taxi drivers have not yet introduced the subscription travel plan but certain bus routes and commuter modes lend themselves to unlimited passes where an alternate single use rate and behavior record can be used as a price comparison.

I recall a wise and successful colleague in the insurance business revealed the dark truth about unlimited subscriptions.  “They are like extended warranties, the only people who should actually buy extended warrantee are those who fully intend to beat the crap out of the item that they are covering”.  Like gym subscriptions, low use members are needed to subsidize high use members.

Simulated Economy

Another way to simulate the effect of an unlimited prescription without leaving the business with an unmanageable long-term liability is to create an option-like instrument.  The buyer would hold the right without the obligation to purchase the service at a discount during a specific period of time where behavior will be regulated by market forces.

Holding the option would be priced relatively cheap so that the buyer does not feel a deep loss for not exercising the option, yet sufficient to subsidize the activity of those who do exercise the option for discounted service.  Another feature is that the option can be traded allowing holders to build a proto-economy around the asset that they possess.    This would decrease the marketing costs of the provider as the price of the options floats to meet the needs of the market.

These strategies are commonplace on Wall Street but a statistical construct for their deployment on Main Street may be emerging.  New “platforms” will arise which produce and  aggregate data in the right format to support an options type of instrument for the trade or exchange of any number of goods and services in a non-cash environment.

Maybe the all-you-can-eat buffet of the future will resemble a cornucopia of options for assets that everyone shares.  Bon Apetite.

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How Collaboration Distorts Markets

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On May 7, 2012

In General Information

Adam Smith From the un-encyclopedia

Long before the word “economics” and “capitalism” were even invented, a Scottish social philosopher and political economist named Adam Smith describes how wages are determined by competition between workers and competition between employers – not necessarily competition between workers and employers.

 An Inquiry into the Nature and Causes of the Wealth of Nations

Published on March 9th 1776, The Wealth of Nations, in part,  describes the fundamental dynamics of labor markets at the dawn of the industrial revolution.  In essence, when workers compete with each other for a limited number of jobs, wages fall.  When employers compete with each other for a limited number of workers, wages increase.

He also described what happens when workers decide not to compete with each other; and instead form unions.   Unions effectively distort the market toward increased wages.  Likewise, Adam Smith describes what happens when employers decide not to compete with other employers (tacitly or implicitly) for workers.  This activity also distorts the market, except, towards decreased wages.

Why are we fighting again?

Adam Smith does not mention specifically that these mutual distortions manifests in workers and employers competing with each other in lieu of competing with themselves.  Since the 1780’s, vast resources have been committed to preserving the fight without really questioning why the fight needs to exist in the first place.

A fish has no word for water

One of the ways that corporations form tacit collusion is with arcade job descriptions and skill codes.  When a company or an industry develops its own language, this makes it very difficult for outsiders to enter and insiders to leave.   Yet, this is precisely what needs to happen in order for the diffusion of innovation to flow across the entire economic spectrum.

For example;

A medical instrument manufacturer and an aerospace company and a sporting equipment company would have very different ways of describing the environment that they operate in.  However, an engineer designing a carbon fiber composite aircraft structure would be equally adept at designing a composite athletic prosthetics.  Yet today, engineers from multiple industries are rarely interchanged.  In fact, interchange has been largely suppressed.

Innovation Economics

If workers were able to cross industries they would benefit from increasing employment options and the ability to shift rapidly with economic cycles.  In Adam Smith’s analysis, this would drive wages up.  On the other hand, employers would also have a greater pool of qualified workers to hire, which in Mr. Smith’s analysis would drive wages down. Both would benefit from  increased exchange of  knowledge, access to innovation, transfer of wisdom, and diversification of risk.

If workers and employers could produce the exact same labor relations outcome by collaborating among themselves, there would be no need for the massive infrastructure of social division and political rhetoric that we have invested in preserving the fight.

Public Knowledge Asset Inventory

The Internet has made collaboration and interchange vastly more efficient than competing yet our economic system remains in the 1780’s.  We are watching a public knowledge asset inventory forming outside the construct of corporations.  We are watching corporations begin to index their skill codes to the public knowledge inventory rather than their internal ontologies.

We now need to recognize the importance in which we formulate this public asset.  If we do it right, astonishing value will be released.  If we do not, the invisible hand of capitalism will remain, well, invisible. As such, even a distorted image would be an improvement.

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New Value And The Future Of Money

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On April 25, 2012

In General Information

The 3rd Annual Future of Money and Technology Summit was held in San Francisco on April 23rd, 2012.  This was my 3rd appearance at the Summit and I must say that #3 was one of the most profound experiences that I have had a conference.  FOM&T is possibly one of the most important conferences of its kind.

Lunatic Fringe

Several years ago, many ideas that are now becoming mainstream were fringe topics at best.  At one time, the very idea that intangibles may in fact be immensely tangible, drew razor shards of broken glass from the KM community toward anyone who ventured toward such a claim.  Then, modern events such as Arab Spring and Occupy Wall Street demonstrated a direct challenge to very tangible “guns and money” brought by new ways of organizing communities around intangible assets.

The fringe questions of today become mainstream questions tomorrow

Now, what happens if we turn that concept into a means of producing the things that people really need instead of producing things that people don’t really need? What happens when people interact around a shared asset – either tangible or intangible – will they work to preserve the asset or consume it?  What if an economy arose where the Earth is the shared asset?  What if an economy arose where the individual was a shared asset? what if Both happened?  What would that look like?

A Value Game

The New Value Movement Panel came together around those ideas.  When I set this panel up, I created a value game – each of the people has something to gain from the success of the others on the panel.  This  panel shared an intangible asset in the form of a conversation.

The outcome was movement – a new value movement. Please watch this video and contact me with your thoughts – I am deeply interested in your interpretation of what happened here.
Thank you.

I hope to see you all at the next Future of Money and Technology Summit

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Elevator Pitch – The Ingenesist Project

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On April 20, 2012

In General Information

>door closes<

The Ingenesist Project designs and deploys a new class of business methods that will facilitate the production and trade of goods and services against the inevitable devaluation of the dollar.

The systems and methods developed by the Ingenesist Project can create new and tradable value from existing social infrastructure which would act as a hedge against inflation, austerity programs, and lost productive capacity due to high corporate unemployment.

Anyone looking for a hedge on the dollar is looking for The Ingenesist Project.

< door opens >

In case you are still interested

Ingenesist designs and executes a new class of business methods that creates new value by deploying a social game to real asset markets.

A Value Game begins and ends with money because that is the world we currently live in. However, new value is created within the game through the managed interaction of 3 or more communities that share an asset.

Current Milestones  

The Value Game was developed from a large-scale international comparative education research project from the NAFTA implementation era. Currently, Ingenesist deploys a Value Game to the aviation industry with a funded start-up called Social Flights.  In this platform; private aircraft are the shared asset and the operators, travelers, and economic development concerns represent the integral communities.

Ingenesist is currently designing a value game for the construction industry on a large remediation project for a high-rise condominium.  In this case, the condominium is the shared asset while the residents, the contractors, and the real estate market represent the integral communities.

Future Milestones

Ingenesist is currently looking to fund a web application with a working title of Zertify.  Zertify is a proprietary knowledge asset inventory method that will allow The Value Game to scale indefinitely and internationally.  As such, the requirement to convert back into money will no longer be necessary as the value created in one  game can be exchanged with value created in another game.

Expected Outcomes

If we are successful, a new currency will form; one that is backed by real assets and the real interaction of real communities whose best interest is to preserve real assets rather than consume them.   Zertify.com will be followed by Exoquant.com, and Gamidox.com – which will securitize the new currency to achieve  capitalization.

Why is this important?

This will be very important because the inevitable global currency adjustments would not have a direct impact on a non-debt backed currency.  In fact, Ingenesist will hedge the dollar – as the dollar loses value, the new currency will increase in value.  It is likely that everyone reading this post has a vested interest in the outcome; literally and figuratively.

Why are we different?

Many start-ups just scale Facebook networks and call it a “social currency” for the purposes of  consumption marketing. Other application have formed the asset incorrectly in our opinion. Ingenesist actually produces real things that reflect the real priorities of real social interactions…and this is real serious business.

Contact:

Daniel R. Robles PE, MBA
The Ingenesist Project, Founder/Director
Social Flights, Chief Innovation Officer

Skype: Ingenesist
Linkedin Profile
Twitter: @ingenesist

YouTube Channel: Ingenesist
Video: Sibos 2011
Video: The Value Game
Zertify.com specs; Contact Directly (for actual)
Gamidox.com specs Contact Directly
Exoquant.com specs: Contact Directly

Speaking: The Future Of Money and Technology Summit 2012 April 23rd San Francisco
Attending: The Unmoney un-conference 2012; April 24th San Francisco

Ingenesist Blog
Social Flights Blog

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The New Value Movement

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On April 5, 2012

In General Information

It’s time once again for The Future of Money and Technology Summit in San Francisco on April 23, 2012.  Each year this community of visionaries dive deeper into the subject of alternate economics as the public narrative around the subject also increases.  This is truly an important event.  Please register here.

In full disclosure, the producers of FOM&T trusted me to assemble this panel to advance a theme that was initiated at Sibos Innotribe Sessions (Toronto 2011).  I elected to NOT appoint myself moderator – Dr. V is much more experienced in that role.   Instead, I will attempt to speak for the Ingenesist.  The word ingenesist is derived from the Latin word for engineer – an ingenesist is any person who creates real value through their social, creative, and intellectual abilities. For this reason, the panel is titled:

The New Value Movement

Past panels in this segment at FOM&T included discussions about non-quantifyable exchanges and intangible capital.  This panel introduces the New Value Movement where emergent ideas and associated web applications seek to allow non-quantifiable exchanges to become “quantifiable” and Intangible Capital to become “tangible”.

Like the Beatles once sang “Money Can’t Buy Me Love”, New Value refers to those things that cannot necessarily be produced through the allocation of classical factors such as land, labor, and capital. Rather, the next generation of entrepreneurs will allocate resources of social capital, creative capital, and intellectual capital in order to produce the things that society needs.

Innovations such as trust networks, knowledge inventories, social games, and abundance capitalism will become increasingly important and hold great promise for hedging the inevitable constraints on fiat currency.

Dr. Amy Vanderbilt – moderator

Dr. V is the Founder and Chief Strategist at TrendPOV.com, next generation social omni-media that over 600 thousand executives call GPS for your business strategy.  Amy is an award-winning author, show host, executive coach, speaker, board member, and  commentator. She has distinguished herself in academia, private and public industry as well as government. (full bio here)

Patrick Murck

Speaking to the existing legal structures and foundations that would support the storage and exchange of New Value Enterprise is Patrick Murck.  Patrick is a Principal and Founder of Engage Strategy and Engage Legal.  Patrick helps clients innovate, operate and grow their business with a heightened focus on the legal and regulatory issues governing the use of virtual economies, gamification, alternative payment systems, and social loyalty and reward programs. (full bio here)

Joe Johnson

Speaking to the emergence of a new class of business methods is Joe Johnson, CEO and head coder of runaway startup called Connect.me.  Connect.Me is a new reputation and people discovery network creating a consolidated platform for social verification and trust in P2P and freelance economies. In 2011, Connect.Me won the prestigious Privacy Award from the European Identity Conference for its groundbreaking trust framework and business model. (full bio here)

My Role:

In Amy’s world of executives consulting, the ingenesist includes the designer new products.  In Patricks world, the ingenesist may be an innovator from Anytown USA trying to navigate the intricacies of law, money, and finance.  In Joe’s world, the ingenesist is the cloud of specialized skill holders looking for each other to create value together.  I often argue that all value not created directly by Mother Nature, was created by the ingenesist within all of us.

Please join us as Dr. Vanderbilt skillfully weaves the ideas, needs, and predictions of this extraordinary combination of panelists into a unique and more complete view of the great opportunities that await on the horizon of this unprecedented financial revolution.   
***
The Future of Money & Technology Summit brings together the best and brightest thinkers around money, including visionaries, entrepreneurial business people, developers, press, investors, authors, solution providers, service providers, and organizations who work with them at the convergence of cash and commerce. We meet to discuss the evolving money ecosystem in a proactive, conducive to dealmaking environment.
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The New Economy Movement

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On March 27, 2012

In General Information

The following 7 minute talk was presented at the Innotribe Sessions at SIBOS 2011 conference in Toronto Canada.

Here I identify a serious omission in our form of economics which may  inhibit the ability for currency to represent the things that people do and make. I also introduce how a new class of financial instruments could re-connect currency with productivity thereby reintroducing vast amounts of value into the tradable asset (currency) pool.

What if the solution to the great complexity of economic collapse is actually fairly simple – and we don’t find it?  What if the new economy is going to happen whether we want it to or not – and we are not prepared?  What if the tipping point to the New Economy is already past – and we are not in the game?

The only ones to blame would be ourselves for not building the obvious.

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Goodbye University Hello Multiversity

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On March 9, 2012

In General Information

I recently responded to the following Question on a Facebook group:

How could a newly established university be designed today in order to be elite? Which features must be included, and which features can be left out?

Subquestion: “What would you include in all dimensions: desired faculty, desired student body, location, graduation, research and tenure requirements, institutional structure and purpose, among other things, and what features would you exclude that are currently prevalent at “elite” institutions such as the Ivy Leagues?”

***
My answer as follows:

Why not go farther, much farther. Teachers would not get paid. Instead, they would hold an equity position the future of their students. Sort of like an inverse pyramid scheme built on knowledge assets – teachers would collect a small % amount from many students and a smaller % amount from their many future students students, and so on (multiplying value instead of dividing value). This would attract a certain type of teacher as well as a certain type of student. It would also favor research and innovation since the promise of stagnant salaries are not attractive in this arrangement.

Why two or three subject minors? How about a 3 platform minors; one in social philosophies, a minor in creative arts, and a minor in sciences. Instead of a “degree” your education would be expressed as a string of code representing each unit of study to form your unique API. Your API would interface with the APIs of your colleagues and teachers such that an algorithm could predict the likelihood that a strategic combination of knowledge assets could execute a particular business plan. Such probabilities would be able to predict and associate future cash flows with such business plans. These cash flows could then be securitized into a financial instrument called an “innovation bond”.

Rich people, corporations, and governments would buy these bonds and the revenues would fund the school. Access to the bonds also provides access to the underlying assets – the world’s knowledge. They would be hugely valuable as a hedge agains a declining fiat currency because, like money, knowledge assets can be deployed to create the things people need. Soon, everyone would become a teacher and everyone will become a student in a new form of capitalism will emerge where factors of production are allocated as social, creative and intellectual capital.

***

There were several interesting responses to this question as well as comments to my response.  Admittedly, I was riffing a bit with my response , but I’ll defend it as follows:  

First, let us not mistake “money” for “value” as a so-called “equity position” can be denominated in either. Second, there are many examples in society that demonstrate my conclusion.  Parents take an equity position in the future of their children, executives across America have a cadre of protege from whom they take an equity position in their careers, and Society accepts levies, and taxes, and buy bonds that fund public education so that future productive generations can support the elderly.

The miracle of capitalization and securitization have created extraordinary levels of prosperity on Earth compared to historic social structuring.  The ability to capitalize and securitize knowledge assets (as opposed to classical land, labor, and capital) is likely the next economic paradigm…if not the only sustainable economic paradigm.  I would suggest that current university system is the aberration, not my comment above.

Goodbye Universe, Hello Multiverse

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Encouraging Customer Self-Organization

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On February 25, 2012

In General Information

TrendPOV

Here is a repost of an interview with myself by Dr. Amy Vanderbilt at TrendPOV.  I like Dr. V for her ability to really draw out the best in people.  Here she tackles a topic of great complexity and makes it feel like an everyday conversation.  If you ever have an opportunity to work with Dr. V you will be deeply rewarded with the outcome.

On a side note, I felt so comfortable that I forgot that I was on air – you can see my eyes wandering, yikes.  Next time I’ll tape a sign on the ceiling that says “Look Down”.  Anyway – it’s an interesting topic so please watch and let me know what you think.

From Trend POV

Social media is no longer just a way to reconnect with friends; it has become an integral part of daily life that is rapidly gaining traction in the business world. Social media now provides a format for customers to self-organize in a way that creates a competitive market for goods and services where both the customers and the vendors can benefit. The depressed economy has brought people together to share advice and zero in on great deals through group buying.

As defined on Wikipedia.com, “Group buying, also known as collective buying, offers products and services at significantly reduced prices on the condition that a minimum number of buyers would make the purchase.” Originating from China, group buying, called tuángòu grew from the practice of haggling and has now infiltrated the online world in many parts of the globe. Notable sites include Groupon, LivingSocial and MyCityDeal.

Unlike China’s deal strategy that is self-organized and executed, most of the group buying in Europe and North America is done using online intermediaries who charge vendors fees that can be as much as 50 percent of the deal. Group buying has been gaining consumer popularity for three years now; however, group buying in the business sector is still in its infancy. Despite Groupon having over 100 million subscribers that had bought over 60 million Groupons by September 2011, skeptics suggest the trend will not last.

Consumers may be getting saturated by email overload from deal sites competing for their attention. China is struggling amidst accusations of selling fake goods; almost a fourth of the 6000 group buying Web sites shut down in 2011 and those still operating are losing money. But group buying is probably not yet dead. As Dan Frommer said on businessinsider.com, “The future of group buying is on mobile devices. Why? Because they’re always with you, can identify your location via GPS, and can access a network of real-time, instant deals.” If businesses can engage customers and retain loyalty, group buying may have a bright future.

To turn this trend into an advantage for your organization, consider the following. Customer self-organization is going digital. Selling to groups can increase profits. Use social media to drive customer self-organization. Group-selling is not for gaining new customers. Instead, try group-selling for exclusive products and services and rewarding loyalty.

 

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The 5 Pillars Of The Inevitable Economy

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On January 24, 2012

In General Information

The previous article identified a recurring trend in human history; each new stage of civilization resulted from the integration of tools invented in the prior stage. Where we are today carries many clues about where we need to go tomorrow. However, change cannot come about from changing random components because the output of one component is the input of another. In general, this is what defines a “system”.  This article describes the 5 pillars of the inevitable economy.

The financial system is built on five integrated pillars

Currency

A currency is a device that people use for both the storage and the exchange of value.  Currency serves as a proxy that represents the value of things that people produce it is not in itself an actual product.

Inventory

The accounting system keeps track of the things that people produce.  It is helpful to use a currency to represent the the storage and exchange of value from the things that people produce; but again, currency is only a representation of inventory.

Vetting

An economy must have a vetting mechanism that keeps the game fair otherwise nobody would play.  Today this includes a legal system, contracts, and institutions  – such as representative government – that defend the value of things that people produce.

Entrepreneurs

Classically, entrepreneurs are the merchant class who allocate land, labor, and money in various proportions and combinations as a means of organizing and matching the supply of things that people produce with the demand for what people produce.

Society

People define markets.  They supply the inventory that other people demand and they demand the inventory that other people supply.

Examples of financial system failures are legendary

The Enron Fiasco was an accounting system failure caused by a vetting mechanism failure. The housing bubble was a was a currency failure because CDOs effectively divorced the dollar from any meaningful representation of productivity.  The unemployment crisis is a social failure that limits the ability for people to supply the things that they demand.

The Inevitable Economy

So what if the functions of these same five pillars could be achieved and integrated in some other way? What if this is already happening?  Going through the list backwards to reflect a mirror image:

Society

People are reorganizing in new and different ways.  They increasingly use social media and mobile technology to supply and demand limitless information with which they then use to supply and demand many useful things of each other.

Entrepreneurs

Land, labor, and capital are becoming increasingly irrelevant in the age of non-scarce information – instead, entrepreneurs are allocation social, creative, and intellectual assets as a means of matching the supply and demand for the things that people need.

Vetting

Social contracts are playing an increasing role in keeping the game fair. It is not in the best interest for anyone to act with low integrity when they can be Googled in a matter of seconds.

Inventory

The knowledge asset inventory is forming in many applications and platforms – but it is not yet integrated. When this happens, an accounting system for social, creative, and intellectual assets will immediately emerge.

Finally, the currency

Any device that can represent human productivity better than today’s money will become that next currency.  This can only happen after the four pillars begin to integrate.

The currency is supported by the system. The system is NOT supported by the currency.  

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The Inevitable Next Economy

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On January 23, 2012

In General Information

The Human Productivity Chart:

Human civilization has progressed through many stages.  Each stage arose from the “integration” of the tools developed in the prior stage.  Believe it or not, the next economic paradigm will arise from the integration of the tools being developed in the current stage of human development. Let me explain:

Hunter -gatherer:

We started as hunter-gathers who traveled from place to place to follow animal migrations and seasonal flora.  People would collect fallen branches and burn them for heat or cooking.  Then people started to sharpen rocks that could be used to hunt food better than a dull rock. They sharpened rocks to chop down trees for warmth and shelter.  Soon they sharpened rocks to till soil.

The agrarians

The arrival of the agrarian age came when the arrow, the axe, and the plow were integrated; that is, the output of one became the input of another – allowing people to conserve energy and increasing productivity. The emergence of communities led to the division of labor as people specialized their skills. People soon developed tools and techniques for forging metals, building structures, and harnessing of forces such as wind, sun, water, and domesticated animals.

City-states

The arrival of City-States arose when division of labor, harnessing forces, and transportation became integrated.  Spare time became available to experiment in ideas such as governance, laws, civil services, and currency. Travel allowed for trade of goods, services, and the spread of knowledge across great distances.

Philosophers

The age of philosophy emerged as the leisure class, knowledge exchange, and civil law integrated such that people began to question existence, spirituality, and test theories about the observations that they constantly witnessed in the natural world.

Scientists

The scientific age emerged from the integration of tools developed during the philosophical age.  Written language, mathematics, geometry, came together as alchemists attempting to turn lead into gold, instead created many other new and useful things from the elements. Astronomy, calculus, the scientific method, and modern finance were born.

Industrialists

The industrial age emerged as an integration of the tools developed by the scientific age.  Eli Whitney demonstrated the “interchangeability of parts” paving the way for modern production. The printing press and cotton gin demonstrated the scalability of machinery while capitalization and securitization of value (finance) allowed a merchant class to allocate land, labor, and capital.

Information

The age of information formed from the integration of tools created by the industrial revolution.  All that machinery created a tremendous amount of data.  Computers were developed for processing data creating information that could be used to make productivity more efficient.

Knowledge

The Knowledge age emerged from the integration of tools developed during the information age. The Internet vastly accelerated the amount of information available from which knowledge could be applied as factors of production in physical systems from weather prediction, space travel, medicine, and new ways for people to organize their selves.

Innovation

The innovation age will emerge from the integration of tools developed by the knowledge age.  So called “social media” is creating thousands of platforms upon which people reorganize themselves around interests, affinities, relationship, and commerce.  As these tools integrate; that is, when the output of one tool becomes the input of another tool (and vice versa), a new economic paradigm will emerge.

Wisdom

Keep in mind that the agrarian economy and all previous stages are still with us today. Keep in mind that elements of future economies also exist today.  Keep in mind that the US dollar has not always been the currency of trade nor should we expect that it will always be with us in the future. We can assume that the productivity inherent in people and communities is not dependent on the currency, rather, currency is dependent on it.  Time is the only scarce resource and everyone has an equal amount of it.  As such, time is the only true currency.

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