The Ingenesist Project

Social Networks and Innovation Banking

On November 1, 2010

The real estate market is trashed, money markets are unstable, commodities are in the tank, the banking system is corrupted to the core, inflation is looming around every corner, and the politicians are engorging themselves in a game of Gridlock.

There is no safe place to put your money

Instead, people are investing their productivity in social media – social media is simply a storage device for knowledge assets. Soon it will become a stock exchange for knowledge assets. Investors should not take this lightly – the best place to store your money is in the real productivity of real people.

People are trading knowledge assets in social media

This exchange is denominated in social currency. If we mimic the structure of the Financial System with the emerging structure of Social Value Systems, we see a huge opportunity to develop an alternate financial system that can capitalize and securitize knowledge assets in social media.

Ingenesist.com

Music by Phil Felicia

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America’s Uncivil War

By Admin

On October 30, 2010

In General Information

I am deeply concerned with the Liberal / Conservative flame wars. Countless Facebook discussions start with a casual reference to one position or the other, then quickly devolve into deeply divisive language. I see it in forums, Chats, Comments on blogs, news articles and YouTube Videos.

It’s getting worse – people can no longer agree to disagree.

I do not believe in big government. On the other hand, I do not believe that corporations should be the sole protectors for safeguarding the social charter. Call me an idealist, but I truly believe that given the right incentives, people can govern themselves to a very large degree.

Weapon of Mass Reconstruction

We have at our disposal the most powerful tool ever created for the potential benefit of humanity. Societies since the beginning of our time would have envied us beyond words – as their villages were pillaged, as the plague spread, or as the hurricane hit shore – if they had a system that could unify and organize people as we can do today with social media.

My fear, is that we will use this tool to divide instead of unify. Traditional media and the advertising industry are in deep trouble as people go online to self-select their news and content.

Trust me, I’m your friend

Unfortunately, traditional media (TV, print, and Radio) are under extraordinary pressure not just to maintain ratings, but to increase ratings to subsidize less successful areas of the enterprise. As a result, the content must become more and more sensational in order to keep people watching commercials. If I earned one dollar for every minute of YOUR time that I could waste, would you trust me? Yet people do.

The Terrorist Within

I am terrorized by the notion that Americans will turn against Americans. The problems facing this nation are so complex, so controversial, and so far reaching into the past and the future that it is unlikely that any intelligent person is more qualified than any other intelligent person to hold the highest office. Barrack, Hillary, Sarah, John, would all have the same pressures pushing back on every move leading them down 95% similar paths. None could be better and none could be worse – we’re officially in this together.

So until the super-star with extra-human discernment rides out of the clouds, People should really really be looking for a third way through this. Pure Communism is a Failure, Pure Socialism is a failure, and we are quickly learning that Pure Capitalism also runs out of track.

America’s Uncivil War

The Next Great American Civil War will be a battle against ourselves – all of the artifacts of past generations that pull at our subconsciousness; the reactionary fight or flight instinct of our ancestors. We are being called to something new. Let’s get on with business and find out where this road leads – together.

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Social Value Creation: How To Manufacture Wisdom

By Admin

On October 29, 2010

In General Information

We call this wisdom

In the old days, the hiring manager was the person to know if you wanted to get a job. They would read your resume and compare it with the “bell curve” in their mind. This bell curve contains a statistical sample of all similar situations that the manager has witnessed, the variables involved, and a range of outcomes observed across their long and illustrious career…Ohhhmmmmmm

We Call This Simulated Wisdom

Modern HR systems try to simulate this wisdom through a series of innovations such as key word search, structured interviews, personality tests, and employee incentives. Now we can use Google (an information company) to derive sort of a proxy for wisdom as we assess search results in our own image. Facebook and Linkedin go a step further by providing us with another filter through which to pass judgement upon a future employee or partner. The problem is that the more we look into these systems, the more they deliver back to us a reflection of ourselves…Ohhhmmmmm

: Social Media vs. Normalized Intellectual, Social, and Creative Capital

The Data need to be Normalized

The world has become so strange, complex, technological, and interwoven, that no single person can possibly posses such a vast and broad set of experiences as to arrive at an optimized outcome every time. Innovation favors strategic combination of diverse knowledge unlike the Industrial revolution which favored identical packets of similar knowledge. The Innovation Economy will require a completely new approach to social value creation.

The Social Credit Score

Not unlike the FICO score, the knowledge inventory is a collection of potential knowledge events where the social network is a reporting agency that has a vested interest in meaningful knowledge events. Unlike FICO however, the variables for knowledge can be infinite (think of the Dewey Decimal System). Also, a Social Credit Score would respond to positive events rather than a finite set of negative “hits”.

The Percentile Search Engine

Instead of just returning information, this new search engine must return probabilities from which an entrepreneur may test scenarios related to the likelihood of executing a particular business process at a known time, cost, proximity, ROI, etc.

Example

Innovation Economics

An entrepreneur may want to know if her team has enough knowledge to execute a business plan. Perhaps the team has too much knowledge and they should try something more valuable. Maybe the team does not have enough knowledge and they should attempt another opportunity or accumulate training.

Valuation of Knowledge The search engine can look into a network and identify the supply and demand of a knowledge asset. If it is unavailable or too expensive, the search engine can adjust for price, risk, or options that may emerge at a later date.

Business Intelligence Organizations can scan each other’s knowledge inventory and decide to compete, cooperate, acquire, or evade.

Knowledge management If a key person retires, the entrepreneur would simulate the knowledge that is lost and reassign people strategically.

The Secret Sauce Companies such as Disney and Boeing both use Engineers, each would have proprietary algorithm of knowledge that represents their “secret sauce” of success. These recipes can be adjusted and improved to reflect and preserve the wisdom of an organization. Over time, these algorithms will become far more valuable then the Patents and Trade Secrets created by them – this will allow technologies to be open sourced much more profitably and shared across more industries.

Eventually, we will learn to manufacture wisdom …OhhhhMmmmmGeeeee

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The Social Credit Score

By Admin

On October 27, 2010

In General Information

Money Matchmaker

The function of a Bank is to match most worthy money surplus with most worthy money deficit. In the old days, the banker was the person to know if you wanted to be successful in town because they did the matching. But with the emergence of the credit score, the “banker” became digitized. The spread of the credit score is responsible for great wealth creation because many more entrepreneurs could borrow money in the present to increasing human productivity in the future.

The Credit Score

The credit score is statistical in nature; it isolates about 30 or so indicators of your financial activity and puts them on a bell curve. These include how much debt you have, how much your assets are worth, your income, etc. These ratings are run through the FICO Equation and out pops your credit score. Anyone can predict the likelihood that you may default on your financial obligation.

All of the data that feed FICO are collected from public records, your employer, and the people who you borrow money from because these same organizations have a vested interest in a system of correct credit scores.

We are competing with ourselves

It is interesting that people do not compete directly with each other for our credit score because it is not a ranking system, it is a “normal distribution”. However, with no credit, people are invisible and the system shuts them out. With bad credit, the system also shuts them out. People are also willing to give up some freedom and privacy, but they accept these terms because the credit score provides tremendous leverage to finance a business, automobile, or a home.

The Knowledge Matchmaker

The Value Game specifically transforms financial currency into social currencies where value increases by human interactions in communities. Then, the social currency is transformed back into a financial currency or stored in a yet to be determined social currency. The efficiency of the Social Value Creation Process can be vastly improved with a Social Credit Score. The objective, like the financial credit score, would be to match most worthy knowledge surplus to most worthy knowledge deficit.

The Social Credit Score

There are two forces that need to be combined to produce a credit score; the reporting of social activity and the independent variables that constitute social activity. We already see some elements where search engines report your social activity and we have seen a few unsuccessful attempts to use Twitter as a proxy for social productivity. Neither are functional but the nascent social credit score system will eventually improve. But why wait if we already know what needs to be done?

Something else needs to happen

Not unlike the FICO score, the Social Credit Score is a knowledge inventory for social, creative, and intellectual assets that a community of people collectively hold. The format of the knowledge inventory must be assembled to a bell curve.

Next, a new type of search engine must be developed that can process the knowledge inventory and statistically match most worthy surplus of knowledge asset with most worthy deficit of knowledge asset given a set of business objectives. Then and only then can holistic transactions take place which can redefine human economics in social currencies, i.e., where knowledge really is an asset.

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80/20 Rule: The Value of Human Interaction

By Admin

On October 25, 2010

In General Information

If an IPod is shuffling in the forest, and nobody is around to hear it, does it make a sound?

This is a standard philosophical riddle that raises questions regarding observation and knowledge of reality. Alexander T. Jackson, one of the great minds of the 20th century, may have said that, “View points of this riddle differ based on the perceived definition of the word ‘sound’, often confused with the definition of the word ‘hearing’.”

A $300 Ipod is shuffling in the forest and nobody is around to interact with it, does it have value?

This philosophical riddle also raises questions regarding observations and knowledge of reality. Viewpoints in this riddle differ based on the perceived definition of the word ‘money’, often confused with the definition of the word ‘value’.

To this question, Wall Street would say “Yes”, but Main Street would say “No”. In fact this brings into question the order of how we assign value in our world.

Suppose we constructed the same riddle for any physical asset such as a bridge, house, airplane, computer, car, university education, insurance policy, Marketing Department, tennis shoe, police officer, trumpet, leaf blower, FaceBook, Twitter, Linked In, fungus cream, guacamole, anything at WalMart, etc…..

Value of human interaction

Before long, we notice that the value of nearly all products and services is wholly derived from the value of human interaction with the object. So where exactly is the true value of our economy, in the object or in the human interaction? Wall Street would say “object”, but Main Street would say “human interaction”.

Credit Score

In finance, the credit score was established to assess the human interaction with a financial instrument called debt. Yet, in the above example it is relatively clear that the vast majority of value created is dependent on human interaction with products and services that may or may not be financed with debt, not the debt itself. It would seem that a social credit score and a knowledge inventory would be more appropriate way to assess the true value of economic activity. But where do we start establishing such an index?

The Social Value Index

We’ll start with a baseline 80/20 rule first identified by an Italian Economist named Vilfredo Pareto. In our rendition, 80% of the true economy is created in the form of social value and 20% is created in the form of financial value. Keep in mind that Dr. Pareto also defined a concept called the “Pareto Efficiency” for social resource allocation. This refers to the end-state of an economic game where no player can become better off without also making at least one other player worse off.

The objective then, is to design Social Value Games that are 80/20 (social vs. financial leverage) compliant and Pareto Efficient then, test the hypothesis and improve it toward optimality.

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Social Value: The Aerobics Game

By Admin

On October 23, 2010

In General Information

The Social Value Game is a not a social currency exchange, it is a social value exchange. The objective of the game is to convert financial value into social value, then create new value, tax-free and frictionless in any number of social currencies, then convert it back to financial currency + social value. The strategy is to identify and leverage an existing high value social resource and organize a community of people and other vendors around that resource.

Consider the following example:

The Aerobics Instructor Game

Suppose that a popular aerobics instructor has 20 students and charges 40 dollars for an 8 week class. 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 so they are largely agnostic to the source of the impression.

It is in the instructor’s best interest to enroll people who are likely to spend the most at the store. Given this arrangement, a sporting goods store may offer a similar coupon against tuition as would an Indian Restaurant, or even a health insurer.

The health food store gains loyal repeat customers without advertising

The aerobics instructor may maximize her profits by enrolling a health food chef or a caterer, a wedding planner, or people with large families. She may negotiate a services with a hotel enrolling guests while extending food discounts to the restaurant. If she’s successful, event pictures pop-up on Facebook and deals appear on Twitter. The aerobics instructor becomes knowledgeable about the products and the community and talks about them with her friends.

The Social Value Index

The Social Value Index compares the cost/benefit of the non-integrated advertising model with the cost/benefit of the socially integrated model of community benefit. The Social Value Index rewards this store for enabling entrepreneurs in exchange for loyal repeat customers. The Social Value Index favors this instructor for being knowledgeable and supportive of her community and available health resources. The Social Value Index rewards the network of secondary vendors who align with the aerobics instructor and who may likewise offer electronic coupons.

The coupon constitutes full disclosure therefore, it is clearly not in the best social interest of the aerobics instructor to accept coupons for, say, cigarettes. It is not in her best interest to cheat since her social value would be punished if her actions were found to be fraudulent. The Social Value Index rewards Aerobics students for participating in socially redeeming activities. The alternative is for the Health Food store to drop a lot of money on TV commercials, Google Ad Sense, and Social Media Spam.

The Social Value Theory: 80% of the economy is social value, 20% is financial value

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Social Value Creation; A Blank Canvas

By Admin

On October 21, 2010

In General Information

The evolution of money

Money has evolved from coins to paper to electronic accounts. Now we see the emergence of mobile electronic accounts. Money may represent value but does it actually represent the value creation process? If not, then what does and which is more important?

PayPal wants to be like the electrical socket that all mobile payment innovations plug into. In fact, they have a standing invitation for all technology partners in the mobile payment space to integrate with them. This is called an externalization strategy (much like Facebook, Twitter and Windows), where there are so many developers, users, and participants that NOT being on the platform becomes the competitive disadvantage.

The PayPal offer represents the separation of money from the value creation process. This exposes a very interesting point to consider.

The Frictions of Monetization

The assumption is that PayPal et al will store and exchange dollars, and only dollars. As such, they are contained within the financial system: credit score system, a person’s name, birth date, and the social security number as a personal identifier, the IRS reporting jurisdiction, and commercial code vetting mechanisms, etc.

Similarly, the drive to monetize in Social Media is pushing applications toward the same containment within the financial system. Not surprisingly, the complaints of privacy and data security in Social Media stem precisely from association with credit scores, IRS, personal identifiers, Social Security Numbers, etc. But “Big Social” presses on – they know not another way. Ironically, this is precisely the battleground; the source of all intermediary tactical and social friction that hinders monetization in the first place. It has little to do with the creation of value – only containment of value. To win is to lose.

A Better Proxy for Value

The reality of governance dictates that all business ventures begin and end in a standard currency of commerce such as the dollar. However, there are NO restrictions on which currency must be traded in between to “create value”. Nor is there any schedule that determines when a venture must begin, end, or be liquidated to dollars.

While The Social Value Game may start and end with dollars, the value creation process is carried out in a social currency using a “Social Credit Score”, an anonymous “Unique Identifier”, and a collection of “Social Vetting Institutions” independent of government or corporate jurisdiction. The Value Game is a frictionless, tax-free and self-regulating environment without the guy wires of the financial industry. The game simply leverages existing value socially to make new social value.

Social Value Specifications

The Social Value Creation Process is a blank canvas and we are writing the specifications today. If a social currency becomes a better proxy for productivity – it may also become a stand-alone currency fully capable of capitalization and securitization. Theoretically, a social currency may never need to be converted to financial currency any more than a dollar ever needs to be convertible to silver or gold – it simply becomes another ledger entry on an accounting balance sheet.

Is Money Irrelevant?

The value creation process is the hard part. Transformation of Social Currency into Financial Currency will become easy – anyone can do it. In other words, if PayPal becomes irrelevant, the money evolution chain will be broken and money will become obsolete. The market is wide open for a money competitor who can simply transcribe a social currency transaction into a ledger entry for financial currency. It’s a lot easier and closer to reality than many people think.

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The Social Value Game

By Admin

On October 19, 2010

In General Information

The Social Value Game

The value game is a social media business method developed by the folks at The Ingenesist Project in a dynamic application of social technology.

Most applications of game theory are controlled from in-house or deployed against a competitive landscape. The Value Game is deployed external to the corporation and in a cooperative landscape where rewards are given to those who organize people around a “highly leveraged product” in valuable ways.

There are 5 elements to The Value Game

The first is what we call a highly leveraged product such as a conference, experience, convenience, ZipCars, or reunion – we’ll see that almost any product can be leveraged.

The next element is a secondary product vendor such as a hotel, restaurant, transportation, clothing, or equipment supplier – we’ll also see how almost any product can be deployed in the secondary role.

The third element is a consumer who seeks to minimize financial cost and maximize social value.

The fourth element is a 3^rd party entrepreneur who is able to organized people in social networks and leverage primary and secondary assets in unique combinations.

The fifth Element is a true value calculator called the Social Value Index (SVI). The SVI is the scorekeeper that calculates the actual value of the leveraged product after all of the discounts and social value factors are counted.

The game starts when everyone joins the same social network underwritten by a mobile electronic debit card platform and sets their filters for what information can enter (and to block out spam). The highly leveraged product in the middle acts like a ball in play whose value is dependent on the interaction of the other elements. Secondary vendors will deploy incentives into the field. Third party entrepreneurs will organize people around the incentives and take social profits. The Social Value Index will keep score.

Example 1: A ZipCar costs about 8 dollars per hour; this business model does not encourage social activity; it encourages fast shopping. Suppose that a person pays for the ZipCar on their debit card. Local restaurants will be made aware of the purchase and then deploy coupons against the ZipCar to the buyer’s debit card. Next, a 3rd party entrepreneurs may improve the SVI by organizing a ZipCar swap so that the person does not have to leave in the same ZipCar that they arrived in and can spend more time shopping. Another entrepreneur may organize events for families and friends that increase the passengers in each ZipCar, or by capturing any inventory from the community such as movie tickets or family experiences to deploy against the ZipCar. After the event, the SVI updates the net cost of the ZipCar from 8 dollars per hour to, say, 1.42 per hour. This is 80% savings on the ZipCar and 33% savings on a day out with the family over using their own car.

In effect, the leveraged product buys itself in a convertible social currency

Example 2: Suppose that a popular aerobics instructor has 40 students. The local health food store may authorize her to give away 1000 coupons for 5% discount on store products. In return, the aerobics instructor gets 5% of total purchased. The health food store already spends 10% of revenue on advertising. It is in the instructor’s best interest to give the coupons to people who are likely to spend the most at the store. After all, if 1000 people spend 100 dollars each, she stands to gain 5000 dollars. The health food store stands to gain loyal customers without advertising. The aerobics instructor may maximize her profits by joining with a health food chef to teach classes in healthy cooking. Or, she may join with a caterer, wedding planner, or hotel to supply an entire event for which she will receive social and financial value. She may give them to colleagues who also become authorized to give away coupons – and she negotiates for a percentage of their output as well. She will become knowledgeable about the products at the store and talk about them with her friends. She may even sell the face value of the coupons for cash since it is likely that a high bidder would also be a large customer for the health food store. The Social Value Index favors this store, this aerobics instructor, and this social network – higher than competitors. SVI registers with Search Engines and bargain hunters seek the Aerobics Instructor for deeper information and services.

Millions of applications will arise limited only by the imagination of communities not Wall Street

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American Day Dreams

By Admin

On October 14, 2010

In General Information

As we discuss many times in this blog; human knowledge assets include combinations of intellectual capital, social capital, and creative capital. Of course nobody can survive without all of these elements, however, I am continuously amazed at the power of the last and most important element; Creative Capital.

This video is from an extraordinary Seattle Musician named Aaron English. I have known Aaron for several years and follow all of his work. He is always up to something completely interesting. Aaron can say more in 4 minutes that I can say in 100 blog posts.

Artists and musicians have what I call “communication density”. They are the true innovators among us. They can combine so many different concepts, media forms, and objects to produce something completely new and interesting. Artists create value. I rely heavily on the artists for my day dreams.

Please enjoy this video – American Day Dreams. Watch it several times. Don’t forget to daydream

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The Capitalization of Silence

By Admin

On October 8, 2010

In General Information

"Silence" by Horst Schmier

Coupon Madness

The business concept of rewards coupons is not new. S&H Green Stamps were among the original applications of the concepts. The fact that coupon cutting is now going on-line is not surprising to anyone. A second major trend is in the area of data collection. Supermarkets have learned that it is valuable for them to “pay” the customer in exchange for data that makes stocking and distribution more efficient. When combined, coupon + data is a tremendously valuable marketing and logistics tool.

The next development of coupon + data model is the notion that if a person likes a product, so too will their friends. This is the coupon + data + association model. Not surprisingly, the marketing value of the combination of these linked data increases almost exponentially.

To Pay Dearly

Brands are now willing to pay dearly for information about the transaction as well as the social networks associated with a transaction. With the ability to track several layers of transaction and association, vendors can paint an extraordinarily accurate predictive model that can be used in their favor – and in competition against market challengers.

The half-life of noise

The hype is brisk and often short lived as most companies eventually run up against the proverbial viral backlash. Someone somewhere can just as easily elevate their own influence by challenging a big influencer. Privacy issues, fair trade issues, corporate responsibility issues are all fair game. Social media forces transparency in an organization too as controlled data can quickly become uncontrollable data.

The battlefield is strewn with the corpses of marketing campaigns gone horribly wrong. Even Groupon, once touted as the champion of mom and pop shops across the land is now accused of dumping economic “sugar calories” into a zero sum game where size does matter – a lot. Groupon is now used by competitors against each other thereby wrecking havoc on Mom and Pop Shops across the land.

Help, I need a Guru

Social Media Gurus continuously pound home the message that they must find their customers grazing in their own pasture and engage them in order to be truly accepted into the herd. Now the Gurus have all the vendors looking like wolves in sheep’s clothing – nothing could be more obvious or look more ridiculous.

The inherent flaw is that companies are designing and delivering products predicted to interact with people in their own setting. Instead, they must develop a set of products and services that are designed to facilitate human interaction with each other in their own setting – and as a consequence, filter out all the noise that wastes valuable social time.

Coupon + knowledge inventory + anonymity

Learning what people know does not mean that they need to give up their identity. Joining people who have complimentary knowledge is a superior value creation mechanism than harvesting relationships already played out. The ability to protect and empower the customer in their home setting is the greatest branding opportunity on Earth. The ability to filter out the noise is the single greatest competitive advantage that any marketing campaign can ever enjoy. The ability to bring communities of people together to solve the problems of their own choosing is far more powerful than trying to convince people that they have a problem for which only you have the solution.

This is the capitalization of silence

Image by Horst Schmier

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We Got It Backwards

By Admin

On October 4, 2010

In General Information

The History of Financial Innovation

The invention of the wheel, wedge, and pulley came long before the invention of credit scores, CDO’s, and International Trade Agreements.

Technological Change must always precede economic growth – economic growth cannot sustainably precede technological change. If you throw money at a problem, you are not guaranteed technological change. If you throw technological change at a problem, you are guaranteed money.

The Tiny Flaw of Market Capitalism

We are going about the process of globalization as if economic growth can precede technological change. This is the tiny flaw of market capitalism and it is unsustainable. In short, we’ve gotten it backwards and continuing on this course prevents us from seeing the future.

The flaw is easy to correct. The Ingenesist Project has specified two for-profit business methods, “The Value Game” and “Zertify.com” which if deployed today in Social Media could accomplish this. These business methods are committed to the public domain. The only thing standing in the way is a social agreement.

Let me know if you agree

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Tattle-Tale Economics

By Admin

On October 2, 2010

In General Information

Editorialized Economics

Social media used to be so cool – a way to bypass the mediated reality of editorialized content. Real people coming back with real ideas and real opportunities from the crystal clear waters of cooperative community. Then legacy media and their ad-rev departments started to wonder “Hey, where did everyone go?” Marketer started saying, “Hey, these CPM numbers are F***ed – something is cutting into our pie ?!?!?”

Then came the Social Media Gurus

like the tattle-tale kid brother intent on spoiling a perfectly good game of hide and seek, screeching: “There they are, there they are!!!….Can you see ’em?…see, see, your customers are hiding in the shadows… there, in the shadows….quick!!! Can you see ’em now?. By the way, pay my fee, buy my book, and did I mention my latest ‘keynote’ yet?”

Next, the Gurus went mainstream as legacy media analysts!! Legacy media picked up the ball on the run-away ad spend. They glossed poetic on the “effects” but not the “causes” of social media. And, OH Gawd, what a nuisance all those pesky bloggers are to the dignified art and science of professional journalism.

A Monster was Born

Facebook declared that people really want to share their personal details with the world, and a monster was born. So now we are stuck with Corporate Media on steroids. Your data are scraped so they can find you. Images are reproduced infinitely. Lies and deception grow legs half way around the world before the truth can even be awakened from it’s slumber. Say one thing wrong and it haunts you forever.

Casualty or Causality

Social Media has become another casualty of the broken financial system where people fight for artificial scarcity. It is no longer a means to empower and enlighten, it is becoming another means to exploit and oppress. Special recognition goes out to all the so-called social media gurus. I can’t blame them though, everyone has the right to make an honest living.

Call it tattle-tale economics

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Of Anxiety and Optimism

By Admin

On September 30, 2010

In General Information

Keep it Simple

I’ll keep this simple because it is simple. Most people know exactly what I am talking about. Most people feel that a huge change is underway. Most people feel deep in their hearts that whatever we are doing today will be different tomorrow. Most people feel a strange combination of anxiety and optimism.

It’s Time to Change

No, it’s not just a political change or an economic change or even a social change. All of these, in their simplicity, would not do justice to the magnitude of what is really about to happen. The forces now in play will resolve to the equivalent difference between the hunter gatherer civilization, and the Renaissance. The next economic paradigm will be as different as the abacus is from the computer itself. Yet, the process by which this is happening is so simple, that the mind is repelled.

Factors of Production

In the Industrial revolution, a machine would make widgets. It did not matter whether you or I ran the machine, the same widget would emerge.

Today, the machine is a computer. Your interaction with the computer is entirely different than my interaction with the computer. In fact, you could swap out the computers and our individual output would remain unchanged.

A HUGE difference

Factors of production are no longer the land, labor, and financial capital of Classical Economic theory. The factors of production are social, creative, and intellectual capital of people and their communities.

Classical economic theory is breaking down. There is a huge change on the horizon. The new economic paradigm is in the process of siphoning off the old economic paradigm. We’re approaching mid-span; both tanks are half empty or half full, depending on how you look at it.

Confidence is a mixture of anxiety and optimism

I can say with great confidence that anxiety and optimism are the correct emotions to be experiencing today. So go ahead and tell the children in your life that everything will be OK.

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Outsourcing Fail

By Admin

On September 28, 2010

In General Information

Gambling with Jobs

The US Senate recently blocked a measure designed to reduce the outsourcing of US jobs that many corporations pursue in the relentless drive to reduce costs.

Modern Globalization is a system

Globalization must be analyzed like a system. Data, Information, knowledge, Innovation, and wisdom are profoundly related in a system. If you take away one of the components, the others become worthless. If you destroy one component, the entire structure could fail.

Everyone knows that data, information, knowledge, innovation, and wisdom are related. If I corrupt the data, then the associated information, knowledge, innovation, and wisdom are also corrupted. Likewise, if I eliminate any of these elements, the system fails.

Focus on Core competency – what core?

The standard argument for outsourcing is that knowledge workers are better allocated in innovation jobs so “we can better focus on our core – and heck, we can all save a little dough in the process”. But when we outsource our knowledge economy, the innovation economy is choked off. The knowledge economy is the source of the Innovation Economy. The Knowledge economy is also the recipient of the information economy which transforms data and information into useful tools, ideas, and products.

Rate Of Change is Innovation

The rate of change of the innovation economy is directly proportional to the INCREASE not the OUTSOURCING of the knowledge economy. This is the calculus of outsourcing. If, on the other hand, it is in you best interest to keep a population poor, weak, and unable to organize into powerful collectives, then yes, outsourcing is an effective method.

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The Innovation Banker

By Admin

On September 22, 2010

In General Information

Future of Banking

When I use the term “Innovation Bank”, people conjure up the image of a cheery place where anticipation reigns as starry eyed depositors arrange their intellectual property in neat cubby boxes, Patents fly like cash register receipts and companies troll the halls looking for a cure for their bottom line blues.

This is not exactly what we have in mind, nor is it too far off either. An innovation Bank is simply a knowledge inventory that contains knowledge assets that exists in the format of a financial instrument and can be deployed for the purposes of increasing productivity. In the process, it makes 10X more of itself every time it is deployed. It mints its own money.

The Innovation Banker

This is not much different than a financial bank. In fact, in the financial bank, everyone assumes the borrower has the knowledge to execute the business plan and the bank lends the money. Oh, by the way, the money makes more of itself 10X over (fractional reserve system) every time it is deployed.

With the innovation bank, everyone assumes the entrepreneur has the money to execute the plan, and the seek to borrow the knowledge. Other than that, they can be considered identical. The key is in the scope, depth, and format in which the knowledge assets live in a community as well as the ability to track and preserve the creation of new knowledge in a community. An innovation banker is a knowledge banker

A Virtuous Circle

Together with the financial banking, these two system engage in the dance of the virtuous circle of innovation enterprise. Apart, they collapse into the swirling cesspool of eternal debt and infinite interest (pun intended).

Ingenesist.com

Music by Phil Felicia

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Calculus for Dummies and Capitalists

By Admin

On September 20, 2010

In General Information

Mathematics Dysfunction Disorder

I am continuously astonished at the reactions I get from people every time I make a reference to mathematics, especially Calculus. Most people politely glaze their eyes over and stare at an inanimate object somewhere behind my head. Others launch into a diatribe of how the linear thinkers destroyed the world in the first place. Others will simply say, “I have [insert Deficit Dysfunction Disorder here]”

Puzzled by Limits? Perplexed by derivatives?

The truth of the matter is that everyone already knows Calculus, they solve differential equations all day long – they just don’t know that they already know what I’m talking about. If you take away all the strange terms, squiggly lines, and alphabet soup notation,….

Calculus is astonishingly simple

The Banker does not care about money, he cares about the rate of change of money.
The Stock Market does not care about risk, it cares about the rate of change of risk
The Politician does not care about votes, they care about the rate of change in votes
The Meteorologist does not care about weather, she cares about the rate of change in weather
The Pilot does not care about lift, they care about the rate of change of lift
The Gymnast does not care about motion, she cares about the rate of change of motion
The Artist does not care about color, he cares about the rate of change of color
The Doctor does not care about your health, she cares about the rate of change in your health
The Baker does not care about dough, they care about the rate of change of dough
The Farmer does not care about crops, he cares about the rate of change of crops
The Scientists does not care about data, they care about the rate of change of data
Google does not care about information, it cares about the rate of change of information
Entrepreneurs do not care about knowledge, they care about the rate of change of knowledge
Markets do not care about innovation, they care about the rate of change of innovation
Our children do not care about our wisdom, they care about our rate of change of wisdom

When people can learn how to understand what they are really doing in instead of what they think they are doing, then and only then, will we be able to see, and subsequently, build the next economic paradigm. That is why I use mathematics and that is when Social Media Becomes a Science

The Capitalist does not care about value, they care about the rate of change of value

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Death By Résumé

By Admin

On September 19, 2010

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.

Here are a few comments that I’ve picked off some recent Human Resources Community 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.

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How Knowledge Assets Live In Community

By Admin

On September 17, 2010

In General Information

Our culture organizes itself around winners and losers. Corporations reflect this competitive nature to the core of their Capitalist doctrine. Sports analogies abound across the enterprise straight through to the HR department always on the lookout for the most amount of superstar for the least amount of money.

Social media has every industry trying to understand the concept of community. Nature and our environment continues to demonstrate to humanity that there is far more cooperation going on than competition. There is tragedy looming at both ends of our political spectrum and some people are realizing that we are all in this together.

Twitter shows us that everyone is an expert at something and nobody is an expert at everything. Corporations must understand that someone not performing adequately cannot be treated as flotsam subject to jettison at the next layoff or outsourcing opportunity. They soon see that their customers disappear as well – because they are the same. Communities, people, social networks, and their integrated knowledge assets are the mis-allocated asset being squandered by losing management teams, not land, labor or capital.

Like most valuable assets, there is a perfectly legitimate market for everyone in a community – nobody need be excluded, marginalized or laid off. Social Media is turning the tables on the hierarchy. Old winners who don’t play by the new rules quickly become the new losers. Maybe we ought to run our economy like a community instead of losing so badly at trying to decimate our competition; each other.

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How Obama Will Save The World

By Admin

On September 16, 2010

In General Information

Do the math – Interest on National Debt can go all the way up to infinity while Austerity measures can only go down to zero. There is tragedy looming at both ends of the political spectrum and the Golden Goose can’t fly much longer. Captain Obama is in a tough spot.

Someone will eventually need to gently lay the economy down in a nice soft spot with a just a few critical social programs intact. A task comparable to US Airways Pilot Capt. Sullenberger who successfully landed his stalled airliner on the freezing Husdon without ripping off the wings, catching on fire, splitting the hull, or sinking the ship with all the passengers inside.

Here is how the endgame is shaping up:

Through some secret signal, all of the World’s money barons will come together and agree to simultaneously lop off three zeros (000) from all financial balance sheets. This will effectively reboot the world economy. A $50 trillion debt obligation now becomes a quaint and manageable $50 billion debt. Unfortunately, a $500,000 dollar pension becomes worth about $500 bucks. The game will reset with champaign toasts and business-as-usual in a race to conjure new debt into existence. The recovery is on … for some.

Those who have exactly as much debt as they have tangible assets will enjoy a net zero impact. Those caught at the extreme ends with too little debt or too much cash will lose spectacularly.

A stoic and sober Capt. Obama is at the controls, should we be worried?

Well, maybe. Just to give you an idea of what’s happening in the cockpit: Capt. Obama will project his glide path into the visible horizon. If he can’t make it out to Hillary’s term, he will probably try to set it down right after he is re-elected and can still blame the GOP. The GOP will try everything they can to wrestle it down before 2012 – split hull or not – so that they can claim the presidency. If they win 2012 without the landing, they’ll land it soon after 2012 and blame it on Obama. Note that none of this has anything to do with aerodynamics.

Why should this inspire anyone’s confidence?

There are a few people in the back seats working really hard to build a parachute that will hedge their fall. None of the people near the cockpit, boardrooms, or stock exchanges have any idea what these passengers are doing – they don’t seem to care – instead, they are too busy topping off their debt to equity ratios for optimum survivability upon impact.

But, the hedge instrument is playing out in Social Media, slowly siphoning the factors of production into a new economic system. Some passengers are only inches away from jump-starting an alternate economy using a social currency backed by real productivity, not debt, in a new form of capitalism. All they need is an instrument that is only a little better than what’s flying now. Then, all the money in the world will convert to the hedge currency.

Now THAT’s monetization.

The guys near the cockpit will never see it coming – they’ll only see it leaving. That’s how Obama will save the World. Let’s hope he can swim.

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Social Vetting Makes Knowledge Tangible

By Admin

On September 15, 2010

In General Information

The term “Vetting” comes from the sport of horse racing where the animal is “vetted” by a veterinarian to determine if the animal is in suitable condition to race. Today, there are many vetting mechanisms acting in society and communities. Think of it as the referee that keeps the game fair. This is important because if the game is not fair, people will stop playing.

Where the vetting mechanism fails, the system fails. This has happened in countless instances from the current financial crisis to nearly every product, market, environmental calamity, or political failure in recorded history – the referees who were supposed to keep their eye on the ball, did not. Likewise, where a vetting mechanism is effective, the system is efficient.

Today, we find severe problems in finance and government and people are investing their knowledge assets in social media as the place to “store and exchange” their present and future productivity – instead of deploying money or debt. As such, social vetting is taking many different forms to validate, qualify, and quantify knowledge assets in communities.

While the progression may not be noticeable, there will be a tipping point where the medium has built enough trust that it can support a currency. This new currency needs to be only a little bit more “trustworthy” than the currency it will replace. This is the point where knowledge becomes tangible.

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Why Two Gurus are Better Than Four

By Admin

On September 13, 2010

In General Information

Marketers need to recognize the order and permanence of human evolution. Once our species started to walk upright on two legs, we never permanently returned to walking on all fours. Such is also the case between the lower social order of communication called “Information” and the higher social order of communication called “Knowledge”. I will explain the difference now.

Social Value written or spoken to a medium is defined as Information.

Social Value which exists only between human ears is defined as Knowledge.

Likewise,

Social Value is created by transforming Information into Knowledge.

Social Value is reduced by transforming Knowledge into Information.

Once humans learn to create, store, exchange, and trade knowledge among each other, they will never return to the utterly primitive practice of mining and exploiting information.

If you agree with me then I congratulate you for your advanced state of evolution. If you do not agree with me, then I apologize for the inconvenience.

Living in the Past

Advertisers have an especially hard time with this because it is their core competence to devolve human knowledge into information through data mining, social media espionage, and machine gun marketing – all without necessarily elevating anyone to a higher state of social order. This is, by definition, a reduction of social value.

Consumers now walk on two feet in forming a strategic networks of knowledge assets in social media. Meanwhile advertisers still slither around on all fours pimping info biscuits. Consumers can easily see when Value is being stolen from them so they simply ignore the screeches and clamoring of the devolved creature. Or worse, a counter attack is a very simple – and often quite entertaining – using an evolved tool set.

Holy shit, I need a Guru:

So, the advertisers go off and hire a Social Media Guru to make the old evolutionary order all better again. The Social Media Guru does all sorts of things that look civilized to a four-legged creature, but appear increasingly ridiculous to the evolved being.

Lo and behold, the advertiser is hugely successful in attracting lots of other four-leggers and believes this to be progress!! This makes the Guru into a Celebrity. But still, the advertiser simply cannot get any attention from the two-leggers, who now control all the Value. So, the advertiser goes back to the Social Media Guru who responds by joining forces with yet another Social Media Guru….

Surely two gurus are better than one, especially to those who still believe that four legs are better than two.

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9/11 and the Convergence Economy

By Admin

On September 11, 2010

In General Information

Today, I have been reading a lot of posts related to 9/11 and the terrible events of that day. The conversation lives. It is propagated in every direction and expressed in so many different ways once unimaginable from editorialized news.

My memory of 9/11 was quite personal; I was the customer engineering account manager at Boeing – my customer was United Airlines. I was fortunate to have worked with many UAL Pilots and Flight Attendants and their Unions; UAL lost 16 employees that day – I lost 16 friends.

I remember the anxiety in the aircraft business as the unspeakable was spoken, the impossible became possible, and the unreal became real. My own identity was defined by commercial air travel and the safety and comfort of people and families. The relationship between Boeing and UAL has always been profound; but the strain caused inside the industry was foreboding.

The fact that data could shift so rapidly called everything into question. Relationships diverged, people no longer knew how to process the information that was available. This gargantuan ‘outlier’ stained every single probability chart in existence – like a crater in a barren landscape. The only clarity could be found in shorter time segments, before 9/11, after 9/11… but not 9/11.

“Google News” was one of the first information aggregation devices and was developed in response to one news junky’s need to know, as soon as possible, what is happening in the world of such micro-timing. As the subsequent political and economic swings overshot every rational stabilizing mechanism such as ‘checks and balances’, or ‘market arbitrage’ forces, the rest of us sought quicker and better ways to stay in touch with the events of the world. This meant, quicker ways to stay in touch with each other.

Today, as 9 years of “new time” has been added to the risk equations, we can see the effects of radical cultural shifts; social priorities are gaining momentum over Wall Street priorities. While governments still wrestle with the old world order, a new one is forming in it’s place. This new world has the power to perform many of the functions of corporations and government. Can twitter catch terrorists? Can Facebook entries trigger community awareness? Can instant messaging deliver instant response? How many lives are saved by Social Media? I am not certain, but it is an important question to ask that age old question: Will good triumph over evil? or in economic terms; Is humanity self-correcting?

The convergence continues. The next paradigm of economic development will continue on the micro-time scale as FB communities hit neighborhoods, Linkedin communities hit local communities of practice, and Twitter news armies grow. Cooperation Capitalism will replace competitive Capitalism and social vetting will replace institutional surveillance. Finally, a productivity backed currency will replace debt backed currency. Bring it on.

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Create 9 Million Jobs with Innovation Bonds

By Admin

On September 10, 2010

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 innovation enterprise. Surely the World still greatly admires and respects American Ingenuity (social capital, intellectual capital, and creative capital) especially in the age of social media and would likely buy such a financial instrument, if not to copy, improve, and outsource on it later.

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 entrepreneur density is about (1) person per square mile. The United States is a little more than (3) million square miles. If only (3) of the thousands upon thousands of potential applications of Last Mile social media were implemented across the country, then (9) 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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Social Capitalism And The ROI For Social Media

By Admin

On September 9, 2010

In General Information

Social Capitalism can be summed up as Classical Capitalism except with the factors of production swapped from “Land, Labor, Financial Capital” to “Social Capital, Creative Capital, and Intellectual Capital”.

This video introduces a new way of looking at social media valuation. It should be obvious by now that people create value in social media – otherwise they would not do it. The monetization paradox is stuck on “how can this value expressed as a financial instrument”?

If you engage your clients in the same currency that they are trading among themselves, the greater the likelihood you will realize the value of the new media phenomenon.

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Sell-ebrity Sects

By Admin

On September 8, 2010

In General Information

Waiting in the grocery store checkout line, there is never a shortage of glossy media about the sex lives of Celebrities. The stories are always the same, only the Celebrities change.

There are no glossy tabloids in the DIY check-out line where the objective is to check you out as fast as possible in order to meet a competitive “service quota”. In either case, however, the consumer is being extorted of value.

A sect is a group with distinctive religious, political or philosophical beliefs. In modern culture the term can refer to any organization that breaks away from a larger one to follow a different set of rules and principles. A sellebrity is someone who sells distraction for a living – they may talk about something that sounds like productivity, but it is really a distraction designed to maintain a status quo.

When marketers want you to do the same thing over and over again, you get Sellebrity Sects. When marketers want you to change your behavior, they remove the Sellebrity sects. The absence of sellebrities is equally interesting, and somewhat counter intuitive. Yet, consumers think it is the exact opposite. In either case, the consumer is extorted of value.

Sellebrity Sects refers to a set of rules or principles set out as different from the rest and used for the specific purpose of liberating you from your values; your time value, social values, financial values, even your family values.

Social media is introducing a host of new Sellebrities peddling some object designed to fortify their credibility, usually a book tour, keynote address, “Reputation”, social currency, or an A-list client. The ‘pitchman’ preoccupies the consumer into standing still long enough to create an arbitrage position for those who can exploit the TIME that you are not acting – either for branding or automating. When the arbitrage position collapses, a new sect is formed and the game continues.

Keep in mind that “Value” exists in many different forms, the game is intense, Time is the currency, and the story never changes. Look at the sellebrities all around you. Ask yourself why they are there. Try to identify the sects. Guard your social capital, creative capital, and intellectual capital very carefully – use it to increase your productivity alone. Most of all, be different – they will either ignor you or pay you.

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