Tag: community

If it looks like a buck, and talks like a buck, and quacks like a buck – it’s probably a buck.

So when your money gets “free will” and starts walking out the door door, that’s bad enough. When flies out the window en mass enabled by the same social media that brings money in the door – serious management issues arise. Should organization choose fight, flight, or cooperation?

Battle lines are being drawn:

“Among large U.S. companies, 33% have employees on staff to monitor e-mail messages — up from 15% last year, one survey found. The Proofpoint study also found that 31% of companies had fired workers who breached confidentiality via e-mail, and 8% had fired someone over a social-networking leak. The survey found 41% of respondents are worried about potential leaks via Twitter. ZDNet (08/10)”

“Marines banned social networking sites from their computers Tuesday due to security concerns, and the Pentagon announced a policy review. But Pentagon’s top officer will still tweet (Christian Science Monitor 08/05)“

“A great way to keep up with the latest Navy news is through the MyNavyMyFuture Twitter handle: https://twitter.com/mynavymyfuture. Just FYI for anyone who’s on Twitter. The handle is based off the Navy Officer site www.mynavymyfuture.com. (NavyNima – recruiter)“

The New York Times reports, “The N.F.L. has identified the enemy and it is Twitter.”

There are literally thousands of articles on this subject but none of the few that I read came to any conclusion, so I will:

Money is becoming intangible (cannot be contained) and Social Media is becoming tangible (has become the container)

The very structure of organizations is changing. Trying to control the temperature of the room when the windows have been blown out will only destroy existing controls faster. A completely new economic structure is emerging complete with new factors of production, incentives, institutions, accounting, and currency.

Swap or swamp?

Easier said than done? Not really; all we need to do is swap the same methods that we use to manage tangible assets with those same methods that we use to manage intangible assets. There are in fact people and organizations trying to do this (specifically this author) but you won’t find then in corporations anymore.

Companies have no choice but to understand migration patterns, flock actualization needs, motivation, and environmental issues. Going from an economy where the corporate charter is only “to deliver shareholder value” to one of safeguarding the health and welfare of people and their property” is a huge leap.

The discussion of Conversational Currency is required to understand the underlying economic forces that drive social media and the emerging institutional structure for corporations to create value in a computer enabled society.

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Humility R Us

By Admin

On July 28, 2009

Many companies are flocking to Social Media as the great new tool for pitching products. The results have been mixed; there are winners and there are losers. At first, there was no clear path toward certain success but now the differences are becoming increasingly clear. Humility is rewarded and arrogance is punished.

If “Nice guys finish last,” is the mantra of the old world, then “The last will be first,” is the motto of the new. To understand why humility works in social media, we need to understand what humility is.

Cashing the Reality Check

Humility does not mean looking down on oneself or thinking ill of oneself. It really means not thinking of oneself very much at all. The humble are free to forget themselves because they are secure. So when they mess up, the humble don’t have to cover up. They have nothing to hide.

All this is simply a way of saying that the humble are in touch with reality. If the definition of insanity is being out of touch with reality, then in the old world, “nice guys finish last” illusion is clearly insane.

Strength in numbers

Since the humble are secure, they are strong. And since they have nothing to prove, they don’t have to flaunt their strength or use it to dominate others. Humility leads to meekness. And meekness is not weakness. Rather, it is strength under control, power used to build up rather than tear down.

You can’t buy happiness

Back in the early 90’s, I worked on an ad campaign in Hollywood. The producer told everyone; “The objective of this commercial was to steal the thing that people love about their self, and sell it back to them for the price of the product”.

The marketing message has been for many years much along those lines. Make people believe that they need something that they don’t. Make people believe that they can buy happiness, love, and community. Make people believe that reality is something that can be escaped.

Rising Tides float all ships

The great brand messages, the successful blogs, and the viral communications in social media all have one thing in common. They provide true and real value to the most people. They produce correct and practical insight for the most people. They empower the most people to help their selves. They amplify the priorities of the most communities. They help the most people to be successful in their clear and present reality.

Soul Searching

Ironically, it will take great introspection in the hearts of many corporate brands that follow the old rules of marketing. These corporations need to look backwards into their own corporate philosophy and business plan to re-identify what they represent and how they represent it. This new identity must reach into R&D to define what innovations are developed and what features they provide. This cannot and will not be easy for most.

Since the humble are secure, they are strong. Likewise, when Brands are humble, they too are strong and they don’t have to flaunt their strength or use it to dominate others. The power of social media is to build up rather than tear down.

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The 1.6 Trillion Dollar Waste of Time

By Admin

On July 15, 2009

Countless blog articles and news reports complain about information overload in our society. People are so occupied filtering information that they no longer have time to act on what is deemed important. Every thought, idea, message, and picture that enters the human mind is stored somewhere by the magnificent human brain. But the onslaught continues in spam, junk mail, billboards, pop-ups, aesthetic pollution, and road signs.

Endless War:

It’s a war that we cannot win so we just resign ourselves to the noise. Adult attention deficit syndrome is on the rise and I personally forget ideas quickly as they are replaced by new data appearing in my field of view. I am increasingly aware of the huge time expenditure and the tremendous loss of productivity that is induced.

Money is time:

The underlying premise of Innovation Economics is that money represents human productivity and the only way to sustainably increase the quantity of money is to increase human productivity. The only way to do this is to innovate. This and other articles from the Ingenesist Project predict the value of innovation economics by the amount of productivity saved through the application of IE principles.

The Ad Spend and who really pays?

In the United States 2% of the Gross Domestic Product is spent on advertisements, not including the production cost of the ad. This is equal to 280 billion dollars per year.

Although direct response professionals usually project a response rate of less than 0.1% which means that 99.9% of the views are irrelevant noise. Time, energy, bandwidth and human productivity are consumed in seeing the ad, determining it is irrelevant and moving on (or sitting through the ad if you are captive such as TV commercials).

Pass Complete Ratio:

On super bowl Sunday, 90 million people will sit through a 30 second commercial that cost the advertiser 3 million dollars to air. For an irrelevance rate of 99.9% , 375 man-years of productivity are lost. For an average salary of 50,000 dollars per year; 18.8 Million dollars of productivity is burned by a single commercial. For an 18.8M dollar productivity loss on a 3 M dollar ad spend, the ratio is about 6:1.

This means that for every ad dollar spent, 6 are lost in unrealized human productivity. For a 272 Billion dollars spend at 6:1 irrelevance, then 1.6 Trillion dollars worth of human productivity are lost every year.

The most willing viewer is the most worthy viewer

The Ingenesist Project specifies a knowledge inventory system where a person’s knowledge inventory is represented by a packet of computer code. Since the dissemination of this code is in the power of the owner, money spent on advertising can now be spent on compensating people for their time viewing and responding to an advertisement that they are actually interested in.

Economies of scale for advertisers can be produced by supporting groups that bring communities of people together in social media activity.

Spread the word:

So if media advertising disappears, what will the rest of us do with all of our spare time? We’ll spend it with our families, friends, communities, and groups talking about what we know best – and the great products that empower us.

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Is a social contract legally binding…and who cares?

By Admin

On July 13, 2009

Trillions of dollars in play:

Trillions upon trillions of dollars worth of value that once coursed through the veins of Market Capitalism is being transferred to social media from the legacy economy now stifled by insurmountable debt. These numbers are indeed spectacular because they account for the invisible value “lost”, and most importantly, the calculations provides clues on how to “find” it again.

What is a Social Contract worth?

According to Legacy Economics, the term “social contract” describes a broad class of theories that try to explain the ways in which people maintain social order. The notion of the social contract implies that people give up some rights to a government or other authority in order to receive or maintain social order. Otherwise, we would each have unlimited natural freedoms, including the “right to all things” and thus the freedom to harm all who threaten our own self-preservation; there would be an endless “war of all against all”.

Take me to your leader

By contrast, Social Media begs the questions: who or what exactly is that authority? Isn’t the greatness of the Internet the lack of an all powerful authority? So why aren’t we at a war of all against all? What keeps social media at peace instead of an endless flame war? Whatever this alien is, it is capturing and storing trillions upon trillions of dollars of value away from the legacy economy, but where?

Separating facts from fiction

According to the old economy, it is a “fact” that human knowledge is an “intangible asset” of which there are only two types defined:

1. Legal intangibles such as trade secrets, copyrights, patents, and goodwill (brands).

2. Competitive intangibles such as knowledge activities, collaboration activities, leverage activities, and structural activities.

However, when we consider social media;

1. There is no law governing the phenomenon – so there are no legal intangibles.

2. Collaboration, leveraging and structural activities are not being conducted in a competitive environment (the context of one “Company” against another).

So, the definition fails to account for knowledge assets in social media. The Ingenesist Project discovers the lost trillions simply by treating the social contract like a legal contract.

Tangible assets are managed by contracts

Technically, any oral agreement between two parties can constitute a binding legal contract. The legacy economy limitation, however, is that only parties to a written agreement have material evidence (the written contract itself) to prove the actual terms uttered at the time the agreement was struck.

But social media, email, and blog posts, etc., all constitute vast “written” agreements and material evidence as far as most people are concerned. So what is missing? Are we waiting for permission from government, Wall Street, corporations, attorneys, or the Federal Reserve to say it is OK for people to stop competing with each other or to renegotiate the terms of the social contract (and currency of exchange)?

The mystery is no mystery

Guess what, there is nothing there. Absolutely nothing except philosophical barriers carried over from legacy economics built upon political division. The mystery is that there is no mystery except using social media to unite people. After all, the biggest Brand in the world is a Community Organizer. Such calculation provides clues on how to “find” value again.

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Follow The Leader

By Admin

On May 12, 2009

Two Types of Leaders

There are two types of Leaders in the World. The first type elevates themselves by standing on the shoulders of others. The second type elevates themselves by elevating the people around them.

The first type of leader gets ahead much faster but often produces unsustainable conditions. The second type takes much longer to get ahead, but creates a solid foundation for much greater growth and benefit to the community.

Follow the speculator

This is often the difference between the entrepreneur and the speculator. The entrepreneur will scour the earth looking for resources to elevate from a low level of productivity to a higher level of productivity. The speculator simply looks for volatility and instability so that they can place bets for or against the success of the entrepreneurs.

Social media aggregation services and search engines are very good at analyzing followers and using the quantity of followers as a proxy for leadership. They are not, however, very good at identifying leaders any more than they can identify empathy, kindness, and courage.

Leaders follow leaders….

The next paradigm of economic development will be an innovation economy characterized by social aggregation and search devices that identify both types of leaders in a community. Once visible, an entrepreneurial community, by definition, will reject the first type of leader and elevate the second type to a level of higher productivity.

…not followers

The Ingenesist Project specifies the structure of an innovation economy where human knowledge is tangible outside the construct of the Wall Street. All of the functions of a corporation can soon be duplicated in social networks enabled by social media. We are very close to this day. One of the critical evolutionary steps will be to identify and segregate the leaders from the speculators. This simply cannot be accomplished if preoccupied with watching followers.

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The New Economic Paradigm; Part 6: The Business Plan

By Admin

On April 10, 2009

The objective of this series is to contain what we know about social networks within the construct of the financial system. The intention is for knowledge to behave, and thereby trade like a financial instrument. In prior articles, we discovered the currency, the inventory, the institutions, and the entrepreneurs of the next economic paradigm. This module will construct the business plan:

A business plan is the blue print for the construction of enterprise.

Like the construction of any tangible asset, an inventory of parts is assembled in strategic proportions. The ability to accomplish this gives the enterprise a strategic and competitive advantage in a market.

Business failures are knowledge failures

Most enterprises will emphasize design, or service, or performance or price in their proprietary secret sauce of market success. The question becomes, what quantities and qualities of strategic components allow the new enterprise to create a positive economic outcome.

Most business failure are due to knowledge deficits such as the inexperienced management team, a poor assessment of market conditions, under estimating the amount of money needed, under estimating a competitor, loss of a key employee, or the poor understanding of the technology, etc. These are knowledge problems not financial problems.

Prediction is the quality of knowledge:

To solve the knowledge problems is to decrease the risk of innovating and increase the predictability of innovations. To decrease the risk will decrease the cost, and increase the availability, of venture capital. To increase the predictability would increase entrepreneurial activity.

The Unit Business Plan:

The business plan of the innovation economy is very simple; it starts with the single transaction between two people. The lender provides information and the borrower combines the information with their existing knowledge to create more knowledge. This single transaction has a value of 1 unit of currency and we call it a unit business transaction:

The Parallel Circuit:

Now we will assemble these single transactions in many combinations. When we combine two unit transactions in a parallel circuit. This represents a brain storming session between two people.

The Percentile Search Engine matches the person with the most worthy knowledge supply to a person with the most worthy knowledge demand. The transaction is a simple conversation and the outcome is a prototype process, system, method, or iteration.

The Series Circuit:

The next transaction type is modeled as two unit business transactions occurring in a series circuit. This represents a product development cycle.

Each cycle of these transactions is an improvement to the business objective. Each time the transaction occurs there is a net increase of new knowledge and therefore an increase in value. New options are created. The conversation stops when the product is ready for the market, cancellation, or next physical iteration.

The transaction is recorded as an event between two known persons of known knowledge inventories. The transaction is stored in the intellect of the participants and becomes their property in the form of a knowledge asset represented by the things they create with their knowledge.

The Social Network:

Now if we combine the parallel transaction with the series transaction we have what now looks like a network. In practice, we know that strong networks of people freely exchanging ideas make organizations better, smarter, and more efficient. Networks are where knowledge and community wisdom is stored. A network is fault tolerant, if one person leaves, the network survives. For a relatively small input into a network, we can produce a large output of new knowledge – we have a learning organization.

However, in society, these interactions are largely accidental; people meet at Church, Starbucks, and Social Events or by word of mouth. Other times, these interactions are concentrated inside a single community of very similar people such as a technical conference, group meeting, or lunch buddies and are often not well diversified. More recently, interaction is self selecting through social media devices such as Twitter, Linkedin, Craigslist, Biznik, and Meetup, etc.

What if the social interactions could be made less random and more intentional?

Suppose interactions be designed with a specific purpose by the entrepreneur as a means toward producing a unique outcome. The Innovation Bank will combine people of complementary knowledge assets in a calculated manner in order to arrive at specific business approaches and applications.

What if Innovation could be made less random and more intentional?

The Multiplier Effect:

A special case business plan is called the Multiplier Effect. In effect, building a network of applications from a network of knowledge assets.

Suppose that a company owns composite material technology for use on aircraft. Since the company specializes in airplanes, they have no intention of pursuing other applications such as recreational equipment, energy production, or health care products.

The Innovation Bank:

Suppose that the company could deposit this asset in a bank and collect interest. The Search Engine can scan the business landscape to find persons or organizations with a worthy knowledge deficit in the area of your technology. The originator holds the option to see what those other companies invent and hold the right to use their new ideas in an aircraft application.

Contracts manage those options. Those contracts are social contracts and they can be traded. They are a form of currency – or stored value.

In the event of a cyclic downturn, instead of “laying off” knowledge assets, people can work in tangential industries where they will continue developing – literally putting “Knowledge in the Bank” – to be called back to their original company when market conditions improve. A mobile knowledge asset increases in value and continually becomes smarter and more productive over time. This is not socialism, this is not capitalism, this is Ingenesism – from the root word: Ingenuity.

Market Efficiencies:

With an innovation Bank, a company can reduce their Research and Development costs and create additional revenue in a tangential innovation market. Millions of people are being layed off work from corporations – billions upon billions of dollars of innovation potential is being squandered. With reduced cost and risk of innovation, The new American corporations will specialize in inventing, networking, and applying new ideas as their primary revenue source.

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Innovation Bonds: 3 Million Jobs

By Admin

On February 26, 2009

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

The final frontier; your backyard

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

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

Running Numbers:

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

Dan’s List; Leave a Tip

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

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

Improving Information for Fun and Profit:

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

An Endowment for their Grandchildren:

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

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The Global Financial Crisis; The End Game

By Admin

On February 18, 2009

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

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

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

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

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

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

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

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

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

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

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

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

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

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The Shift to Social Capitalism

By Admin

On January 8, 2009

As computer enabled society marches toward social capitalism as a result of overburdened financial institutions, a new generation of social media applications will form to emulate those institutions. Social capital, creative capital, and intellectual capital will increasingly behave like tangible assets.

Economic and Privacy

Our credit score is a statistical sampling system in which we compete with ourselves for the cost of money. We lose some privacy with the credit score, but we accept these terms to the degree that we enjoy the benefit. After all, we can literally print money today to build a businesses backed by future productivity (financial capitalism). If this benefit disappears, so too will the paradigm and something else will take its place.

Social Media and Privacy

Similarly, we lose privacy with social media; we drop our resume on Monster, we post our profile to Facebook, we express opinion on a Blog, and search engines display this activity. But we accept these terms to the degree that we enjoy some benefit from our social network. Whatever that benefit is, we know that it is real, it is tangible, and it has value – otherwise, people would not do it. This is the nascent domain of Social Capitalism.

Cover your Assets

Like financial capitalism, social capitalism will be the ability to borrow knowledge assets today to build a business backed by future productivity of those assets. In order to anticipate how social capitalism may be structured, we continue with the analogy:

The FICO equation churns about 22 variables related to your financial behavior. These variables include debt load, asset value, income, payment history, etc. Input data comes from past lenders for the benefit of future lenders, as well as insurance companies, employers, public disclosure, etc. The credit score predicts the likelihood that your future productivity is worthy thereby allowing the lender to hedge risk accordingly.

Computer Enabled Society

If we reconstruct computer enabled society in the same form, we notice some interesting similarities as well as differences. Instead of 22 financial variables, social variables appear as events demonstrating social, creative, and intellectual capital. Input data comes from Social networking applications such as profiles, blogs, referrals, etc. Finally, search engine placement registers your social credit score. Have you Googled your name lately?

As imperfect as this may sound, remember that computer enabled society has not fully developed on the ground. Social Capitalism is in the beginning stages and there is great opportunity in improving this system if we know how it should work because the value of the paradigm, by default, could be in the trillions of dollars.

Next Generation Business Methods

The next great business opportunities will be in the area localizing, mobilizing, organizing, vetting, classification, and normalization social capital, creative capital, and intellectual capital. These elements will contribute to one’s social credit score which buys access to share information and knowledge. Geographic location will become an essential SEO component as diverse communities cluster around technologies and tangential innovations. Many of the functions that drive a traditional corporation will exist in communities governed by social economic incentives. As a consequence, not as a cause, social capitalism will reflect social priorities as the term currently implies.

Social Capitalism and The innovation Economy

Social Capitalism fueling an innovation economy may become the most powerful engine of economic growth in human history if structured correctly, and a dud if not. We are much closer than anyone realizes and the path is becoming increasingly clear. There is great cause for optimism in the next few years of social media development and social capitalism.

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Advertising in the Age of Social Capitalism

By Admin

On December 31, 2008

The recipe for selling great products to great customers in the age of Social Media resides first in helping people find their highest talent and passion.

The great innovations of our time were created by people doing what they enjoyed most by using their talents to the highest potential. Disney, Boeing, Apple, Mattel, and nearly every other ground breaking venture had the secret sauce of people doing what they were best at and most passionate about.

Advertising in the Age of Social Capitalism

Computer Enabled Society is in the midst of a struggle to reorganize itself outside of the construct of the traditional corporation. People seek to develop methods and systems that allow for the reallocation of social capital, creative capital, and intellectual capital to match a person’s natural talents and passions with those complementary to other people.

If marketers have the foresight and methods to “get ‘em while they’re young”, they certainly also have the foresight and methods to develop ‘em to their highest purchasing potential. All they need to do is listen and support to the future trends in Social Capitalism.

Instead, mass marketing pays mass money for mass audience from which to draw mass revenues. As a result, actual products are designed to be marketed and thrown away; not to be particularly useful, productive, or even healthy. Such unnecessary innovation wastes human effort and natural resources while mass marketing of unnecessary innovation wastes the time and bandwidth of those for whom the product is irrelevant (yes, Spam). Economies of scale will become liabilities of scale in an Social Capital driven Innovation Economy.

Few realize that advertising can become a highly useful component of the Innovation Economy. In many professional societies, practitioners look forward to hearing from vendors, educators, and fellow practitioners for trends, news, and developments that can strengthen their community. Bad products are rejected quickly and good ones are elevated quickly. This is how the great innovations are found. This is where the early adopters congregate. This is where brand loyalty is unyielding. This is where wealth is created. This is efficiency that society wants and needs.

The Ingenesist Project starts the discussion by specifying the creation of a knowledge inventory in society. This simple exercise enables communities of practice to form around a set of knowledge attributes. Advertisers can quickly identify target markets and support the operating costs of these communities in exchange for the bandwidth of the members. The community will look forward to learning about the advances in the field of their interest and ad copy will become far more useful and efficient to deliver in greater detail.

When communities of practice merge with other communities in the innovation process, the message of the advertiser can be carried far and clear as people share ideas and coordinate activity. Feedback to the vender is highly qualified thereby creating a virtuous circle of innovation. In the age of social media, highly targeted advertising is simply more efficient than “bending the herd” in a TV era mass market model.

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Finally, A Definition for Innovation

By Admin

On December 5, 2008

Innovation: The rate of change in knowledge with respect to time

[In earlier post we identified the 5 essential elements of a market economy. What would be the currency of an innovation economy? Currency is anything that serves as a medium of exchange, a stored value, and a standard of value. Basically we are asking; What are those things that people are out in the World trading among each other today?]

Today, innovation is repeatedly cited as the only thing that can get us out of the financial/environmental/sustainability conditions that find our ourselves in, yet the most common definitions for this term are deeply and tragically flawed.

Most definitions for innovation boil down to: “a new idea introduced that has an economic outcome” or “something new that is useful”. While these definitions match some observations, they are reflective and “You know it when you see it”. As such, there is little to define innovation before it happens or to make more of it from this definition. It is like defining “Art” as the thing that people stare at. Unfortunately, this is just the beginning of our troubles.

“Innovation is a new idea introduced that has an economic outcome” is impossible.

This definition defines one unknown quantity (innovation) with four other unknown quantities: what is new; what is an idea; what constitutes “introduced”; and what is an economic outcome? From High School Algebra we know that you cannot solve one equation with two unknowns – let alone four. There is little that you, I or anyone else can do to satisfy this definition. Therefore, it is not useful.

Granted, this definition sells plenty of ad copy as the guru of the week wax-poetic over those four pesky unknown thingies. I found one consultant who claims that innovation has 51 variables and only he can solve that matrix – for a price.

What is the truth about the phenomenon of Innovation?

A useful definition must clarify the subject in a manner that is repeatable and measurable.

If we look at history we know that economic “benefit” and innovation are mutually dependent – you can’t have one without the other. Wealth has been created by increasing human productivity through innovation in agriculture, manufacturing, computers, etc.

Next, we observe that information, knowledge and innovation are also mutually dependent – you cannot have one without the other two. Wealth is created by integrating information, knowledge and innovation.

Next; look at our society; everywhere we turn, people are collecting information from each other, building their knowledge, and innovating together, i.e., coming up with better ways to do things. All of these little exchanges obviously add up to something because things like IPods and Airplanes get built and lots of stuff rolls off assembly lines.

Innovation is anything that increases human productivity

Next we can say that information, knowledge and innovation can be related as follows:

Information is defined as facts and data

This should not surprise anyone.

Knowledge is proportional to the rate of change of information (facts and data) over time.

This is a little trickier to grasp. But any good teacher knows that information must be introduced in a certain order and at a certain speed before the information can become knowledge – this is called learning. Learning is a mental process for turning information from a book, a lecture, or personal experience into knowledge that can be used later. Therefore, knowledge is proportional to the rate of change of information and can only exist inside a person’s head.

Innovation is proportional to the rate of change of knowledge over time

trickier still, but for example; everyone has had an ‘Ah-Ha!’ moment during a brainstorming session, some incredible event that we witness, or even after some real bad mistake that we made. The Ah-Ha moment is a spike in our knowledge that happens in a very short period of time. Innovation is related to this high rate of change of knowledge. Then we blurt it out, or write it down, or make a sketch, give a lecture, in the form of information, etc.

Definition of Innovation:

a. Innovation is anything that increasing human productivity.
b. Innovation is proportional to the rate of change of knowledge and information.

Admittedly, not as sexy in the sound bite but this definition does include all conversations, sketches, dreams, and ideas of all people on Earth and allows them to combine with the sketches, dreams, ideas, of all people on Earth to become designs, methods, and processes which further combine to become products, systems, and institutions, etc.

Let entrepreneurs worry about the economic outcome

Since innovation can be difficult to observe directly. Our new definition allows us to use a proxy that is easier for entrepreneurs to see. For example; if you want to identify innovation as it is happening, simply look for high rates of change of knowledge in a community. If you want to create innovation, do things that create high rates of change of knowledge. Likewise, if you want to identify knowledge, look for high rates of change of information. If you want to create knowledge, do things that create high rates of change of information.

We need to give the entrepreneur a game they can win. The key is that everyone must be included in the game. This is a definition that can be used by anyone and everyone, in fact, it already is.

notes:

[Anyone familiar with differential Calculus can see an equation forming where Innovation is the derivative of knowledge and knowledge is the derivative of information. Calculus is the study of change like geometry is the study of space. Since the mathematics is beyond the scope of this article, I’ll finish with the following analogy for defining information, knowledge, and innovation more intuitively: “Information is to knowledge is to innovation what distance is to velocity is to acceleration”]

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Social Enterprise; Show Me The Money

By Admin

On October 27, 2008

The term social capital is thrown around with great ease without really understanding what the word “capital” implies. Capital is money used to earn more money; that means that social capital must somehow be related to, or derived from money. There is no shortage of blog posts asking the timeless question “Where’s the money in all this social stuff?”

If social capital is money, it needs to behave like money. So for our litmus test today, let’s talk about financial derivatives – the same ones that got us into the mortgage crisis mess. A derivative is something whose value is derived from something else. The price of an SUV is often derived from the current price of fuel. Not so obvious are collateralized debt obligations – but they are kind of similar.

So where is the money in all this social network stuff, what on Earth is a social capital derivative, and how can it be “capitalized”?

Suppose I start a social network for my neighborhood. The objective of this social network is to make certain all of the data collected by, and posted on Zillow.com (a real estate valuation site) is accurate. After all, it is not in anyone’s best interest for an overpriced house to stay on the market too long because it raises questions about the value of the other houses. Nor it is in the best interest for a house to be undervalued – that too brings down the value of the other houses. It is in everyone’s best interest that all the houses are correctly priced. If this could be accomplished, then a discount real estate broker can be used saving 2-6 percent on the transaction. That sounds like real money to me.

Meanwhile, it is in the best interest of all of the neighbors to help all of the other neighbors to improve those things on everyone’s homes that increase correct market value by the most; kitchen, bath remodels and a little landscaping, etc. Again, this supports the value of everyone’s house and improves people’s decisions on how to invest their home improvement money. Wow, that sounds like real money too.

A sample of persons living in a community would surely reveal a whole range of specialized knowledge useful to others in the neighborhood. Neighborhood watch organizations are better crime deterrents than police patrols. Further, local contractors, banks, stores, and businesses would love to target such an organized and focused group of people. They may even pay the community for advertising on the site… cha ching! Nobody would dare provide poor service since reputations would be quickly damaged on the community forum; likewise, disputes are handled quickly and equitably since it is everyone’s best interest to do so…

Now for the derivative:

The number one attribute for increasing the value of a home is a good neighborhood.

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A Few Predictions for the Innovation Economy

By Admin

A good article from business week

Here are a A Few Predictions for the Innovation Economy

Social Network will become the corporate structure of the future. They will spit out start-ups at an astonishing rate.

The “resume system” will be banished forever possibly earning the title of the cruelest human invention since the lobotomy.

The University System will be challenged – the relevance of the college degree will be questioned in an economy that favors unique combination of knowledge assets rather than everyone having the same “degree”.

Everyone will have visibility of supply and demand for knowledge assets meaning that employers and employees will have equal information about cost, availability, and demand.

Creative knowledge workers will earn micro-royalties for their participation in thousands of brainstorming sessions and product development discussions. Earnings will be shared openly and the percentile Search Engine.

The new Patent will be the “Secret Sauces” – the algorithm that entrepreneurs will develop to select their knowledge assets when producing specific innovation.

Teachers will forego salary in favor of an equity position in their students. The best teachers will make the most money. Universities will forego tuition in favor of an equity position in students; the best students attract the best mentors and universities. Apprenticeship will become commonplace.

The knowledge inventory and Percentile Search Engine system rewards people for doing what they are most passionate about. The dominant strategy for all players in an Innovation Economy (that which produces the most revenue) is for participants to pursue what they are naturally good at and passionate for – as long as there is a market for it.

Innovation bonds will return 80% interest or more with near-zero risk. Institutional investors, insurance reserves, and foreign investors will flood the market with venture capital.

Knowledge workers will outsource management.

The Fed will peg the dollar to productivity, not gold or silver – interest on deposits will track productivity increases due to innovation.

Social priorities will impact what gets invented or what stays on the shelf; Global Warming, Alternative Energy, Sustainable environments will have net positive business cases.

The flaw in market economics will be reversed. Technological change will precede economic growth eliminating the economics of debt (ref video). The financial system will be restored to a sustainable condition.

We know that innovation is the engine of all wealth creation and it will live in an integrated system. Knowledge will be reformatted to emulate a financial instrument.

A great Blog: Jay Deragon and the relationship economy

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The Capitalization of Knowledge – Innovation Bonds

By Admin

With a computer readable knowledge inventory, local communities of practice, a percentile search engine algorithm, and the virtuous circle of finance, then future innovation cash flows can be predicted much more accurately and with far lower risk than with, say, the venture capitalists acting alone.

Were risk is predictable, cash flows are predictable and the portfolio of innovations can be diversified so if one business fails there is an equal chance that another will succeed and the risks cancel each other out. The cash flow of all the innovation enterprises can be combined into a single large steady cash flow. Just like companies do to raise money for expansion, the innovation bank can issue innovation bonds on the open market. The revenue from selling Innovation Bonds can return to the community to finance innovation and fund wealth creation at very low interest rates compared with venture capital today.

With a lower cost of venture capital and a system that supports open source innovation an astonishing amount of innovation will be unleashed in society.

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The Capitalization of Knowledge – The Virtuous Circle

By Admin

We have set up a new game for entrepreneurs to play called Innovation Economics. We have defined a currency and an inventory where knowledge is visible outside the construct of the corporation – and resident in social networks. We have also described a way for entrepreneurs to visualize the knowledge asset and the supply and the demand for knowledge assets. We have given them a tool for matching assets for profit. We have described how social networks will keep the game fair. We have outlined the structure of new business plans; the brain storming session, product development cycle, the neural network, and the multiplier effect. Future businesses will be built upon combination of these four structures and whatever else entrepreneurs can dream up.

We have described all of the pieces needed to form a new economy. Now we need to connect with the financial markets so that knowledge is readily convertible to other currencies.

For review;

With the financial bank, the entrepreneur assumes that they have the knowledge to execute a business plan and then they look for the money. The risk is that the entrepreneur does not in fact have enough knowledge.

With the Innovation Bank, we assume that we have the money, and we go to the bank to search for the knowledge. The risk is not having enough money to purchase sufficient expertise.

With both banks acting together – the risks cancel each other out and the innovation economy tends toward a ‘risk free’ cycle; the more knowledge you can assemble, the more money you can borrow. The more money you can assemble, the more knowledge you can assemble.

Now we have a virtuous circle. The more knowledge you have, the more money you can borrow; and the more money you have, the more knowledge you can borrow.

There is no shortage of money circling the globe – only a shortage of risk free places to put the money. The innovation economy is an environment of very high return for a very low risk and will attract a great deal of money to fund innovation enterprise.

Earlier we demonstrated that money represents human productivity. It follows that the places that have the greatest potential for increasing human productivity can create the greatest amount of wealth. Therefore, poor areas and marginalized economies with under utilized knowledge inventories or the injection of specific knowledge inventories, become the highest ROI centers in a risk-free system; a condition the explicitly favors the wealth equalization rather than wealth disparity.

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Social Networks and the Multiplier Effect on Innovation

By Admin

If we combine the parallel transaction with the series transaction we have what now looks like a neural network. In practice, we know that strong networks of people freely exchanging ideas make organizations better, smarter, and more efficient. Networks are where knowledge and wisdom is literally stored. A network is fault tolerant, if one person leaves, the network survives. For a relatively small input into a network, we can produce a large output of new knowledge – we have a learning organization.

However, in society, these interactions are largely accidental; people meet at Church, Starbucks, and Social Events or by word of Mouth. Other times, these interactions are concentrated inside a single community of very similar people such as a technical conference, group meeting, or lunch buddies and are often not well diversified.

Suppose the interactions among people were not random, instead, they could be designed by the entrepreneur to produce a unique outcome. The Innovation Bank will combine people of complementary knowledge assets in a calculated manner in order to arrive at specific business approaches and applications.

A special case of the above business method and resulting social network is called the Multiplier Effect. A financial bank enjoys a multiplier effect with the ability to lend the 10 times more money than they hold in reserve. Money changing hands has a multiplier effect on an economy. Again, financial analogies hold.

Suppose that a company owns composite material technology for use on aircraft. Since they specialize in airplanes, they have no intention of pursuing other applications such as recreational equipment, energy production, or health care products.

Suppose that the company could deposit this asset in a bank and collect interest. The Search Engine can scan the business landscape to find companies with a knowledge deficit in the area of your technology and make loans of your technology. As the originator, you have the option to see what those other companies invent and you hold the right to use their new ideas in your aircraft application.

With an innovation Bank, you can reduce your Research and Development costs and create additional revenue in a tangential innovation market. With reduced cost and risk of innovation, you are likely to specialize more and more in innovation as your enterprise. In the event of a cyclic downturn in the business of an originator, instead of “laying off” knowledge assets, people can work in tangential industries where they will continue developing – literally putting “Knowledge in the Bank” – to be called back when market conditions improve. A mobile knowledge asset increases in value becoming smarter and more productive over time.

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The Percentile Search Engine

By Admin

The Percentile Search Engine is a way of using a computer to make predictions about all types of combinations of knowledge Assets.

Conceptually, the percentile search engine is where all of the equations that we use to analyze financial assets are now applied to knowledge assets. The main characteristic is that the Percentile Search Engine returns probabilities – that is, what’s the probability of success for any number of scenarios.

For example; an entrepreneur may want to know if her team has enough knowledge to execute a business plan. Maybe the team has too much knowledge and they should try something more valuable. Maybe the team does not have enough knowledge and they should find someone else, take training, or try something simpler. The Percentile Search Engine can look into the community and identify the supply and demand of a knowledge asset. If it is unavailable or too expensive, the Percentile Search Engine will even tell them what training they need to increase their probability of success.

The entrepreneur may also want to determine what competitors have a dangerously high probability of competing with her new business. The Search Engine will allow competitors to scan each other’s knowledge inventory to determine how long it would take for their secret sauce copied. They can take then choose to take evasive action, compete, or cooperate. If a key person retires, the entrepreneur would simulate the knowledge that is lost and reassign people strategically. All of these scenarios can be examines prior to spending money. They can be made during the project cycle, or after the project is completed. Lessons learned can be used to adjust the algorithm perfecting it over time.

While companies such as Disney and Boeing both use Engineers, each would have proprietary combinations of knowledge that represents their “secret sauce” of success. These recipes can be adjusted and improved to reflect the wisdom of an organization.

Over time, these algorithms will 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.

Literally thousands of new business plans will emerge from this important new paradigm. Knowledge will become tangible outside of the organizational construct of the corporation. Knowledge combinations will become the new corporate structure. The rate of change of knowledge with respect to time is the key metric and fundamental building block of the innovation economy.

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The Credit Score Analogy; Part 2

By Admin

Now we look for a similar situation for Knowledge Markets.

In the cuurent times, the hiring manager is the person to know if you want to get a job. The manager would read your resume and compare it with “bell curve” in their brain about what has worked or not worked in their past. This was a great system for the industrial economy, but it falls far short in the innovation economy.

The world is evolving so fast with new technology, new disciplines, and global cultures that what worked in the past may not work in the future. Innovation favors different combinations of knowledge where the Industrial economy favored similar knowledge. A hiring manager may not accumulate sufficient experience in a lifetime to make a proper assessment in the complexities of a diverse, global, and technical future market.

If we look in society, there are many vetting mechanism in place. Social networks are by far among the most exciting and important new technology that can serve this purpose. Social networks must now evolve to become a local vetting mechanism for knowledge assets.

Just like the reporting agencies in the credit system, Social Networks can serve an extremely valuable function in permitting human knowledge to emulate a financial instrument by acting as the “Recording Agencies” who have verified the asset in terms of quality and quantity. The knolwedge Inventory acts as the independent variables that are used to calculate the probability of market success. The difference is that the credit score measures mostly negative events while the new system will seek only positive events and can be designed to give the participants much greater influence on how they appear to the market.

One thing is missing. The credit score uses the FICO equation; Innovation Economics will use something called the Percentile Search Engine.

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The Credit Score Analogy; Part 1

By Admin

We have defined the currency, the factors of production, and the inventory of the Innovation Economy; we destroyed the old resume system and turned it into a computer language that makes knowledge appear like money in the eyes of the entrepreneur.

Now, we need a system that keeps the game free and fair. For example; EBay does little more than protect the feedback system, Craigslist uses community flagging, Linkedin keeps track of comments and contacts, etc. All markets must have a vetting mechanism in order to operate efficiently. Entrepreneurs do not invest in places without a good legal system and where property rights are not protected. When vetting fails, investors leave – It is that important.

In the Innovation Economy, the knowledge market is analogous to the credit market.

In the old days, the banker was the person to know if you wanted to be successful in town. If you needed to borrow money to start a business or buy a house, the banker would review your work history and financial records as well as your reputation in the community where you both live. If you were deemed an acceptable risk, the banker would lend you money from the deposits of local companies and individuals.

Then an engineer named Bill Fair and mathematician Earl Isaac created the first behavior scoring system to predict credit risk. They formed the Fair Isaac Corporation FICO and their invention came to be known as the FICO credit score. With the credit score, the local banker is almost irrelevant; now a Saudi Billionaire can lend money to a young couple in Boise to buy their first home – and neither of them are aware of the other. The credit score is responsible for the creation of a lot of wealth because it made many more entrepreneurs who invested borrowed money in business. The credit score even allows you to recover if you hit hard times – you just pay more a little interest until you prove yourself solvent again.

The credit score isolates about 22 or so measurements of financial activity and puts them on a bell curve relative to everyone else. 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 now predict the likelihood that you will default on your obligation.

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

It is interesting that you and I do not compete for our credit score because it is not a ranking system. The old saying “No credit is worse than bad credit”, although inaccurate, is cited often because with bad credit, you are visible to the system and it can adjust to find a suitable interest rate. With no credit, you are simply invisible.

We lose some privacy with FICO, but we accept these terms well because they provides us with tremendous benefit to finance a business, automobile, or a home without needing to save cash. Likewise, we lose some privacy engaging each other on the Internet and in our community, however, the benefit of Social Networks far exceed many perceived privacy issues.

My personal complaint with credit scores is that they track largely negative events and seem to predict failure. What if we had a system that tracks success and used that data topredict varying degrees of success.

In the next section, we will identify the institutions that exist in society and how Social Networks can act to duplicate the benefits of the credit score without the downsides….watch

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The Knowledge Inventory; Part 3

By Admin