I will be introducing a number of applications of Innovation Economics in Social Media as continue writing part 2 of my book. The objective is to identify new business opportunities by disrupting the old economic paradigm with new ways to organize people around social media. In this case, a troubled industry would team up with communities that are not their direct customers:
I live in Edmonds Washington near Paine Field – home of the sprawling Boeing manufacturing site of the 747, 777, and 787 aircraft. For years, the county executives have been trying to lure major airline service into Paine Field Airport claiming the economic benefits would far outweigh the drawbacks. Paine Field is about 1 hour north of Seattle Tacoma Airport and about 3 hours South of Vancouver, BC.
Many efforts over the years to locate another airport in this gap have hit political and environmental land mines. Paine Field expansion is no different. For years, the county, state, and FAA have been funding “improvements” that look a lot like accommodations for scheduled airline service. The county executive has been courting carriers, lobbying ‘unaffected voters’ and corralling legislators to this grand economic development cause.
The citizens of neighboring communities have not stood still. They have commissioned studies of every environment and quality of life factor from home value impact to distracted learning at the local schools. They cite urban blight, social deviance, and under development at other similar expansion projects. Political careers are made and broken over support or opposition to the airport expansion.
So far, the market has not proven large enough to support a major B737 sized scheduled service. Ironically, there have been very few studies of the impact of private aviation service expansions. Little data is discussed related to the noise foot print of small jets versus large jets. Very little data is presented to the community about distributed vs. concentrated air and car traffic flows and the upscale effects of a private aviation presence.
To the community’s advantage, small private carriers can soak up and diffuse the market that would eventually support a major carrier. These battles are raging all over the country against the political mantra of Jobs! Jobs! Jobs! Local communities are running out of money, lawyers, and stall tactics to fight them.
With the price of seat on a (full) private Jet about the same as a business class ticket on a major airline, local communities may want to go into the travel agency business. By using community media, website, a booking website, twitter alerts, and tourism agents to identify and match travelers to destinations combined with some proactive social media marketing, Citizen Airlines LLC can stave off an airport expansion by competing with it.
Meanwhile, unemployed citizens are available to manage an on-line Community Branded jet service (operated by a private carrier). Advertising and marketing can be transferred to the community in exchange for reduced rates and shared access to private aviation reports and data which would help them fight airline expansion.
This requires that the private aviation industry empower communities who are not necessarily their direct customers but are stakeholders none the less. Social Capitalism is the act of elevating oneself by elevating the entire community rather than opressing then for capitalist gains. By giving people a voice, the economy gets a bullhorn.
It looks like everyone is buffing up their predictions for another year of astonishing growth by social media. The last several years have brought so many surprises that the next several are promising to yield a bumper crop of “I told you so” fodder from the “pithier than thou” crowd.
My prediction for 2010 is that nothing is sacred, including the onslaught 2010 predictions. Therefore, I’ll will go way out on a limb and make my 2011 predictions in 2009.
In General:
The interest coming due on our national debt will consume increasingly more of the money that institutions need to provide basic services. As these institutions weaken, they will increasingly be replaced by social media enterprise. These structurally weakened institutions will drive social media innovation more than any other factor.
Specifically:
So there it is and be assured that 2012 will not disappoint even the hardiest eschatologist!
Sorry for not repeating the “real-time is king” mantra or singing the “people will finally pay for content” tune, or reciting the “every department is the marketing department” manifesto. Something much bigger is about to happen. The evolution away from the current financial system will drive social media more than any other factor.
Most literature on the subject of Innovation cites diversity as an important component of the innovation enterprise. Unfortunately diversity rides a political narrative rather than practical applications. Polarization is the death of diversity and the political narrative that plagues our country also plagues our ability to innovate.
Process Diversity
Not only does the diversity in innovation matter, the diversity of acceptable outcomes of innovation is also important. In addition, the diversity of attempts at innovation is essential, i.e., failure must be culturally acceptable. Preconception, bias, thresholds, and ideology often spell the end of a economic outcome.
Moving Against the Grain
Unfortunately, the forces acting against diversity are deeply ingrained in each of us whether we’ll admit it or not. For example, if you are in charge of producing diverse groups, processes and outcomes. How does one extract their own personal bias? How does one determine how much diversity is needed? Removing oneself produces randomness. Including oneself produces similitude. Polarization returns.
A Diverse Quagmire
Most companies innovate with existing personnel whose behavior can only be a function of their interaction with the company for their career and retirement prospects. Utilizing external sources does not eliminate this bias and may in fact magnify it.
There may be a way out of this quandary; we must open our observation to include all possible outcomes as worthwhile. Then we must distribute the results broadly. Where diverse people observe the same event, objectivity is achieved.
A striking resemblance to social media
By observing something derived from unobservable events, we can gain a great deal of information. because Social media is experiencing extraordinary growth we can say that a great amount of innovation is occurring. It is our prerogative to capture the innovation and not to expect the innovation to capture us, our government, or our corporations.
Diversity by Proxy
At the Ingenesist Project, we define innovation as outcomes proportional to the rate of change of knowledge with respect to time. As such, all we need to do is look for high rates of change of knowledge and we know that innovation is taking place. We do not know what the innovation is, where it’s directed, or what the market for the innovation may be. However, when we employ diverse observation, these answers begin to emerge.
Social media provides an interesting backdrop to the innovation process. Social Media does not care what you look like, the clothes you wear, or the church you attend. Social media hold no monopoly of opinion on diversity –
Diverse Incentives
If we take a lesson from economics, we know that people will generally act in their own perceived best interest. Then we can apply a set of incentives that modifies the best interests of the people. These incentives may be rewards, access to more incentives, or reduction of risk. Suppose that diversity were in fact a process of self selection or self removal from an objective? That is, people would have enough information regarding the potential outcomes that they could choose to interact with the process or not. In effect, innovating as an economy.
Photo credit
As brands get social, they enter the new media performing their best interpretation of a conversation. Face it, they are still going for the kill – like a wolf in sheep’s clothing – the dance of the pitch is just getting more sophisticated. Social media is powerful followed closely by the of abuse .
The danger is that the more it resembles buddy talk, the more likely it will be mistaken for buddy talk. The sales pitch is being elevated to an art form. Now social media can be as much as a social cure as a social anomaly.
The 4 Big Lies of Marketing:
The integration lie; Ingratiation efforts are manipulative and calculating but serve as a very subtle way of obtaining increased power over another person. Appearing to be similar to the target the ingratiator appraises the target person’s attitudes, opinions, and interests and modifies his/her statements to match the perceived beliefs of the other conforming to the target’s wishes.
Major Brand: The key principles underlying [company] decisions and actions in social media are: Listening, Learning and Engaging in conversations with our customers where they are…while hiding where we are.
The foot-in the door lie: To increase the likelihood of a prospect saying yes to a moderate request, a person may ask for a smaller request first. By saying yes to the first, small request, the person may agree to the second request to maintain consistency with self perception.
Major brand: we recently launched an on-line quiz with a widget component exclusively through social media and it has been a great success just in terms of the number of people taking the quiz and then word of mouth as a result. This goes back to us showing people can engage with [company name] not yet buying the product.
The ‘Istanbul bazaar’ Lie: The initial request is very large – large enough that no one could be expected to comply with it. It is then followed by a smaller, more reasonable request. This technique relies on the norm of reciprocity. The norm of reciprocity states if a person does something for you, you should do something in return for that person.
From a famous social media marketing evangelist: Extrapolate the potential points of touch between your customers and your organization, by showing them what full engagement looks like but then asking for a smaller subscription, enables participation in some of your processes, in some way.
Even a penny will help Lie: This technique is based on the tendency for people to want to make themselves “look good.” Since everyone has a penny, one would look foolish to say no to the request. The target cannot simply give a penny without looking foolish. The target tends to give whatever is appropriate for the situation.
From a Social Media Marketing Guru: FB Friending, Twitter, and even Linkedin are brilliant in delivering mutual follow mentality to marketing – people want to feel good for having followers and will often put up with constant, yet fleeting marketing messages. Tweet meme is another way for people to feel good about thier self for a tiny investment of a single click.
Inherent in all 4 techniques is the attempt by an influencer to manipulate another by engaging in subtle subterfuge. The only way to undo the lie is with a simple truth: knowledge and understanding that the influencer is always lying.
We have posted a few articles about the Deep Web and presented an emerging technology project that promises to provide a database of databases for the next great development of Internet Search. This short post considers the significance of one aspect of Deep Web Search.
Google Search has provided a set of incentives that drives people to document their world by blogging, developing social media, and creating seemingly infinite video content. The ability to see and be seen is the essence of market economics.
While the promise of searching a huge store of databases may not sound like Saturday social night at the local drive in burger joint, it does by extension, introduce new incentives. The new technology will drive people to build databases. A new generation of entrepreneurs will collect, organize, analyze and create – not information – but data.
The first things entrepreneurs will organize are human knowledge data – starting with their own, then relating it to others. Not unlike the human genome project, the vast human knowledge reservoir will be mapped. Entrepreneurs will enter their communities (on line, neighborhood, work, school, church, social networks) and create a database for what other people know and parse the data in any number of important and useful databases.
The reason for this is simple; data are collections of human observations.This is the only thing people are willing to pay for. Markets cannot and do not get any more fundamental than that.
Anyone who follows the news, social media, or some of the tech blogs may have noticed a lot of rehashing of old data – every blog has a posts about how social media will “really catch on”. New media isn’t so new anymore. The only thing that makes money is is the disclosure or new data – followed by weeks of rehashing of the data all the way down the rankings.
All Financial instruments are characterized in terms of a quantity and a quality. Real news, real insight, and real productivity results from new and reliable data, qualified interpretation of data, and relevant analysis of data – relative to time. The value of money is directly associated with the quantity and quality of the data representing money – relative to time.
Data alone are useless. People must process data into information – the backbone of all economics. Human knowledge and productivity is the source of all information – derived from data. Therefore, the only things people are willing to pay for are, in fact, data. Monetization of social media may be the deep dive into the data. Do the math. That’s big news.
Conversational Currency Blog continues to present components of the Next Economic Paradigm as we spot the integrations. We believe that one of these features is the Deep Web, estimated to be 500 times bigger than the surface web or “Google-verse”.
One way to get an idea of how the deep web is hidden from view is to perform any simple Google search except add the term “database”. You immediately notice that an entirely different set of results appear – much of it is extremely interesting and useful. If you do this several times over several terms you will soon ask yourself:
“Where can I find a database of databases?”
Now take your original search term and add “database of databases” to it and again an entirely new search result appears. The results become highly localized and less organized. The results show FAR LESS ADVERTISING and even a few more subscription based data enterprises. But more than anything, the results give you an idea of how large the Deep Dark Web may be.
Now return to the surface web and visit your favorite blog. Where exactly are bloggers getting their insights? Follow the trail of references back to the sources (pass through Wikipedia and Forrester) and you will eventually wind up back at the Deep web.
Revenge of the Librarians
Now here comes Internous. A technology start up by library Scientists who shines the light on the Deep Dark Web with a search engine concept that combines both algorithmic search with human classification. By introducing a new standard called The Internet Search Environment Number, Internous will soon organize the database of databases.
The Next Economic Paradigm
Meanwhile, The Ingenesist Project has specified a parallel financial system with a currency similar to the dollar except backed by innovation instead of debt (both are a proxy for future productivity). In the specifications they call for a knowledge inventory system for what people in a community know (“what’s between their ears?”) as an requirement for a proxy for future productivity in a new financial system. While nobody can predict exactly how this may eventually arise, we most certainly will watch new technologies such as the ISEN very carefully.
Special thanks to Matt Theobald. Here is the Internous video – well worth the time!!
In 2001, Michael K Bergman, an American academic and entrepreneur and one of the foremost authorities about the Internet, published a paper estimating the “Deep Web” to be 400-550 times larger than the known Googleverse. What does this mean for everything we claim to know about the web, social media, and social influence marketing?
Andy Becket wrote an excellent investigative piece called The dark side of the internet that I highly recommend reading. Among many great points, Andy describes the deep web:
“The darkweb”; “the deep web”; beneath “the surface web” – the metaphors alone make the internet feel suddenly more unfathomable and mysterious. Other terms circulate among those in the know: “darknet”, “invisible web”, “dark address space”, “murky address space”, “dirty address space”. Not all these phrases mean the same thing. While a “darknet” is an online network such as Freenet that is concealed from non-users, with all the potential for transgressive behaviour that implies, much of “the deep web”, spooky as it sounds, consists of unremarkable consumer and research data that is beyond the reach of search engines. “Dark address space” often refers to internet addresses that, for purely technical reasons, have simply stopped working.
The implications of the Dark Web are subtle. Like “Dark Matter” in space, the dark web may behave as a multiplier to account for that which cannot be explained except by some invisible, albeit, constant force. We can assume consistence because the common thread that transcends the entire Internet is still conversation. The ability to have a conversation as well as the ability to reject a conversation is part of the Dark Web and still a conversation nonetheless. The opposite of publicity is anonymity – if the universe seeks balance so too can we expect the web to equalize around the average anonymity of conversation.
Entrepreneurial factors also appear rational when applied to the Dark Web, specifically true ownership. Ownership includes the right to restrict access from others. In the Googleverse of search rankings and old economics, watered down and largely unenforceable copyright laws create a wasteful game of Cease and Desist among content providers – not exactly a safe place to converse. The inability to establish ownership and boundaries of user generated content is a primary constraint on monetization.
Meanwhile, the Dark Web utilizes a knowledge inventory where trusted people of known affinity are given free access to share freely – and anonymously. Ironically, anonymity improves the quality of a conversation by eliminating the irrelevant data that often constrains conversation. It is worthwhile to consider anonymity as a possibles monetization factor – pay to hide?
Not all anonymity is corrupt and perverse. People spend a great deal of time and effort developing a database that represents a knowledge inventory and they don’t want someone to just copy it. Trade secrets are the great competitive financial instrument of capitalism and depend on secrecy. For better or for worse, political activity in non-free countries such as China, Iran, and Afghanistan also rely on anonymity. The more time people spend on the web, the more of their personal life that would want to keep to themselves – the ability to avoid Google bots is a tangible conversation.
The phenomenon to consider is that people with mutual anonymity are able to share more freely. Ironically, anonymity improves the quality of a conversation by eliminating the irrelevant data that often constrains conversation. Conversely, efforts to constrain anonymity destroys freedom of the web. Tell that to your web analytics team.
This Open Letter is directed to all Deep Web researchers, authors, developers, practitioners and people who have a great interest in what lies beyond the popularity contests playing out on the ‘surface web’.
I submit this letter in appreciation for the work that you do I also want to present an important application to your research for which you may not yet be fully aware.
As they say, beauty is only skin deep and the hard work of organizing the Deep Web offers an astonishing opportunity for the next economic paradigm. Very few people are aware of this.
Who are we?
I am the director of The Ingenesist Project, an obscure Think Tank in the Seattle area modestly funded by visionaries. Our job is to specify an alternate financial system that we loosely describe as an innovation economy built on a platform of social media.
Consequently, we also specify a new currency backed by innovation instead of debt. Innovation currency is very similar to debt currency since they both ‘represent’ future productivity. As such, these two currencies would be readily “convertible” in exchange – something that we all may need in the not-too-distant future.
Where do you fit in?
Essential to this concept is the relationship between data, information, knowledge, and innovation which we express as a differential equation. Here is a quick explanation – please bear with me:
We can predict the value of innovation by observing rates of change of knowledge. We can predict the value of knowledge by observing rates of change of information. But the most critical element is the ability to predict the value of information by observing rates of change of data. The most critical element in the next economic paradigm is the human interaction with data.
With that missing piece, a new financial system can then capitalize and securitize these “predicted future values” much like Wall Street does with social debt. Deep Web Researchers literally hold the key to ending the oppression of debt economics worldwide. No kidding.
What’s in it for you?
This is where your work gets us really excited: Google induced economic incentives that drove millions of entrepreneurs into the work of creating new information – and yet direct widespread monetization remains elusive. In contrast, human interaction with the Deep Web will unleash economic incentives that will drive millions of entrepreneurs to create databases. The difference is that new Data are the only thing that a market is willing to pay for – not the popularity contests. And wow, is there a market waiting for you.
I understand that you are all very busy given the magnitude and complexity of your work. If this letter speaks to you, then please speak with me. Let’s discuss how your work would be applied to this very important effort. I’m easy to find in the datasphere.
Thank you
The FTC recently issued guidelines for payola to bloggers. The impact and opinions are now emerging over what this means for social media. As with any game played on a new field, rules need to apply. The questions emerge regarding who the rules hurt, who they help, and how the game will develop in the future due to those rules.
Straight from the horse’s mouth:
The revised Guides also add new examples to illustrate the long standing principle that “material connections” (sometimes payments or free products) between advertisers and endorsers – connections that consumers would not expect – must be disclosed. These examples address what constitutes an endorsement when the message is conveyed by bloggers or other “word-of-mouth” marketers.
Extrapolate into the future:
(Editor’s note; This is the first in a series of articles that challenges the “degree system” of knowledge measurement as archaic and irrelevant to what is actually happening in the world today. Like the resume system – it is ridiculous if not outright damaging to the prospect of knowledge behaving, and therefore, trading like a financial instrument.
Why do we still care about college ‘degrees”?
The information that fuels the next economic paradigm will not be captured in the form of college degrees; rather, it will be captured in extremely detailed granularity of unique collections of knowledge assets in diverse combinations of persons that solve complex puzzles – and then share the solution with others.
This begs the question, why do we still care about University Degrees?
Yikes…
Unemployment tops 10%. Add in the under-employed, part timers, young adults trying to enter the job market, the ones who have given up or otherwise marginalized, and we’re well into the 15-20% range.
Mediated Reality:
When will people come to the realization that a new financial system is needed to represent the new social order? When will people realize that they have in their possession the most important tool ever devised by humanity for the benefit of humanity? When will they shut off the TV and reject the barrage of mediated reality that blinds them with propaganda at every turn?
I worked extensively in Japan and apologies from CEOs are not uncommon. When All Nippon Airlines and Japan Airlines had a few runway incursions – both CEOs (competitive enemies) appeared together on national TV nearing tears and ending with a loooooooong bow of remorse. US media does not often get a chance to see this side of Japanese culture because of it’s intimacy, sensitivity, and frankly, it’s a little bit strange since scandal and corruption in Japan can be truly world class.
A few interesting quotes from Mr. Toyoda:
And on the other side of the pond…
I am still waiting for a single US Banker, Insurance company CEO, or Corporate executive to apologize for mismanagement and failing to sell worthy products. Not one – Sure, they will kowtow to the Congress or the courts, but not the people – all they need to do is look straight at the camera. Seat belts were not even installed in US automobiles for the first 60 years because they did not want to give the “impression” that automobiles were unsafe.
The devaluation of conversation?
“Sometimes, this apology business is a way to avoid taking real action or responsibility,” said Robert Dujarric, director of the Institute of Contemporary Japanese Studies at Temple University’s Japan campus.
“When you hear these long apologies,” Mr. Dujarric said, “It makes you want to say: ‘Don’t be sorry, just do something about it.”’
Now, enter Social Media:
Toyoda again has set a new standard. This story is covered throughout social media space – most other big Japanese apologies had not. The difference between the US automaker and the Japanese is stark. Toyota intends to be the standard by which all other competitors are compared. When most are trying to lower the bar, Toyota raises it.
That’s the value of conversational currency.
Many people know that the events that inspired what now has become The Ingenesist Project originated with my personal observation and experience of the Mexican Peso Crisis as a visiting professor. Very few people in America realize the implications of a real financial crisis and associated currency collapse. Unfortunately, many people in the World have – perhaps we should listen to their ideas.
The Good, the Bad, and the Ugly
As recently as 1999-2002, Argentina experienced the type of worst-case financial collapse that America narrowly avoided only a few months ago – but that may eventually happen. The simplest reality is that when things go really really bad, people need to continue trading among each other for basic needs using a functional and relevant currency. When things are really good, people need a currency that reflects productivity, not debt – i.e., social capitalism priorities, not necessarily Wall Street capitalism priorities.
Ground Zero
It is not surprising to me that great applied currency applications would be coming out of Argentina today. The Whuffie Bank is an exciting new project that introduces a reputation based currency inspired by several science fiction authors of the past, specifically Cory Doctorow. Likewise, the founders of the Whuffie Bank demonstrate the perfect combination of humility, openness, and inquisitiveness that is required in the emerging social media space. Everyone realizes that the Whuffie is not a perfect currency, but the story has to start somewhere and TWB has something important to say.
It’s Time for a Reputation Based Currency
I’ll talk more about the Whuffie Bank as I learn more. First, it would be best to describe the origin of the term. I lifted the following description from Wikipedia:
Whuffie is the ephemeral, reputation-based currency of Cory Doctorow’s science fiction novel, Down and Out in the Magic Kingdom. This book describes a post-scarcity economy: All the necessities (and most of the luxuries) of life are free for the taking. A person’s current Whuffie is instantly viewable to anyone, as everybody has a brain-implant giving them an interface with the Net. (Cory’s Blog)
The term has since seen some adoption as a synonym for Social capital, including its use in the title of the Tara Hunt book The Whuffie Factor.
Google 10^100 award voting is Launched. There are two sectors that we believe would have the greatest impact on the greatest amount of people; building a better banking system and funding social entrepreneurs. You can’t have one without the other – if Google funds these two sectors in concert, the outcome would be incredible.
Build A Better Bank
In the old banking system we assume that we have the knowledge to execute a business plan and we go to the bank to borrow the money. In the new banking system, we will assume we have the money and we go off in search of the knowledge. Social Media is an excellent “public accounting system” for knowledge assets.
Our current banking system has gotten it backwards.
Technological change must always precede economic growth. The supranational currency may be backed by productivity and not debt. Social media provides an excellent platform upon which to design such a banking system. People trade “social currency” at a tremendous rate. This is evidenced by the amount of destructive innovation is occurring in many legacy sectors due to social media.
Better Banking Tools for everyone
“Partner with banks and technology companies to increase the reach of financial services across the world. Users submitted numerous ideas that seek to improve the quality of people’s lives by offering new, more convenient and more sophisticated banking services. Specific suggestions include inexpensive village-based banking kiosks for developing countries; an SMS solution geared toward mobile networks; and ideas for implementing banking services into school curriculums”.
Suggestions that inspired this idea
1. Enable prepaid cell phone bank accounts for millions of people working in the informal economy
2. Create a community-level electronic banking system for rural areas
3. Build IT-enabled kiosks which provide access to financial services
4. Create a single world bank or supra-national currency, uniform rules and transparent public accounting
Fund Social Entrepreneurs
Venture Capital is ridiculously expensive. Corporate innovation serves shareholders value over social priorities. Some say that the financial risk of funding innovation is too high. The top ten reasons why start-ups fail are due to knowledge deficits, not money deficits. A new banking system that trades knowledge as currency would solve this problem.
The key is to match most worthy knowledge surplus to most worthy knowledge deficit. Google is perfectly able to build a search app for knowledge assets if there were an inventory of knowledge assets. With the most worthy match, Risk can be reduced and new financial instruments can be developed such as the innovation bond, innovation insurance, tangential innovation markets, and destructive innovation transition contingency options, etc.
Create a fund to support social entrepreneurship. This idea was inspired by a number of user proposals focused on “social entrepreneurs” — individuals and organizations who use entrepreneurial techniques to build ventures focused on attacking social problems and fomenting change. Specific relevant ideas include establishing schools that teach entrepreneurial skills in rural areas; supporting entrepreneurs in underdeveloped communities; and creating an entity to provide capital and training to help entrepreneurs build viable businesses and catalyze sustained community change.
Suggestions that inspired this idea
1. Provide targeted capital and business training to help young entrepreneurs build viable businesses and catalyze sustained community change
2. Create a non-profit, venture capital-like revolving fund to invest in high-impact local entrepreneurs
3. Send young American entrepreneurs to underdeveloped communities to help create small businesses that would economically benefit those communities
4. Create schools in rural areas to teach local people how to become entrepreneurs
5. Create a private equity fund to help immigrants in developed countries finance business development in their countries of origin
If you ask a newspaper whose lead story was trumped by an unexpected celebrity death, the answer is yes. If you tell a political activist whose rational message is lost to more radical activists, the answer is yes. If your speech is interrupted by a heckler, the answer is yes. If you are caught lying about your Nuke Plant, the outcome is unintentionally the same – a loss of credibility, value, equity, and associated increase in risk, volatility, etc.
In today’s world of floating currencies, almost every currency rises and falls against other currencies at one time or another. But a currency that is persistently weak or continually falling relative to others presents a problem. If the dollar’s value were to continue to fall to new lows, eventually this would trigger rising inflation pressures. That’s because inflation can be defined as the loss of purchasing power of a unit of currency.
Inflationary Pressure on Conversational Currency?
Likewise, weak and falling conversational currencies are also bad for growth, since they scare away investment by another conversant. Who wants to invest time and knowledge in a conversation if there exists the real possibility that one’s investment will be eroded by a falling currency? At the very least investors require special incentives (i.e., premiums) to invest in an conversation with a weak currency.
Incentives Packages of Social Media Space
Weak conversational currencies are symptomatic of a variety of factors: cheap talk, lack of references, weak economic growth prospects, lack of confidence in the other participants, weak currency demand, and bad fiscal policies (e.g., wasteful discussion, high cost of participation, low quality venue or presentation). Strong conversational currencies, on the other hand, typically reflect tight topic control, vetting policy, strong growth prospects, confidence among participants, strong currency demand, and good fiscal policies.
The Critical Breath Mint
For better or worse, in order to “mint” conversational Currency, a discussion must be made accessible to largest audience possible. The discussion must also be directed to those most “qualified” to engage in the discussion. When the value of the conversational currency reaches a low level threshold in either factor, the discussion ends with no resolution to continue and no tangential discussions taking place. This can often be attributed to disruptive innovation making old conversations obsolete. But it can also happen to worthy conversations infected by a parasite such as spam, hecklers, radicalization, flame wars, and emotional versus rational articulation, vendetta, sabotage, etc.
Critical Level of Conversational Currency
The critical level of conversational currency is where supply and demand cross. The value of conversational currency will be determined by the ability to match the most worthy knowledge surplus with the most worthy knowledge deficit. We use the financial analogy because the idea is the same – a currency is a currency. Many of the same rules, methods, and calculus hold. What is missing in Social Media are an inventory and accounting system for knowledge assets. While such systems are emerging on FaceBook, Twitter, Linkedin, etc. Some intervention is needed to integrate a social media system we can bank on, literally and figuratively.
Clear and Present Value
The value of conversations is real, clear and present – especially in the actions of those who profit wildly from them. I saw this in the negotiations of NAFTA when it was clearly in the best interest of the some negotiators to keep engineers poor weak and disorganized.
I saw it again in corporate America. Imagine if Boeing was to publish a complete accounting of the incredible intellect, ingenuity, talent, and creativity that roams their hallowed halls – the world would dismantle them piece by piece. The “knowledge inventory” is a company’s most closely held secret.
Keeping secrets from the secret:
Sometimes it seems that the biggest secrets are held from those who represent the greatest real value. Corporations pay their engineers the minimum amount of money required to get them to their desk in the morning. Then they resist organization of engineering professionals, and they give them little or no power over marketing, human resources, accounting, and sales promises related to the engineering outcome.
The problems get worse when this big “secret” becomes public. For example: Steve Jobs has now been identified as trying to collude with Ed Colligan, the CEO of Palm, to not poach each other’s employees.
A Currency Collusion Collision Conversation
“Your proposal that we agree that neither company will hire the other’s employees, regardless of the individual’s desires, is not only wrong, it is likely illegal,” Colligan said to Jobs last August, according to an article Bloomberg reported. Jobs succeeded in making such an arrangement with Google, according to published reports. The feds are investigating and the Palm allegations only make Apple look worse.
It is quite amazing that companies would expose them selves to such risk if conversations among engineers were NOT in fact extremely valuable. Why else would Apple engage in such disrespect to engineers and others who actually create the products Mr. Jobs gets credit for?
The liberation of Knowledge Assets
The IPhone that rolls off the assembly line is not an innovation. Rather, the millions upon millions of tiny incremental ideas, conversations, and shared thought are assembled into what does eventually roll off the assembly line. The role of the CEO is significant, but still a minority task in the larger picture.
More than ever, social media is empowering people to hold equally productive and focused conversations outside the construct of corporation. With the ability to measure and track impressions comes the ability to pay royalties to those that produce, direct, and sustain conversations.
With the Obama justice department and other federal regulators already looking closely at Apple over the iPhone and handset exclusivity and the sharing of board members, Jobs’ alleged anti-poaching efforts only add to the fire that is growing around him. If social media continues to integrate at a rapid pace, the biggest fire that Mr. Jobs and other CEOs may have growing around them is the autonomy of creative, social, and intellectual staff.
Special thanks to a post written by: Veteran industry-watcher David Coursey who tweets as @techinciter and can be contacted via his Web site.
People look for leaders that inspire them to achieve innovative breakthroughs. People trust, or so we think, CEO’s to effectively lead their organizations so that employees can continue to get paid.
The confidence in leadership is waning and a new “leadership” is emerging. The new leadership is from and by the people. The reason for a shift in leadership is as follows:
1. Politicians have failed us with self interest and politics as usual. Usual no longer works for the people
2. CEO’s and management have failed to listen to the markets of conversations
3. Greed is out, efficiency is in and the old market is not adapt at “lean, mean and fast”
4. The people has lost trust in media, politicians and old management schemes
5. Advertising and marketing methods of the past are dead. 96% of the online ads get no responses. A rate of 3% at best is the return on direct mail, coupons and broadcast ads.
6. The market is no longer listening to the old market rather the market is listening to the people
7. People have been empowered and engaged to create their own markets and they follow a new kind of market leader. A leader who enables them to learn, grow and share with others whom have an affinity to their interest and beliefs.
8. New leaders are now conversing with their own audience and there are many of them. There are also a few leaders who are enabling many to engage, converse and build our own audience.
9. Conversations have never been so fluid, so reaching and so powerful. The irony is that the power of speech has always been and will always be disruptive. History proves it so but we are in an era of making history that reinvents itself daily from the conversations.
10. Old leaders either adapt very quickly or die. The old game is over and the longer you try and play it the more it will cost the market, your investors and the people whom supply the market with commerce, the people.
Admit It, You are Out of Touch And Blinded By The Past
For politicians and corporate leaders the downfall of your empires is directly related to markets changing and you denying the change. If you haven’t noticed markets are now transparent. There is nothing you do that the market won’t notice and freely comment on, good, bad and indifferent. When you do good the market with follow you. When you do bad or do the same thing the market will leave you. Unless you recognize this shift your dead in the water.
Time is your enemy and denial is your your deathbed. Being dead in the water means the next wave will topple your boat because its force is too big, too large and you can’t move fast enough to navigate around or over it.
Then again you may simply not have time or attention to even recognize that it just may be true and real. In that case, move over for the new leader to replace you sooner than later. Leaders are failing because they fail to change and fail to listen. Sorry for being so frank but I don’t have time to be politically correct. Get it?
The following commentary was posted last week in Wall Street Journal Op Ed. This is an opportunity to consider the term “Conversational Currency” at it’s most literal meaning. People pay money to talk to each other. Other people want to control how when and how much people can talk to each other. The battlefront is technology, like rockem-sockem robots, technologies duke it out in this trillion dollar struggle to control our conversations.
Who benefits … shareholders?
The irony is that each and every titan is the beneficiary of conversation. The 135 year old Alexander Graham Bell era is about to End. Will patricide or scionism prevail? Will unified voice systems integrate all mediums and devices into a single channel? Will the elimination of conversation “frictions” also eliminate innovation “frictions” (you know, all those things that make innovation impossible to capitalize by regular people; Patents, risk, velocity, market intel, 1000% VC, etc.).
It’s about the data, stupid
Mr. Kessler proposes a National Data policy – after all, voice, text, video, etc., are simply different forms of data and should be treated as such. Any device should work on any network and data should flow freely. What’s with owning airwaves? Who came up with that idea ? – it creates more interference than it is touted to solve. Ditto for exclusivity contracts – who needs them, except those who stifle innovation. And finally, the mother of all frictions, restricting speed and bandwidth. Sure, I like driving with the emergency brake on – it improves my eligibility for “cash for clunkers”.
Resistance is futile
The truth cannot be hidden by economic tyranny. Noble institutions like journalism, education, and entrepreneurship are being sacrificed in the name of shareholder value. People communicate freely and freely they shall communicate. These are the profound questions of our era that play out every day in the news. Please read this and our other posts at CC with great optimism that a new paradigm is arising where an innovation economy will be built on a social media platform outside the construct of corporations:
The New Reverse Order
If someone can track your spending, they can predict your behavior. It is also true that if someone can track your behavior, they predict your spending. The next economic paradigm is simply a higher order of the same.
On the next higher order, if someone knows your “Knowledge Inventory” they can predict how you will manage changing conditions – that is, how you will innovate. Likewise, tracking how people innovate exposes the development of new knowledge assets (the ‘gold-standard’ of conversational currency).
Everyday some new headline shows that we are getting closer and closer to that point – for better or worse – where humanity learns to manage an innovation economy.
Profound Issues Arise.
The following article about Wal-Mart adopting the debit card (Wal-Mart to Staff: Bye-Bye Paycheck, Hello Debit Card) as a means of issuing paychecks represents a quantum leap in the monetization of knowledge assets. We expect many more will closely follow in one of the most important financial developments in financial history – virtual currency. If food stamps can be delivered on a debit card, why not frequent flier miles, Disney Dollars, coupons, rebates, tulip bulbs, beanie babies, or a new global currency such as the Rallod?
A Vetting Zoo
The only questions that remain are related to Vetting. By all accounts Social Media is developing into the mother of all vetting mechanisms. Who controls the card? What system is it replacing? Who can pull money off? Who charges fees to whom and why? Who gets the business intelligence? What is the PR spin? Can advertisers interact with the card to apply discounts and rewards? What types incentives motivate what types of people and can it go on a debit card?
A Steep Departure
Each of these questions, and the companies they spawn, will live or die by Tweet and Blog – this is a steep departure from the past. For example; 30 years ago, if every American were told that their social security number would be tied to a credits score that is tied to their driving record, employability, insurance premium, health care, mortgage rate, and, yup, their debit card – the cities would have burned in protest.
Nobody could have seen this future except those who designed it. Today, the designers are you and I – see the future now, see the future here at Conversational Currency.
The idea of trust as social currency is appearing in more articles, conferences, and books. This is all highly consistent with the TIP thesis on Innovation Economics which describes the necessity of a vetting mechanism among the knowledge inventory as a means for the emergence of a currency in a market – that is, a conversational currency. People need to trust the currency if they are to trade the currency.
Shefaly Yogendra provides some excellent insights below. Keep in mind that American Culture does not have a monopoly on the definition of trust. It should not be an American expectation to define the conversational currency in our own image. Indeed, convertability of such currency will be, and must be, global.
I kept the analysis sparse on this article because it is a valuable exercise to form one’s own perspective on trust prior to diving into someone Else’s opinion. After all, it’s your currency – you own it. Good luck.
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by Shefaly (please see her Bio here)
Trust is a non-negotiable essential in business. The post linked here refers to web-based business-to-consumer interactions. But as social currency, Trust is the most significant in interactions amongst organisations, customers, employees and regulatory bodies.
Definitions
Wikipedia defines social currency as “information shared which encourages further social encounters“. Social currency is different from social capital which refers to “connections within and between social networks and individuals“.
Social currency – some characteristics
a) No distinction between ‘physical’ and ‘virtual’ worlds
b) No distinction between ‘individuals’ and ‘corporate entities’
c) No distinction between validity of negative or positive normative labels
Determining the value of Trust as social currency
a) Verifiable Identity and antecedents
b) Consistency
c) Reliability
d) Peer recognition
e) Value of the network
f) Individuality and collaborative consciousness
The original article can be found here and it elaborates on each of the points above.
Flip-floponomics is a term that I just coined with this post which means:
1. A traditional business method flipped on it’s back to reveal a new business method
2. A mirror image of a previously accepted economic paradigm
3. sing. n; flip-floponom; A phenomenon of flip-floponomics.
Let’s demonstrate how this works.
Flip-floponom A:
Twitter has announced that they will mine user generated data and process it into business intelligence which they will sell to corporations for a whole lot of money. As such, corporations who were unable to figure out how to charge people a whole lot of money money to “watch” social media can now be charged a whole lot of money to “watch” social media
Flip-floponom B:
YouTube can’t make money on ads because viewers don’t care. But with user generated content such as Jill and Kevin’s wedding (with 12 million views), Chris Brown landed a land slide of sales for the song “Forever”. The audience is now the Brands positioning themselves to be “user-generated”.
The Mother of all Flip-flopona:
Before flip-floponomics: entrepreneurs assumed that they had the knowledge to execute a business plan and they went to the bank to borrow money.
After Flip-floponomics: entrepreneurs assumed they had the money to execute a business plan and they go to social media to borrow the knowledge.
Next economic paradigm:
With the continuing integration of social media, every single business transaction has the potential to be re-invented in the mirror image if itself using the principles of flip-floponomics. The opportunities for future entrepreneurs who figure out this class of business activity can be described as nothing short of astonishing.
Image Credit Picasso
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