Tag: diversify

How Does Social Media Affect GDP?

On June 19, 2009

Gross domestic product (GDP) is a basic measure of an economy’s economic performance. GDP is the market value of all final goods and services made within the borders of a nation in a year measured in Dollars. Globally, GDP is equal to the total monetary income generated by production of goods and services in a country.

Gross Domestic Product does not take into account many important variables accelerated by Social Media and growing exponentially in economic influence.

GDP counts only industrial output, but…

Industrial output is becoming increasingly dependent on social networks and social innovation. GDP does not take into account such non-market transactions such as open source development, crowd sourced innovation, conversational currency, social capital, creative capital, or intellectual capital exchanged between people in diverse social networks

GDP reflects Wall Street Priorities, but…

Wall Street Priorities are increasingly challenged by social priorities. GDP does not account for sustainable business practices, heroism, mentorship, activism, volunteerism, social networking, uncompensated innovation, and community involvement. GDP does not account for quality improvements and social multipliers such as aggregation of social media, increasingly powerful computers, acceleration of conversations, online etiquette, multi-media, and social editorial services.

All of the above exclusions are valuable, because…

These exclusions add value, they store value, they create value, they distribute value, and they exchange value. If we called it a financial instrument that is highly convertible, extremely liquid, and easily transported it would describe a currency by any definition of the word. For the purpose of this discussion, call this currency the “Rallod” – or Dollar spelled backwards. The Rallod is the currency of the new American economic and production paradigm.

The Invisible Currency

For Example; Twitter is doing in Iran what America has been trying to do in Iraq for 8 years. Face book, LinkedIn, and the entirety of social media space is producing many times the effectiveness of the $200 Billion U.S. advertising industry in terms of driving people to specific action. Social vetting platforms such as blogs, commentaries, groups, and content aggregation have increased the efficiency of markets by vastly reducing arbitrage opportunities while also identifying scams and corruption. Human productivity is being converted to Rallods and there is no politician, executive, or white collar criminal anywhere in the world who is not deeply concerned about this invisible currency.

The Best is Yet to Come:

The “Last Mile of Social Media” is analogous to the last mile of broadband Internet – the marginal cost of reaching every person in every household and tightening social networks to extremely high resolution, is diminishing rapidly. The Last Mile will bring communities together to vet local politicians, corporations, products, and policies. The Last Mile will formulate a knowledge inventory combines with close proximity of knowledge assets and a percentile search engine to predict outcomes. The Last Mile of Social Media will duplicate every function that exists in a corporation except it will be built upon the social media operating system; aggregated, amalgamated, sustainable, and reflecting social priorities.

So what happens to GDP?

GDP by current measure will reflect only the value of the “dollar”, not necessarily the value of the human productivity. Perhaps it already does.

Social Media; A Public Innovation System

By Admin

On November 21, 2008

In General Information

In order to restructure our financial system; we first need to restructure our innovation system. ALL of the top ten reasons for business failure are due to a lack of knowledge, not a lack of money.

Top 10 reasons why businesses fail:

1.    Lack of an adequate, viable business plan
2.    Insufficient sales to sustain business
3.    Poor marketing plan: unappealing product, poor customer identification, incorrect pricing and lackluster promotion
4.    Inadequate capital, misuse of capital and poor cost control
5.    Poor management skills: lack of delegation, leadership and/or control
6.    Lack of experience and knowledge
7.    Lack of managerial focus/commitment
8.    Poor customer service
9.    Inadequate human resource management
10.    Failure to properly use professional advice: i.e. accounting, legal, financial, etc.

Lack of a viable business plan is an act of negligence where research, scenarios, and assumptions have not been tested. Market ignorance is not an excuse nor is the failure to know one’s customer. Death by poor marketing plan is knowledge deficiency related to product appeal, customer identification, pricing structure, and lackluster promotion. Obviously, one needs to know how to manage a company in order to be focused, let alone correctly estimate capital needs. Lack of customer service knowledge is deadly in the age of social media. Inadequate HR is an oxymoron – if it’s inadequate, it’s not a resource – human or otherwise. Finally, failure to listen to knowledgeable people is ego driven irrationality.

The financial system is not the only problem; the innovation system is a crucial element. Information, knowledge and innovation, by any definition, are profoundly and inseparably connected. A failure in one kills the other two. So, just because an entrepreneur does not have the knowledge, does not mean it the ‘knowledge’ fails to exist – it simply means that entrepreneur failed to find it.

So where is the knowledge? Unfortunately, there is no public knowledge inventory – people do not know what each other knows. There is no website where that people can go search for all 90th percentile social media experts living in zip code 06776, let alone build a dedicated local management team. There is no way that anyone can assemble the knowledge needed to execute a business plan with a known probability of success given the information available. As such, there is no way to finance public innovation.

Insurance companies can tell you the probability that you will die exactly on your 80th birthday, but we cannot estimate the probability that a business will be successful. Nothing has more variables that human physiology, yet it is predictable and business success probability is not. Why can’t this be fixed?

If we could identify, integrate, and predict public information, knowledge and innovation, we could diversify risk exposures away. With risk exposures managed, we could insure start-ups risks. With start-up risk eliminated, we can sell innovation bonds at, say, 6% to fund the extraordinary rate of public innovation that we need to support our debt and pressing social liabilities. If the innovation bond returns a modest 20%, human productivity, by definition, has increased by 20%. A 20% growth in human productivity is a 20% growth in an economy. Again, financial system is not the only problem; the innovation system – or lack of an innovation system – is the problem. Perhaps oversimplified, but this is an astonishing omission from the national dialog on the financial crisis.

The emergence of Social Media technology presents an extraordinary opportunity to organize a knowledge inventory outside the construct of a corporation and marry it to the financial system, much like a corporation. Knowledge tangibility must be the most important “innovation” in the pipeline today if we expect to meet the crushing challenges that await us. Just because we cannot predict innovation does not mean it cannot be done – it just means that we do not know how… yet. This is not about inventing a new currency, it is about the public taking control of the old one. We, the people, don’t deserve to lose this game; join The Ingenesist Project and help build a sustainable Innovation Economy.

The Next Economic Paradigm

Tag: diversify

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