Tag: Innovation Economics Page 4 of 6

Banking on the Past

On October 27, 2009

I am writing a short series on the Banks of the past, present and future. Prediction what future of banking was the easiest piece. Identifying the current transition phase was a little tougher so I borrowed from another blogger’s post. Describing banking of the past was most difficult. Here is an example of what I’m talking about:

“The bifurcation of the credit loss piece is a key component of the revised rule,” says Larsen, “but the part that often gets missed when pundits talk [about the rule] on TV is that the trigger that starts the whole [measurement and recording exercise] is the realization that a loan is not going to be repaid. The rule addresses an impaired security, you still have to identify the fair value of that security, and all of the losses are disclosed on the balance sheet.”

Holy shit, did you understand any of that? Guess what – nobody else did either and bankers are wondering why nobody wants their “currency”. Currency is a conversation, a social agreement, a community organizer – if nobody know what it is, people are going to start trading something else.

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Counting Eyeballs

By Admin

On October 26, 2009

In General Information

The Advertising Industry has some serious problems. Ad agencies are having a difficult time understanding the modern advertising space with the limited, if not worthless, paradigm carried over from the days of radio; the CPM.

CPM stands for Cost Per Mille

CPM means: how much does it cost to penetrate 1000 heads?… or 2000 eyeballs, I suppose. They count the penetrated heads, like an act of war – the body count, the bullet shells, the napalm canisters…and that is the basis of their decisions. As Dr. Phil would say “How’s that workin’ for ya?”

The CPM is however, a great way to kill off creativity, highlighting the flashy crap while burying the good stuff. Maybe it works well in the counter insurgency of Afghanistan, but it does not work in social media space. What happens after the mommy blogger gets a look at that Spiderman drinking cup that melts in the dishwasher? Imagine the blog post about that cool new GM retro rod that smells like formaldehyde to the undertaker enduring their midlife crisis.

What’s the CPM for the blogger?: zero. Can advertisers compete?: no. Should they stop?: yes.

People are not stupid and they do not work for free. Yet, the entire web advertising model tries to get them to walk through a rat maze of links and pages just to hit more banner ads (impressions). Advertisers keep doing it, ad after ad, page after page, year after year. They wonder why the rat don’t hunt. The most important thing to a rat is food, family, and friends. There must be a tangible economic incentive for people to do what you want them to do. Even after that, not all impressions are equal, or favorable, or lead to sales – but every one is valuable to your product and your brand if you know who I am.

Foresight is 20/20

It is always very expensive to change people’s behavior and the best management policy is to accommodate what people are going to do anyway. If I want to drive a retro rod, help me do enjoy my friends with it – don’t pull the emergency brake. If I want to spend time with my family, don’t interrupt me. If I want to walk in the park, don’t whack me on the head with a billboard. That’s not a great way to start a conversation.

Open letter to Pitchmeisters

Dear CPM mongers, I have learned to ignore you. Like the paint blots on a Monet, I have learned to see the image despite your distortions. Your “fear” pitch is comical to me. The buy-me-love pitch is goofy. The lifestyle-threat angle sounds as ridiculous as an old like Archie Bunker re-run. The most fun I can have is using my ability to walk away leaving you talking to yourself like a deranged chimpanzee at the zoo.

Measure what I measure

Help me do what I’m going to do anyway even if I still ignore you – all data is data. If you want to understand me, measure what I measure; health, happiness, productivity, laughter, family, friends, hope, vision, safety, music art, quality of life. Help me make friends, empower my community, and care for my family. Don’t try to take these away from me – you will lose.

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You’ll Know It When You See It

By Admin

On October 20, 2009

In General Information

I’ve been publishing my research freely all over the net, in the creative commons, and several blogs. I am passionate about this work and I want to tell everyone about it. It’s my playground.

Not unlike a playground

Then one day another kid comes over and says, “Hey, that’s an interesting game you are playing, what are the rules”?

So I tell him; “Well, it’s part economics, part innovation, and part social media. Now sprinkle in some differential calculus with finance theory and garnish with a modern analogy or two”.

The other kid responds, “Wow, I know someone you should talk to…..”

Boomerang effect

Unrelated, this morning I received a phone call from a major brand that wants to “innovate” everywhere in their business but are not quite sure where to start. They came across one of my blogs and essentially said “Hey, that’s an interesting game you are playing, what are the rules and where can I find a short course on innovation that meets my schedule?”

I offered my opinion: Innovation is defined essentially as “you know it when you see it”. As such, Innovation courses can only teach you to “know it when you see it”. By the way, the game I’m playing is part economics, part innovation, and part social media. Now sprinkle in some differential calculus with finance theory and garnish with a modern analogy or two”.

You know it when you see it

Then we had an idea. I can find a University in Seattle that will sponsor a seminar and we’ll invite a group of known Seattle innovators and some corporate folks and we’ll all brainstorm for a few days. What better short course in innovation is there?

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It’s Time for a Reputation Based Currency

By Admin

On October 6, 2009

In General Information

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.

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Dollar Pressures Force Talk of New Currency

By Admin

On October 2, 2009

In General Information

I am heavily quoting an article below from the DOW JONES NEWSWIRES written By Tom Barkley because this situation leads us into a discussion about alternate currencies in which Conversational Currency is applicable.

We predict that the structure for an innovation economy will be built on a platform of Social Media where conversational Currency is the currency of trade. We admit that this is a far cry from a declaration of government foreign or domestic, sorry about that. We also admit this is a far cry from what Corporations, Banks, Insurance Companies and traditional media barons would espouse, Ooops.

The best management policy is to accommodate what people are already doing. People are ADOPTING Social Media in a frenzy of applications which were not even predicted by those who developed the platforms – this is a reality, not a fantasy or a blip in the radar screen. Social Media will have an extraordinary role in the value of currency – if people don’t like it, they won’t trade it; Game over. The next Global Currency will be represented by human productivity traded in social media. The most productive country will hold the most currency – this is a game that the US can still win.

WASHINGTON (Dow Jones)–U.S. Federal Reserve Chairman Ben Bernanke waded into the international debate over the fate of the dollar Thursday, pledging to do his part to avoid what he sees as a longer-term risk to the dollar’s status as the world’s predominant reserve currency.

[China and Russia have been the major drivers behind calls for an alternative reserve currency, blaming the U.S. for the global crisis and worried that its growing debt load could pose a further threat to stability. That view gained some additional force this week when World Bank President Robert Zoellick predicted that the dollar would face increasing as a reserve currency and its status would depend on how well the U.S. can manage its debt.]

Here is the Social Media Pitch:

[The G-20’s plan to reinforce country measures to address imbalances through peer reviews “would perhaps strengthen the mechanism” for enforcement, he said.]

Social Currency?

At the end of the day PEER REVIEW will be the global vetting mechanism that supports the value of a currency. What part of Social Currency are we not understanding here?

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Marketing in the Age of Social Capitalism

By Admin

On September 30, 2009

In General Information

Family Recipe?

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. Advertisers need to offer something to the community that they target. The best place to start is in understanding the challenges and opportunities that a modern community faces.

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 – and it was not about collecting “stuff”

The passion play

Computer Enabled Society is in the midst of a struggle to reorganize itself outside of the construct of the traditional corporation. It seeks 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, passions, and abilities with those complementary to other people. This is as true for communities as it is for corporations. The result will be a profound new paradigm of Social Capitalism reflecting social priorities and community values.

Do no evil:

If marketers have the foresight and talent to “get ‘em while they’re young” or to “sell ‘em what they fear”, they certainly also have the foresight and methods to “develop ‘em to their highest potential”. Advertising agencies are full of real smart people who know how to deliver a hidden message – why not use that talent to empower people?

Instead, mass marketing pays mass money for mass audience from which to draw mass revenues – the message gets debased to play on mass fears, anxieties, and insecurities because this is the least common denominator. As a result, actual products are designed to be marketed, sold, and thrown away; not to be particularly useful, productive, or even healthy. 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, the majority of advertising is just Spam.

Advertisers as community organizers?

Few realize that advertising can become a highly useful component of the Innovation Economy. In many professional 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. Social Media can deliver this audience but advertisers need to adapt by losing the CPM (cost per mille) model (more on that later).

Marketing to communities is fluid, dynamic, specific, and it takes some work. The dynamics of communities will replace the statics of demography and CPM. Fulfill those needs of a community and your products will win forever. It is not difficult to see the future, only to act on it. That is innovation.

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Will Facebook Currency Intermarry with the US Dollar?

By Admin

On September 15, 2009

In General Information

Facebook is testing a virtual currency, because it’s cool and they can do it. They are not alone, the gaming industry has been at it for a long time for people who want to be more “productive” in the game space.

There is no mention, however, whether a Facebook currency could be used as a medium of exchange in the event of hyperinflation and the crash of the US dollar. I can find nobody, writing anywhere today, that is willing to cross this proverbial line in the editorial sandbox.

I personally witnessed a devaluation in Mexico. Like a tsunami, the “adjustment” happens relatively fast as values ’snap’ fluctuate relative to other currencies. Then very interesting things start to happen in the community. People will literally empty WalMart because most goods will be cheaper today than tomorrow.

As with other hyperinflation events, black markets form around various items such as gasoline, cigarettes, or Levis as people require some medium of exchange in order to buy necessities such as groceries and cooking fuel.

A Facebook currency may just be what communities will use to get through the event. However, a Facebook Currency would likely be temporary because it could not be used in Banks to capitalize assets – or, by government who can’t figure out how to tax it.

Now the question becomes, what type of social currency could be intermarry with dollars?

Here is a hint; the dollar is backed by debt which is a promise to be more productive in the future. Conveniently, “innovation” is also a promise to be more productive in the future. Two such currencies are of the same species and can intermarry yielding new economic life.

The degree to which any ‘virtual’ currency is interchangable with the dollar is the degree to which it represents human innovation. Chew on that, Facebook.

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Set the Data Free, Please

By Admin

On September 11, 2009

In General Information

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:

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You Can’t Eat Gold

By Admin

On September 3, 2009

In General Information

The following is a question and answer that I responded to on a Linkedin economics forum. This question still occurs in so many forms when it is also abundantly obvious that Social Media is driving so much value in so many directions. The irony is that the question is asked within the currency that it fails to recognize.

Art credit

Question:

Fiat money is the cause or always the main cause of financial crisis. Reverting back to gold standard can give stability. How can this be implemented?

Answer:

It cannot. Everyone agrees that money needs to be backed by something tangible. However, gold has a host of problems as well that are discussed extensively on-line and cannot be ignored.

A successful and stable currency must be backed by the productivity of the [citizens of a country] users. So these two words should be interchangeable; i.e., a country spends productivity to fight a war. A country spends productivity to fund universal health care, etc.

The cause of financial crisis is when the money becomes divorced from the productivity. Debt is a transaction that exchanges current productivity for future productivity – assuming that productivity will increase at least by the so-called ‘risk’. CDOs and other exotic financial instruments further obscure true productivity until money becomes driven irrationality and emotions completely separated from productivity.

If people lose trust in the currency, they will no longer trade it – they will find something else. Your hope is that they will find Gold.

Note clearly that innovation is also a transaction that exchanges current productivity with future productivity (due to the innovation). As such, a currency backed by innovation is of the same species as a currency backed by debt. Therefore, the entire financial system does not need to be torn down and rebuilt to serve a new non-debt backed currency.

The answer to your question is to look toward the places where extraordinary innovation is occurring today, right now. It is clear that social media is developing this new currency. The problem now is fairly simple; making human knowledge tangible. This is where the innovation is. Here are some resources of people working on this problem:

http://ingenesist.com

http://relationship-economy.com

http://conversationalcurrency.com

Our deepest concern should be to feed the Goose what’s been so good to the Gander all these years. Of course one argument in favor of gold is it’s scarcity. However, it is difficult to imagine that in an era of scarcity of so many resources, the basis of a currency ought to be more scarcity. Knowledge, conversation, and innovation are scarce relative to the problems that they must be deployed to solve. We’re in this together.

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When The Kids Arrive – from MySpace

By Admin

On August 29, 2009

In General Information

Several articles have come out refuting the death of MySpace as researchers try to make sense of the continued persistence of what many people consider last-year’s news. Here is an interesting article by Misiek Piskorski from Harvard Business Review answering the question “Where are all those My Space Users”?

“Both traditional and social media have declared MySpace dead. Even a brief scan of articles reveals that media mavens “don’t know anybody who uses MySpace anymore,” which reportedly is not a huge loss as the site “is ridden by spammers” and “its atrocious HTML, bLiNgY graphics, and horrific backgrounds” are offensive. Many of you reading this post probably do not know anyone who uses the site either.

Yet MySpace is the 11th most visited site in the world, with unique 60 to 70 million U.S. visitors every month. Even though the site is not growing, it is a far cry from “dead” if you ask me.”

But wait!

Notice how the “Media Centers” Los Angeles, Chicago, New York are in Facebook territory. Also note how the technology power centers; Silicon Valley, Seattle, and Boston are also in the Facebook territory. Academics from Harvard, Yale, Stanford are taken by surprise in Facebookville. The great financial centers; Wall Street, LA, SF and Chicago are all Facebook. Maybe the prognosis for the future of social media is skewed by the proximity to major media, academic, and financial centers. Centralized power is the antithesis of social media, Right?

Looking for Disassociation.

Here at The Ingenesist Project we have long been looking for a disassociation between main stream media and social media. MySpace may be the social experiment that indicates a deeper and most promising trend. Is it a requirement that a social media analyst be located in Silicon Valley? Do celebrity endorsements really mean anything tangible? Does editorialized news always provide what people need?

MySpace Demographics:

The resulting sample is representative of the MySpace population. 53% of users identify themselves as women. Of all users below the age of 50, half are 21 years old or younger, and 30% are between the ages of 22 and 30. Everyone knows that Kids don’t Tweet and late adopters to Social Media are also later-in-lifers. The population of the world is finite, so when will Facebook level off as Twitter has?

Looking for reversal:

Next, we are looking for a reversal where Social Media drives s0-called traditional media – not the other way around. Can a blogger in Arizona drive the great branding strategies of the future? Can a Webinar from Montana introduce the next age of enlightenment? Can Nashville become the next great Venture Capital hub? Can a community of children in Florida band together to sustain the next great social movement. Will democracy, voting, and public opinion be driven by youth culture? Will corporate innovation respond to social priorities rather than Wall Street Priorities?

Ideas whose times are coming:

There are many examples of the above miracles of social media, however, a disassociation and reversal with traditional media will be an event of flip-floponomics of great significance – a watershed moment in the history of the next economic paradigm. Traditional media, understandably, may inadvertently be assigning a premature death to many great ideas yet to come.

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Social Media and Flip-floponomics

By Admin

On August 28, 2009

In General Information

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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If it Quacks like a Buck…..

By Admin

On August 13, 2009

In General Information

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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It Takes Currency to Make Currency

By Admin

On August 11, 2009

In General Information

If you’re a Flash game developer, you are concerned with how you can make a living from your creative and intellectual services. Fortunately there is a payment system so workable, that it may actually work. Game developers can charge money both for their games, and for things within their games.

Here’s how it works:

1.   Player pays real money to buy fake money within the game.
2.   Player spends fake money on virtual stuff.
3.   Virtual stuff increases the value of the game.

The game developer can technically charge for whatever they like: level packs, hats, extended versions/director’s cuts, etc, etc. The sky’s the limit.

These types of transactions have been very popular in places like Korea for a long time, and it was amusing to see the initial resistance and resentment in North America to the idea. Meanwhile, North American Pioneers of such systems are drowning in money.

The Right [virtual] Stuff:

Now, suppose that Social Media could be modeled after a huge game where people act based on a set of incentives like, say, connecting with friends, accumulating followers for their blog, finding proverbial “gold rings” like employment opportunities, business opportunity, spiritual growth, professional advice, cheap airfare, fun things to do, product reviews, or political activism…just to name a few.

Suppose that in order to get from one level of the game to the next, they need to engage in conversation with another player. Anyone who has been on Linkedin, Twitter, or Facebook long enough knows that the “right virtual stuff” is sometimes hard to acquire. Twitter finally broke the mold with applications that now “sell” followers (I wonder if there were any Flash Developers behind this innovation).

A Mutually Inclusive Game:

Now, suppose the game was mutual such that some players need you a little bit more than you need them and they are willing to invest in your connection. Similarly, suppose you need some players a little more than they need you and you too are willing to invest for their connection. Finally, all players know that a mutual link between two appropriate players substantially increases the value of both players relative to the game.

It Takes Currency to Make Currency.

Immediately the engine of entrepreneurialism will ignite as people figure out new ways to play the game. With a trillion dollar advertising industry, a trillion dollar Professional Placement industry, and a trillion dollar recreation/leisure/entertainment/family industry on the ropes, you can guarantee that innovation will be absolutely intense. Welcome to the Innovation Economy.

(Editor’s note: This article was inspired by a piece authored by Ryan and can be found here)

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Humility R Us

By Admin

On July 28, 2009

In General Information

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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What is the Current of Currency?

By Admin

On July 26, 2009

In General Information

There is not much more ‘federal’ about the “Federal Reserve” than there is about Federal Express. Except, the Fed is a private company for whom the US government is the “Legal Tender”; literally and figuratively.

We could analyze this cozy relationship or we can realize that the value of any currency is a social agreement among people who trade it for goods and services. There is nothing keeping each and every one of us from “legally tending” a currency in communities to exchange for goods and services – as long as there is a social agreement.

The Semantic Web:

The word “currency” has several meanings. It can mean a “medium of exchange” such as “bank currency”; or it can mean a placement in time such as a “current edition”; or it can mean the flow of something such as the “river’s current”. Money is, in fact, all three; it is exchanged, it changes with time, and it moves things. Therefore, anything that does these three things can be used as currency.

Social Media space has awarded civilization with an extraordinary capacity to create, maintain, and design social agreements. Social agreements are founded on conversations between people. Conversation is the medium of exchange for the trade of goods and services long before the money is distributed (or not).

The Value of Value:

The value of the dollar is not changing, but the value of the social agreement is. Conversations about Land, Labor, and Capital are transcended by conversations about environment, health care, social justice, human rights, and global freedom. The social agreement that once supported the value of a dollar is now supporting something else. The value that the dollar once contained is being transferred someplace else. The people that once controlled the value of currency are being replaced other people. The social agreement is being replaced by another one.

To understand the new social agreement is to understand the currency of currency. To support the conversations that define the new social agreement is to support the value of social currency. To support the value of social currency is to support the value of money.

Humility: The New Economic Paradigm

In order to intersect the flow of money people need to be trading a conversational currency. In today’s economy, in order to find value, we need to ask someone else where it is. In order to create value, we need to tell someone else where it is. In order to stay “current” we must engage with others. In order to preserve value, we need to preserve the value in others.

Most importantly, especially for those who want to hold a great deal of money or power or control: in order to hold value, they must give it away. In order to hold power, they must empower others. In order to hold control, they must give up control to others.

Conversely, Humility is the new gold standard and the bad guys will always try to steal it. Does this sound familiar?

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The 1.6 Trillion Dollar Waste of Time

By Admin

On July 15, 2009

In General Information

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

In General Information

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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The Value of Social Currency

By Admin

On July 9, 2009

In General Information

How big is this opportunity?

Roughly 10% of the US gross Domestic Product can be attributed directly to the process of evaluating or examining transactions. This represents a 1.4 Trillion Dollar of value in a system that may be better organized, captured, and preserved through social networks and the conversations that they produce.

Social vetting on a scale that would allow social networks to monetize would require that communities organize their knowledge assets specifically for deployment to a market. All that an entrepreneur needs to do is fill this need.

What happens if they don’t?

The true cost of vetting may be calculated by what happens in the absence of oversight, transparency, and disclosure. When the vetting process fails, so too does the industry. The continuing financial crisis of 2008 was fueled by a failure to regulate mortgage backed securities. The financial Crisis of 2002 arose from a failed accounting (CPA) profession.

The losses due to the absence of vetting mechanism exceeds by many times the cost of having a system in place. The financial crises of 2002 and 2008 have together wiped out nearly 20 Trillion dollars of value and incurred high volatility to financial systems due to failed vetting mechanisms. The people who held the knowledge about the impending doom had no effective medium to share.

Who vets KNOWLEDGE assets?

The flow of money lives and dies by the vetting mechanism. CarFax, Experian, Ebay, Google owe their existence to the ability to vet information – However, they do not vet knowledge. The ability to deliver the right knowledge asset to the right place, at the right time for the right price is tantamount to being able to “manufacturing innovation”, that is, to print money. Inversely, the ability to foresee the result of specific knowledge assets deployed to specific business conditions is the Holy Grail of entrepreneurs.

Social networks can carry out this very important function of the Innovation economy; organize, locate, and develop knowledge assets in a form which can emulate a financial instrument.

How are things changing?

Emerging ideas such as conversational currency, relationship economics, innovation economics,. nd new ways to value intangibles are appearing in research blogs across the web. Disruptions to Global finance, environmental policy, and the emergence of global currencies are setting the stage for a huge transformation in how society organizes itself. Traditional industries such as print media, advertising, and banking are failing. Nothing is sacred except change.

Where are these communities, and what do they want?

Many communities exist today in a variety of forms and functions such as communities of practice, fellowships, service organizations, professional societies, trades groups, affinity groups, etc. Increasingly they are moving to Social Media such as Facebook groups, Linkedin groups, Affinity groups, aggregation groups, and political action groups. Communities are using social media technology to engage the knowledge domain contained within them.

As such, they will soon have ability to foresee the result of specific knowledge assets deployed to specific business conditions. This is the Holy Grail of modern civilization.

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The Vicarious Search Engine

By Admin

On July 7, 2009

In General Information

The search engine wars continue as both Google and Bing develop more exotic ways of arriving at the wrong answer. Both commit the same error as all declining industries in social media space; assuming that they can predict what people want without engaging them in a conversation.

The first development is the predictive search notably pioneered by Amazon.com for predicting future purchases based on past purchases. While predictive search is an improvement, the next step is the “vicarious” search, that is, when the search engine sees the world through your eyes – or someone Else’s – for your benefit.

The Web is Flat

The Ingenesist Project specifies a standard knowledge inventory that may be represented as a packet of code. If someone wanted to see the web through the eyes of another person, they could buy a packet of their knowledge inventory. Likewise, a web article would be tagged with the representative knowledge inventory code of the author. Each comment or re post to a blog article would contain the knowledge inventory of its aggregated vetters.

The search can be done in reverse as well. If I find an idea on the web and want to know who can execute it locally, I can simulate the knowledge inventory in one or more local people. This is not trivial. It literally allows an entrepreneur to manage knowledge assets that they did not know exists and predict content that does not yet exist.

Been there, done that?

Obviously there are privacy, security, and ethics issues related to others seeing the world through your eyes. But what if every American was told 20 years ago that their identifier number for an insolvent social security program would be attached to their personal, medical, financial, and civil records then spun through Wall Street algorithms, sold worldwide to advertisers, politicians, banks, insurance companies, demographers, and ultimately hacked? The cities would have burned.

So why can’t social mediators monetize?

The difference today is that if packaged correctly, we can own and control our knowledge inventory. We can allow or decline access and we can revoke access – it happens all day long on Face Book, Linkedin, Twitter, and My Space. On-line communities represent collections of knowledge assets. The 400 Billion dollar per year advertising budget is on the table – up for grabs. The 100 Billion dollar “head hunting” budget is up for grabs. The multi-billion dollar election budgets are all up for grabs. What are we thinking?

The likelihood of Innovation

The innovation economy will depend on business intelligence related to society’s knowledge inventory to match most worthy knowledge surplus to the most worthy knowledge deficit. Entrepreneurs must know supply and demand for knowledge assets as well as where to find them at what cost. Entrepreneurs need to predict competition, disruption, risks, and volatility in knowledge assets. They need to conduct scenario tests before expending money. They need to predict the likelihood of innovation and all of the options that they have in the future related to those innovations.

The Securitization of Knowledge Assets

Entrepreneurs need to securitize knowledge assets in order to finance innovation on the scale that will be required to offset our massive debt. This is how the innovation economy must play out. We cannot depend on corporations or governments to do this for us. People must control, regulate, anonymize, and manage their own knowledge inventory. If only they could see their world through the entrepreneur’s eyes – perhaps they need a vicarious search engine more than anyone.

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1.3 Trillion Dollar Professional Contact Market

By Admin

On June 30, 2009

In General Information

“Hey, I know a guy who owes me a favor …”

It is only a matter of time until professional contacts will be for sale. The problem is that the ROI (return on investment model) is such a poor valuation tool for social media. Another valuation tool used in finance is called Real Options. An option is the right, without the obligation, to act on an opportunity at some time in the future. Social Networks, friends, family, and professional contacts behave much more along these lines.

Five Easy Pieces:

While the calculation for the value of an option is complex, the things we need to plug in are fairly simple in the context of social media:

1.    There must be an inventory of the assets
2.    The future date when the asset can be acquired must be known
3.    The cost of acquiring the asset must be known
4.    The value effects on the enterprise must be estimated
5.    The uncertainty related to the asset must be estimated

The term “asset” in social media space may include: Knowledge, skill, an undertaking of a new project, or the generation of a new idea, etc.

The Social Networking Manifesto:

The objective of the building a social network is to know where the knowledge assets are, how much they can help you, how much they cost to exercise, and the certainty that they will be applicable, available and useful when you need them. Conversely, the best way to increase the value of a social network is to be visible to others, tell people what you can do for them, tell people what you need from them, and establish a reputation for reliability.

Most importantly, everyone must have the right, without the obligation, to accept or decline the opportunity. This is what jump starts ‘supply and demand’ and makes a market a market

Let’s consider all options:

To estimate the value of an option to call on anyone in your network use a financial option calculator tool on the web and plugged in social media numbers. Let’s use Linkedin as the knowledge inventory; 40 million knowledge assets also hold options with their contacts. Say that the expiration date is 1 year (for tax reasons). Assume the market value of their skill is 100 dollars and that at some point in the next year, the value of their skill relative to yourself becomes 200 dollars. The right to buy the asset at the earlier price is worth a premium. Suppose that the volatility of the asset is 50% and the interest rate is 7%.

The value of the “call” is worth about $3.47 dollars. The Call is an option contract that gives the holder the right to buy a certain quantity of an underlying security from the writer of the option, at a specified price up to the specified expiration date.

The value of options in a network:

For the above scenario assuming all assets are equal in price of 100 dollars; if someone has 10,000 1st and 2nd level contacts on Linkedin, the value of their implied call option is about 34,700 dollars. If Linkedin were a stock market, the value of the social contracts that people have with each other is 34K x 40M = 1.3 Trillion Dollars market value for the contracts that people hold and trade.

This is not even the value of the transaction – only the right to have a transaction. The value of the social contract is in the conversations that they hold. Contracts are a financial instrument that can be traded, combined, diversified, and aggregated for real money. It’s only a matter of time.

The Ingenesist Project specifies the structure of an innovation economy where a knowledge inventory, a percentile search engine, and an innovation bank will facilitate and aggregate the 5 components of Option Valuation. Social media applications form the operating system for the market in options.

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The 2.3 Trillion Dollar Mentor Market

By Admin

On June 29, 2009

In General Information

Mentors provide expertise to less experienced individuals to help them advance their careers, enhance their education, and build their networks. In many different arenas people have benefited from being part of a mentoring relationship: Freddie Laker mentored Richard Branson, Bach mentored Mozart, Dr. Dre mentored Eminem, Aristotle mentored Alexander the Great, and Obi-wan Kenobi mentored Anakin Skywalker.

Mentorship: a Valuable 2-way Conversation

Suppose that mentorship could be monetized like financial instruments. Within the structure of an innovation economy specified by The Ingenesist Project; a knowledge inventory, a percentile search engine, and an innovation bank will match the most worthy student to the most worthy mentor in the respective market structure. The mentor would take an equity position in the protégé, not unlike taking a stock in a corporation.

For example: A single mid-career mentor could take on 10 protégés with an option to exercise, say, 1% of the students future salary for every year mentoring upon predetermined retirement date. Say that the average mentorship lasts 10 years. Likewise, each of the protégés also becomes a mentor taking on 10 protégés of their own. The Master mentor will collect 1% of the revenue that each of the 100 sub-protégés provide to their middle mentors per year.

The Educational Pyramid Scheme

If each protégé becomes at least as successful on average as the mentor, the master mentor can collect the equivalent of their average salary for the duration of their retirement. If each of the protégés become equally effective mentors, then the master mentor can double their average salary for the duration of their retirement. A third tier adds another salary to the master mentor.

This is what actually happens in an informal way within companies, government, and Jedi Knighthood; the exception is that social media will enable this to occur outside the construct of a corporation – and such.

Game Theory for the Rest of Us

An interesting social game emerges: It becomes the best interest of the mentor that each of their protégés is successful in their field and practice high integrity. It is in the best interest of the mentee to learn as much as they can and become as proficient as they can. It is the best interest for mentees to pick appropriate mentors and it is in the best interest for mentors to take on appropriate mentees. It is efficient for mentees to form a social network among themselves and for Master Mentors to form a network among themselves. A multiplier effect surges with cross-mentoring.

In aggregate, it is in the best interest for the membership in the social network to cooperate rather than compete because their income would ultimately benefit less from competition than from cooperation.

2.3 Trillion Dollars Market

The American Public education system is in disarray. Standardized education defies the diversity of the country. Teacher’s pay has been stagnant. Curriculum takes years to respond to new knowledge. Recent McKinsey research finds that a persistent gap in academic achievement between children in the United States and their counterparts in other countries deprived the US economy of as much as $2.3 trillion in economic output in 2008

None of this has anything to do with the dreams of our children. None of this has anything to do with the intellect, motivation, and perseverance of our kids. It has everything to do with Political stalemate and failure of the economic system. All children can achieve their dreams, and ours, if there were a market for mentors.

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Social Media Strikes Back

By Admin

On June 26, 2009

In General Information

Money represents human productivity.

Recent headlines declare that 78 billion dollars worth of fuel and productivity are wasted each year by congestion on highways. 1.2 Trillion dollars per year in productivity is lost due to past failures in education. The US spends 7% more of our GDP on health care than the average of other developed nations leaving nearly 1 trillion dollars of unknown ‘productivity value’ in vapor per year. 200 Billion dollars per year is spent on war, whether necessary or not, that has not increased American productivity in an economic sense.

2.5 Trillion Units of Human Productivity

Without even trying hard, 2.5 Trillion Dollars per year in stuff not produced is wasted on activity that does not increase human productivity (stuff produced). Obviously debt is a promise to produce stuff in the future. But we’re wasting stuff now? At some point the logic falls apart but no matter how you look at it, money represents productivity and the only way out of this mess is to innovate at an astonishing rate.

Conversational Capital

In an earlier article, we conjured up a rough tabulation of productivity gains due to social media:

One billion messages are sent on Facebook every day. Suppose that each Facebook conversation has a net value of $1.00 per person. That comes out to 730 Billion dollars per year of human productivity saved.

Twitter is worth a cool 100 Million tweets per day. Let’s assign a net productivity gain of $1.00 per tweet delivered. That is $36 Billion per year in increased human productivity.

Suppose each blog article published increases human productivity by $0.50 each. With over 100M blogs, that is 10 billion dollars per day – or1.8 trillion dollars per year.

The grand total is 2.5 Trillion Dollars worth of conversational currency.

In Search of Waste Economics:

Now, return to the waste side of the balance sheet let’s reflect on the areas of impact that social media has on: transportation, energy, education, health care, and world Peace:

Social media reviews automobile quality and drives social priorities toward green industry. Social media allows people to find work close to home, social media vets energy systems such as wind, solar, nuclear. Social media is driving journalism to value added roles and away from corporate collusion. Social media provides richer and more current content than textbooks. Social media is driving social priorities over Wall Street priorities in health care, energy, politics, industry, and science. You Tube is seeing a 1700% increase in downloads as people set up video cameras all over the world searching and reporting injustice. Little Brother is watching.

Social media strikes back

In order to predict where social media will strike next all we need to do is look for the waste economy; areas where world governments, institutions, and corporations are inefficient, wasteful, co opted, or corrupt.

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Matchmaker, Matchmaker, Make Me a Match

By Admin

On June 22, 2009

In General Information

The $40 Billion Dollar Dowry

Every organization wants to attract the most qualified employees and match them to jobs for which they are best suited. The human resources department is responsible for matching a knowledge surplus to a knowledge deficit through the hiring process. Fortunately for them, there is no knowledge inventory in society and managers don’t necessarily know what they want.

Human resources, training, and labor relations managers and specialists held about 868,000 jobs in 2006. The following tabulation shows the distribution of jobs by occupational specialty:

Training and development specialists    210,000
Employment, recruitment, and placement specialists    197,000
Human resources managers    136,000
Compensation, benefits, and job analysis specialists    110,000
Human resources, training, and labor relations specialists, all other    214,000

An HR Generalist pulls an average income of about $50,000 per year; A Director earns up to $140,000 per year. The total HR national payroll is estimated at $40 Billion annually.

Commodity Management:

Human Resources creates the impression that people are merely commodities to be treated as expenses rather than assets; or at best, like office machines or vehicles, despite assurances to the contrary. The HR profession is built on the assumption that people cannot manage themselves, that human behavior is random and intangible, the independent variables for success are always known by management, and that the key words on a resume is the best predictor of a good match.

Innovation Economics; the science of incentives:

Social Media is providing systems for people to organize and manage their own career. True knowledge inventories are forming as social groups coalesce around standard taxonomies of professional practice outside the corporate construct. Knowledge assets are being vetted in communities of peers and the resume is being replaced by a Social Network Profile and “Search Engine Footprint” which more accurately predicts the quality and quantity of knowledge assets. In the near future, a predictive search engine will be able to predict the probability that various collections of knowledge assets can execute a specific business objective at a known cost. Scenarios can be tested and compensation will reflect true supply and demand.

Superior Value Comes in Many Different Packages:

So what happens when top management meets the new Human Resources Training and Content Development Manager who was sent by the Social Networks Search Engine to build the new corporate Blog and Social media strategy – sporting facial tattoos, a nose ring, and a black kilt, and dreadlocks? If the fact that a top manager is not comfortable with a person of a particular culture or lifestyle can be perceived as detrimental to the innovation capacity of the organization, that organization is threatening its own survival.

Don’t Shoot The Fiddler

The story of Fiddler on the roof centers on Tevye, the father of five daughters, and his attempts to maintain his family and religious traditions while outside influences encroach upon their lives. He must cope with both the strong-willed actions of his three older daughters—each one’s choice of husband moves farther away from the customs of her faith. The story resolves with a slow acceptance of the new world and creeping redefinition of what love is and what love can be.

In an Innovation Economy, the perfect match is no longer determined by those inside the construct of tradition, rather, it is determined by those entrepreneurs on the outside redefining tradition – and earning 40 billion dollars.

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Collateralized Innovation Obligations

By Admin

On June 9, 2009

In General Information

Collateralized Debt Obligations (CDOs) are a type of structured asset-backed security (ABS) whose value and payments are derived from a portfolio of fixed-income underlying assets. In the case of the current financial crisis, the underlying assets were home mortgages. It is not necessary for the CDO buyer or seller to know who lives in the home and what they produce; the asset is a contract backed by future productivity.

CDOs vary in structure and underlying assets, but the basic principle is the same. To create a CDO, a corporate entity is constructed to hold contracts as collateral and to sell packages of predictable future cash flows to investors. The more money handed out in home loans, the more money could be collected in CDOs

You are a liability.

While corporate leaders proclaim that people are the greatest asset, corporate accounting practices specify otherwise. Employees are an expense and their salaries, benefits, and pensions are liabilities to be reduced any time the opportunity arises. So what’s the problem? Liabilities can’t innovate.

Suppose for a moment that people were in fact an asset on the accounting sheet and their salaries, benefits, and pensions were “investments”.

Collateralized Innovation Obligation (CIO):

The CIO would obviously be a type of structured asset-backed security (ABS) whose value and payments are derived from a portfolio of fixed-income underlying assets, specifically, the output of productive and motivated people.

Like the CDO, a CIO would vary in structure and underlying assets, but the basic principle is the same. To create a CIO, a corporate entity is constructed to hold assets as collateral and to sell predicted future cash flows to investors. It is not necessary for the CIO buyer or seller to know who is innovating or what they are producing; the asset is a contract backed by future changes in productivity. The more money handed out in innovation loans, the more money could be collected in CIOs. For all practical purposes, we could call it an Innovation Bond.

Enter Social Media:

Social media is teaching us an important lesson about innovation. Every time you get a diverse group of people together to share ideas, new ideas form. Every idea is useful as long as it is shared; thousands of bad ideas must expire before the good one appears. Conversational currency is the vetting mechanism of all ideas. While not every good idea becomes a great invention, every great invention is built from good ideas. Machines cannot produce ideas and no single company, country or person holds a monopoly on ideas. Innovation and the creation of all wealth arise from the social, creative, and intellectual interaction of people.

Conversational Currency: The underlying asset

The underlying asset that supports both the Collateralized Debt Obligation and the Collateralized Innovation Obligation is a person and their ideas; one is an asset and the other is a liability. Both types of people go to work every day to interact with other people. They both share ideas and create better ways of doing things. People increase human productivity through fault tolerant networks and support systems. They transform information into knowledge and innovation – and both pay their mortgage.

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The Competition is Competition Itself

By Admin

On June 7, 2009

In General Information

In quantum physics, the Heisenberg uncertainty principle states that certain pairs of physical properties, like position and momentum, cannot both be known. That is, the more precisely one property is known, the less precisely the other can be known.

A practical analogy is the modern corporation. It is difficult for a corporation to truly innovate because people behave as a function of the corporation’s interaction with them. Heisenberg’s uncertainty principle suggests that the more we know about competition, the less we may know about cooperation.

Is competition is good for innovation?

A corporation is a closed loop that feeds on internalization. External influence is traditionally shunned because of the great promise of the competitive economic system. We compete with other companies, with our own legal system, with Unions, and with each other. We hold and protect trade secrets; spend millions on patents that never get used. We make our “intangible Human Assets” sign “tangible” contracts of secrecy and non-competition.

How do we define cooperation?

We often think of cooperation as teamwork. However, we define cooperation as the alternative to working separately in competition. The definition of cooperation is derived from competition; the assumption that there is an opponent. There needs to be a war against something in order to accomplish something together. If you are not with us, you are against us.

Who exactly is the opponent?

Competition is a deeply ingrained part of our culture. The business world is filled with sports analogies like; “knock them dead”, “carry the ball”, “we need a home run”, “great save!” We see that national sports franchises command the highest pay and best ratings. Reality TV is all about kicking people off islands, backstabbing one’s fellow apprentice. We have even turned the pursuit of love and happiness into a competition. The object is to decimate the competition. We define ourselves with slogans like: “may the best man win”; “the survival of the fittest”; “winner takes all”. Destruction sells.

Beating a dead horse:

So what happens when we compete with each other? What are the consequences when we decimate each other? What happens when one departments competes with another department in the same company? What happens when one person competes with another for a salary and bonuses? What happens when society competes with Wall Street for their 401K? What happens when the competition is already lost – do we continue competing or do we then cooperate?

The unwinnable war

After a while, societies and communities becomes a closed loop much like the corporations that they interface with. They have no idea who the friend is or who the enemy is. When people are in a game that they cannot win, they feel alone. Loneliness is the war that cannot be fought.

Social Media Cooperation; A closed loop system:

Social Media is emerging as an astonishing force in cooperation by uniting communities and people of diverse and complementary interests, affinities, and actions. Social media works in a new dimension: It is a “cultural dimensions” where the opponent is opposition itself.

Social media teaches cooperation. The more we know about cooperation, the less we know about competition.

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