Tag: Innovation Economy

INGENESIST PROJECT: Submission to the 10^100 Innovation Contest; www.project10tothe100.com

Single sentence:
The Ingenesist Project is an open source economic development program to induce the Innovation Economy utilizing Social Networks.

Tell us more (300 words)
The current financial system has reached the limits of its effectiveness. Interest on debt has exceeded the system’s ability to pay it off. But debt is simply a promissory note on future productivity – any caveman can tell us that the only way to increase productivity today is to innovate yesterday, not tomorrow.

In modern times, this means that the only way to sustainably create more money tomorrow is to innovate today. This is the flaw on Wall Street that Innovation Economics will correct.

Ingenesist has specified three simple web applications when applied to Social Networks, will allow Knowledge to become tangible outside of the organizational construct of a corporation, government, or academia. To develop these applications would unleash substantial innovation and wealth in society.

*The Knowledge Inventory
*The Percentile Search engine
*The Innovation Bank

Knowledge is an excellent tangible asset upon which to peg a currency – better than Gold, Silver, or Debt.

The factors of production for an Innovation Economy are Social Capital, Creative Capital, and Intellectual Capital. The knowledge Inventory classifies knowledge assets in social networks. The Percentile Search Engine assembles unique knowledge asset combinations and returns their probability of executing a given business objective. The Innovation Bank matches most worthy knowledge surplus to most worthy knowledge deficit. Finally, entrepreneurs elevate knowledge assets from lower states to higher states of productivity thereby creating wealth in communities.

By analogy; in the early 1800’s Eli Whitney performed a demonstration for members of Congress by disassembling 10 working muskets, scrambling the pieces and reassembled 10 working muskets. It may seem trivial to us today, but that simple feat astonished the world; it led to the industrial revolution, and unlocked a vast amount of innovation and wealth creation. Innovation Economics is the modern day equivalent.
What Problem does it solve (150 words)?

Technological change must always precede economy growth. We are going about the process of globalization as if economic growth can precede technological change. This simple reversal is the cause for much of what is unsustainable in the world today. Innovation Economics corrects this flaw.

To make knowledge assets tangible is the Holy Grail of financial accounting. The Ingenesist Project asserts that knowledge assets are not intangible, they are simply invisible – this is a much easier problem to solve. Innovation economics solves this problem.

True valuation of knowledge assets allows for direct capitalization of people and their social, creative, and intellectual capital. Networks of knowledge assets form a new type of corporation that is fault tolerant, self regulating, risk diversified, and responsive to social priorities. Wall Street becomes the steward instead of the master. The whole game changes.

If it becomes a reality, what happens (150 words)?
If Innovation Economics becomes a reality, Social Networks will become the driving force of economic growth because human knowledge (as social capital, creative capital, and intellectual capital) can be capitalized directly. Creative knowledge workers would benefit most initially.

Eventually, publically traded Innovation Bonds backed by productivity gains will replace venture capital at vastly reduced risk and cost thereby unleashing an extraordinary amount of primary and tangential innovation creating a virtuous circle.

Areas of low productivity, such as poor communities and under-privileged populations will become targets for highest returns on innovation applications. Millions of new-to-the-world businesses will emerge and nearly all existing businesses will become more efficient where human knowledge is tangible and free to assemble itself in infinite, diverse, and strategic combinations.

If done correctly, eventually most people on Earth would benefit by freedom from the shackles of debt economics.

What are the initial steps to make it happen (150 words)?

Phase 1: The initial steps are: publish our research to a wider audience, prosecute our patent application (USPTO: 20070226361), release it to public property, and begin receiving public input.

Phase 2: Publish several animated videos which describe step-by-step the role that Social Networks must play to induce the Innovation Economy. Collect more input.

Phase 3: Create an open source development platform where ideas can be collected from the global community on how to develop the three web applications specified herein.

Phase 4: Develop and release common architecture web applications for The Knowledge Inventory, The Percentile Search Engine, and The Innovation Bank.

Phase 5: Exist indefinitely as an NGO to keep the game fair and build out emerging opportunities as needed.

What is the optimal Outcome and how is it measured (150 words)?
The intended outcome is for the innovation economy to arise from the knowledge economy as the next level of economic development. The optimal result would be an improved wider distribution of wealth and the transfer of corporate prioritization to communities regarding what gets innovated and what does not. Or likewise, which existing markets dynamics are disrupted and which are not. The optimal outcome would be the emergence of sustainable enterprise over forest-to-dump consumerism.

Metrics are inherent to the algorithm of the Percentile Search Engine as follows: innovation is proportional to the rate of change of knowledge with respect to time and knowledge is proportional to the rate of change of information with respect to time. Differential Calculus is the mathematical tool used to monitor all performance indicators of this system. In fact, all of the analytical methods of finance similarly apply to knowledge assets, by design.

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The Credit Score Analogy; Part 2

By Admin

On September 17, 2008

In General Information

Now we look for a similar situation for Knowledge Markets.

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

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

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

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

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

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The Credit Score Analogy; Part 1

By Admin

On September 17, 2008

In General Information

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

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

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

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

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

The credit score isolates about 22 or so measurements of financial activity and puts them on a bell curve relative to everyone else. These include how much debt you have, how much your assets are worth, your income, etc. These ratings are run through the FICO Equation and out pops your credit score. Anyone can now predict the likelihood that you will default on your obligation.

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

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

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

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

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

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The Knowledge Inventory; Part 3

By Admin

On September 17, 2008

In General Information

In American society there is a persistent ideology of winners and losers; there can only be one winner and the rest are losers. We rank things in a very linear way; 1st, 2nd, 3rd, etc. Sports analogies dominate many business expressions; low ball, hail mary pass, ball’s in your court, etc. Our culture is to protect one’s position at all cost, shield away all attackers and decimate our competition. This way of thinking was effective in the industrial economy but today with the emergence of social networks it keeps us from understanding how knowledge actually exists in a community – it lives on a bell curve.

The Bell Curve

If I examine a group of people on the streets of Seattle in the area of mathematics – I would get a bell curve. If I examined engineering school students in mathematics, I would still get a bell curve. If I examined engineering professors, I would still get a bell curve.

In the Innovation Economy, there are no winners or losers, only different markets. There is a perfectly legitimate market for a Ferrari and there is a perfectly legitimate market for a KIA – in fact the market for KIAs is bigger than the market for Ferrari, so the idea that we compete with each other may no longer be appropriate. In fact, according to game theory priciples, it may not actually be the best strategy to be number one in a single talent – rather, being slightly above average in many diverse talents, on average, pays more for the majority of people engaged in innovation economics.

This is important. All of the tools, methods, and equations in the world of banking, finance, and insurance use interpretations related to this type curve when they try to figure out the value of an asset in the particular market. This is very important for making knowledge look and behave like money. Again, there are no winners or losers, only different markets.

We will need to come up with a way to sample and normalize knowledge in a community. In some ways we already do: Ebay uses a rating system, we rate comments on blogs, best answers to questions, Google placement, number of contacts, college GPA, credit score, etc. So rating are everywhere – there is nothing new here.

Here is what we need to do to make knowledge tangible in a community: when a local community of practice meets, everyone needs define the knowledge that the community shares, then everyone needs to find their place on the right bell curve. Each specialty and proficiency level is a different market. For example, a photography community there may be some competition for who can operate a camera better – but there is competition anyway. The competition disappears when one photographer is also a musician and nature enthusiast while another is also a baseball player and likes political contests. They would each own a unique market; still life and action respectively – and they can now cooperate instead of compete.

In fact, rather than fighting for first place by beating up your competitors, the best strategy in a market may be to have an average level of expertise in as many subjects as possible rather than being the best at one or two obscure areas. It depends on the market – it always has and it always will.

An entrepreneur will not make a bet without odds. We are giving the entrepreneur the information that they need to create wealth. Again, There are no winners or losers, only different markets.

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The Knowledge Inventory; Part 2

By Admin

On September 17, 2008

In General Information

Suppose we used the Dewey Decimal System to write a resume. A person could be described as a series of numbers instead of words and computers can search the numbers as they do key words today.

For example: 302, 307, 330, 607, 17, 500, 519

This person has experience in social interactions, communities, economics, educational research, ethics, natural sciences, statistical analysis

While memories of high school librarians may make us cringe, the computer loves numbers and classifications in this format. This will be important especially where knowledge is very specific. However, this simple list of numbers does not capture the knowledge of a person any better than the flawed “key word” search system that we are trying to replace. So we need to do something more.

If your mind were a library and you attempted to map it all out, one would see that everything is related in some way – intuitively, this is what defines you. If we looked at your brain, we would discover a huge network of experiences, relationships, books read, lessons learned, and people encountered. We would find a system of knowledge rather than random facts. Your likes and dislikes would be reflected in what you do and do not want to do. Everyone is different – nobody is the same. Everyone innovates, everyone has knowledge, and everyone shares information.

Somehow we need to reflect this on our computer readable resume.

The Universal Decimal Classification (UDC) System was built on top of Dewey for precisely this reason, to catalog complex and dynamic knowledge. The UDC system uses symbols to connect and relate the categories.

• Addition (+) allows for a string of subjects to be listed together.

• Forward slash (/) defines a range – or a “system” of subjects matter.

• Colon (:) identifies categories that are related like; sports and medicine, ethics and law; innovation and economics.

• We can even employ Boolean Operations such as IF, AND, OR, NOT statements. For example; we can say Polo IF Horses NOT water OR trade marks

• In a Global Economy, we can employ language and culture assets as well.

Now, we have a system of numbers and symbols represent the knowledge of the person.

For example: {20,12};[302+307], (330):[607+17]+[500/519]

Now we see that a computer language is emerging for human knowledge. This “resume” is for a specialist in Social systems and communities of practice. Knowledgeable in economics related to educational research, ethics, and natural sciences. They also employ statistical analysis in their work and can do it all in either English and Spanish

This is starting to demonstrate several key advantages:

1. It is Infinite and expandable to any field of knowledge
2. Paints a picture of knowledge not simply a list of information about a person.
3. Machine programmable and machine readable.
4. knowledge of several people can be combined to represent the knowledge inventory of a team, group, or company

We are getting closer to the elusive true “Knowledge Asset”. Part 3 will demonstrate how knowledge can be made to look like a buck, walk like a buck, and quack like a buck.

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The Knowledge Inventory; Part 1

By Admin

On September 17, 2008

In General Information

We identified the 5 essential elements of a market economy. Then, we discussed the currency of the Innovation Economy; people trade information and turn it into knowledge and new ideas using factors of production; Intellectual Capital Creative Capital and Social Capital. Now we’ll discuss the inventory strategy for knowledge assets.

Most companies have an inventory of every nut, rivet, or panel that they need to build something of value. Innovation Economics will be no different – we need an inventory of knowledge in our community so that we can build things with it.

Google and Wikipedia offer us a huge inventory of information – we read that information and turn it into knowledge through a mental process. Since knowledge can only exist inside people, we need a catalog of what people know. Our Knowledge inventory must be able to catalog and classify all human knowledge from the past, present, and future. It must account for Intellectual Capital, Social Capital, and Creative Capital. If done correctly, our knowledge inventory will begin to take on the characteristics of assets – knowledge will look like money.

Suppose that we say your resume is like a book about you. This isn’t too strange since every book that you have read has become part of your knowledge inventory. Every conversation with another person has become part of your inventory. Every new idea that you have tried, successful of failed, is part of your inventory. The things that you like to do, things that you do not like to do, and things that you do not know are part of this inventory as well.

The Dewey Decimal System is a way to catalog information. Even though Dewey is somewhat archaic, it provides a good example of how a knowledge inventory should be structured. Entrepreneurs will improve it if needed – so let’s just understand the concept for now.

For a quick review, the body of written information is divided into 10 main categories. Each main category is divided into 10 more categories and each of those are divided into 10 categories – and this can go on forever. For example, the term 519 identifies a piece of information. The main category is 5 = natural sciences, sub category is 1 = mathematics, and the next sub category is 9 = probabilities. So to have the number 519 on your resume says that you have knowledge and can solve problems related to probability and statistics.

You will also notice that some Dewey categories favor Social Capital, some favor Creative Capital, and some favor intellectual capital. While a knowledge inventory may sound daunting, computers and modern Internet applications can now do much of the work for us – in fact, they already are doing this work.

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