The Ingenesist Project

The Next Economic Paradigm

Tag: market

This Is What I Believe

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On May 17, 2012

In General Information

  1. There is a tiny flaw in Market Capitalism that can be easily corrected
  2. Technological change must always precede economic growth; we are going about the process of globalization as if economic growth can precede technological change.  We got it upside down, that’s all.
  3. Anything that can be made by allocating scarce land, labor, and financial capital can also be made by allocating abundant social, creative, and intellectual capital.
  4. For every dollar of tangible value, there is at least 100 dollars worth of  ‘intangible’ value that is really just ‘invisible’.
  5. The global debt is trivial in comparison to the invisible value that exists with no accounting system to represent it.
  6. There should be no economic incentive for anyone to make anything other than what they are most talented, interested, and passionate about.
  7. Nobody knows everything.
  8. Everybody knows something they can teach any other person.
  9. Students, by definition, hold an equity position in their teachers.
  10. Therefore, teachers should hold an equity position in their students – this will fix a lot of things.
  11. Nothing economic happens until two or more people get together and build something.
  12. Competition is over rated.
  13. Collaboration is under rated.
  14. All monetary things are valuable but not all valuable things are monetary.
  15. There is a perfectly legitimate market for everyone.
  16. A new currency will be the last thing that happens, not the first.
  17. You can’t eat Gold
  18. Information is proportional to the rate of change of data with respect to time.
  19. Knowledge is proportional to the rate of change of information with respect to time.
  20. Innovation is proportional to the rate of change of knowledge with respect to time.
  21. Wisdom is proportional to the rate of change of innovation with respect to time.
  22. If you want to create wisdom, go increase the rate of change of innovation.  If you want to create innovation, go increase the rate of change of knowledge, etc. Now, flip over the series 15-18 above.  See, you’ll do just fine.
  23. Money represents past, present, or future productivity – otherwise nobody would work for it (think about that ).
  24. Therefore, a currency backed by debt and a currency backed by innovation would become the mother of all hedge funds.
  25. Securitization is a miracle of scale if done correctly, a disaster of scale if not
  26. Time is the only valid basis of a currency.
  27. My singular objective and greatest aspiration is to make “intangible” value tangible.  I am confident that my children – and yours – will know what to do next.
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It Is Time To Evolve

By

On October 4, 2011

In General Information

I saw a Fox News commentary on the Occupy Wall Street movement.  They interviewed a bunch of kids who were taking part in the parade and asked them a simple question: “So, what do you expect to replace Capitalism with?”

Then Fox, in their fair and balanced tradition, portrayed their subjects as the poster children of a failed education system (some children left behind after all) and further testimony to the failure of the Obama Administration. because obviously “These kids don’t know how the real world works”.

The Pundits can’t climb the tree any better.

Unfortunately, nobody else has an answer to that question either – none of the pundits or anchors produced anything except the tired argument that we tried Socialism and it failed so therefore more Capitalism is the only way to fix Capitalism.

It’s a Simple Problem

Market Capitalism only articulates value in the things that people make which can physically sit on a market shelf.  Market Capitalism does not articulate the value of individual people; those things that people make in society.

Of course, it is also a double edge sword since those that really don’t produce anything – like hedge fund managers, pundits, and politicians – will become impoverished. Meanwhile, those who really do produce things – like teachers, engineers, and firemen – will become wealthy.  So watch how the lines are redrawn in this debate.

How the world really works

The Internet and social media have shifted the factors of production away from land, labor, and capital to a higher order of human organization.  This is what we need to be talking about.  People today produce things with knowledge – social, creative, and intellectual knowledge.  These are the factors of production for that 99% of the value that exists on Earth.

A Simple Solution

After many a blue face, I’ll say it again; there is no way to build anything meaningful without an inventory of parts.  Car companies have inventories of parts, Banks have inventories of assets, even biology has an inventory of genomes – but there is no knowledge inventory for our communities.  We don’t know what we do or do not know.  We have absolutely no idea how valuable we are yet we complain that we’re impoverished.  Meanwhile corporation create technology to replace people when people could be just as easily be creating technology to replace corporations.

How on Earth can we determine supply and demand for knowledge assets without an inventory?  How can we expect to create any type of fair and rational economy from a bunch of invisible stuff milling around the parks?  There is no escape from Market Capitalism and no path to Social Capitalism without a Knowledge Inventory, period.

A Stunning Omission

This is a very easy problem to solve and we have all the cards waiting to be stacked in our favor using the tools that are right in front of our collective noses.  If we fail at something so simple, then we deserve to be enslaved.  After all, 100,000 years ago, such people would have been eaten by tigers.  It’s time to Evolve.

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Crowdsourcing The Brokerage House

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On February 15, 2011

In General Information

The broker/trading model is a familiar class of business methods.  The broker advertises the availability of someone else’s inventory of assets but withholds information from the market as a means to control the transaction.  The broker does whatever is needed to pay the supplier as little as possible while also charging the customer as much as possible. The Broker  can then collect a fee for producing absolutely nothing of value except control over a transaction.

The Value Game introduces a new class of business methods that disaggregates the broker/advertising model by increasing information delivery to a community rather than withholding it.

The Value Game Revenue Model

For example; Private aircraft charters are held under the weight of a powerful Broker Industry that scrapes 30-40% of the value of created by thousands of hard working professionals who actually operate the airplanes. By deploying The Value Game,  Social Flights was created as a new air transportation company that organizes four types of communities and enables them to interact with each other around a shared asset (an airplane).  During this process of interaction, complete information is provided to each party, rather than being withheld, and everyone plays towards their convergent goals rather than divergent goals.   As a result, the Social Flights application creates Social Currency, which is then readily converted to money.

Social Flights Revenue is derived from the interaction of four communities:

The Travelers

The Operators

The Partners

The True Value Data

Traveler:

Social Flights brings travelers of similar intentions together in Travel Tribes to share flights at wholesale market value.  Air transportation is deployed to the social graph rather than the airline hub & spoke system. Communities that are underserved by commercial airlines are now empowered to interact in new ways.

Operator:

In the past, an aircraft operator would pay a listing service, a Broker, and a marketing department to sell charter services.  Instead, an operator would simply reallocate some of their marketing budget to Social Flights in return for a high volume, reliable, and risk free marketing venue.

Partners:

The cornerstones of the value game are 3rd Party entrepreneurs who scour the community for inventory of hotels, entertainment, recreation, business opportunities, and anything else to support travelers playing the game.  Not unlike Groupon, Social Flights facilitates the application of discount coupons that can be applied to the passenger’s itinerary corresponding to their normalized travel intentions.

True Value Data:

Social Flights creates a valuable and unique form of business intelligence defining how much value, in dollars, that people place on their time.  This results in a conversion factor between social currency and financial currency – something that has never been achieved before. Such data will induce a huge amount of innovation as time/money currencies fuel new Value Games around many other shared assets.

Winners and losers

  • The traveler wins with complete information, point-to-point time travel, and an empowered community.
  • The operator wins with less overhead, less risk, and steady cash flow.
  • Thousands of social entrepreneurs are empowered to deliver support inventory to a new community market.
  • All communities win as such information about the time-value of money helps people reallocates their intentions in the emerging new economy.
  • Social Flights earns their revenue by empowering communities in Social Currency.

OK, so what exactly does the Broker Produce?


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When Everyone has a Coupon, They Will Innovate

By

On January 31, 2011

In General Information

It is extremely important to recognize that, for better or for worse, Discount Coupons can have an extraordinary influence on people and their behavior.  This influence is what makes a discount coupon very powerful and extremely valuable. Coupled with social media, a coupon can be leveraged to influence the behavior of whole communities in extraordinary ways.   The ability to manipulate coupon values is tantamount to the ability to manipulate the value of money itself.

However, coupons, in the marketing world, function as a form of price discrimination that enables vendors to offer a lower price to people who would otherwise go elsewhere.  Since coupon customers are price sensitive and not necessarily loyal to a brand, coupons tend to reward ambivalence in a community rather than trust, commitment, or long term relationship. Normally, one would seek to create incentives for loyalty, quality, and trustworthiness. Instead, such transient market can act against both product quality and new value creation.

Another use of the term “coupon” arises from finance where coupons are used as proof of ownership for a bond, “bearer certificate”, or similar financial instrument. Possession of the coupon is considered conclusive proof of ownership of a tangible asset.  Money, in fact, is simply a coupon representing ownership of a unit of a productivity. Ownership is a cornerstone of all forms of Capitalism, including Social Capitalism.

As such, it is of little surprise that the Internet Coupon industry is exploding with huge valuations of Groupon by Google, The emergence of Google Offers, and Yelp Coupons, and many more.  What is very interesting is that this explosion is happening concurrent with similar innovations in Travel, Currency, and Gaming deemed the “Great Integration”.

The next obvious step is for coupon exchanges to form where holders of one type of coupon can trade value with holders of another coupon not unlike one can now trade Coca Cola stock for shares in The Boeing Company.   Coupons today have limitations on their usage, but over time, continued innovation in “Coupon Currency Games” will result in powerful mechanisms for the storage and exchange of value.

There is a classic business game that plays out in markets everywhere.  Suppose that a vendor offers to discount all prices by 20%.  A competitor simple has to say “We’ll match any price”.  After a day or two, the resulting stalemate is inefficient because it simply resolves to both vendors losing 20% with no net shift in market allegiance, only increased transcience.   This is a the divergent force that weakens ties and introduces susceptibility to disruptive innovation.

Meanwhile, The Value Game uses coupons to leverage relevant communities around physical assets such as airplanes, zip cars, alternative energy, and public infrastructure.  This will be the convergent force that strengthens community ties and introduces huge opportunities for social entrepreneurs to create new value.

As a result, the strategic use of Coupons will play an important role in both the acceleration of innovation disruption AND the subsequent creation of new value. In fact, if used strategically, coupons may help usher out the old economy and bring in the new.  The Domino Effect.

***

(Editors note: The above post is #3 in a series [1], [2], [3], [4], [5] introducing The Value Game to a new class of business methods.  The first real world application is Social Flights; a collaborative production / consumption game being deployed to the market.  If this works, the new business method class will be generalized throughout the economy to catalyze the convertibility of social currency.  Please join us at The Future of Money and Technology Summit in San Francisco on february 28th 2011 where we will unveil the work to the technology community)

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The New Value Movement

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On January 19, 2011

In General Information

I believe that it is important to make a distinction between New Currency and New Value. The potential for confusion is high but the implications of getting this wrong could be catastrophic.

The Storage and Exchange of Value

A currency is a social system designed to store and exchange value.  Value is what people make when they do things together.  Not so obvious is that a particular type of currency may not be very good for storing and exchanging a particular type of value.  It is obvious that dollars may adequately representing the physical value of a computer, however, those same dollars may not be very good at representing the social value of a community using computer systems to interact with each other.

The New Value Movement:

From yesterday’s post: I have encountered hundreds of people developing social currencies with increasingly creative and constructive methods because their community is important to them. People are trying to solve the great puzzle of  human division because their community is important to them. People are trying to resolve the constraints in natural resources and the limitations on our planet, because their community is important to them.

The New Value Movement is precisely that; a movement to articulate, store, and exchange New Value arising from technological advances and NOT adequately served by the existing financial system that enabled those technological advances in the first place.

The Total Value is the True Value

The idea of New Value is not to replace the current financial system, rather, the net total of value articulated by both systems exceeds the maximum value that traditional money alone is capable of processing.  Convertibility between New Value and old currency will be conducted using a yet unknown New Currency that many now call “Social Currency”.  When the total monetary system can articulate the total value of the Earth AND it’s human resources, only then can an organic set of priorities be delivered to a market.

The New Currency Movement:

On the other hand, the image of a New Currency often evokes the wholesale replacement of an old currency brought about by the collapse of a financial system, hyperinflation, destruction of the factors of production, the introduction of some unforeseen peril, induced volatility, political risk, nationalization, war, terrorism, famine, plague, pestilence, etc.,…Obviously, the differences between the two movements could not be more stark…

A Clear and Present dAnger

It is also apparent that the traditional financial system has become fragile and it must never be in the best interest of anyone to benefit from increasing this fragility. The Internet and emerging social media technologies have finally integrated the tools that people need to organize themselves into New Value economic developers. However, during the transition, individual people or groups will hold the power to both stabilize and destabilize.

The danger is that a new currency ideal may seek to benefit from the premature collapse of the old currency system. This is not creating new value, this is the transfer of value by the abuse of power against the very system that supports that power. This is precisely the flaw that the new value movement is trying to correct.

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Social System Capitalism

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On July 6, 2010

In General Information

Whether we like it or not, we all live in and among various system; weather systems, social systems, management systems, monetary systems, transportation systems, etc. The easy way to identify a system is to simply remove one of it’s parts – if it fails, well, that WAS as a system.

You can own a perfectly good car, but if one tire is not filled with air, the entire car has NO SOCIAL VALUE. All the other pieces could be perfectly operational, the motor, transmission, brakes, etc. However, you can’t go to a wedding in it, you can’t go play golf in, you can’t even get to the bus stop in it; the car has no social value. Seems a little silly, but compressed air is part of our social system.

Suppose that you have a perfectly good social system and you remove the financial system. Will the social system fall apart? … Well, that’s an interesting question…after all, people will still have education, health, knowledge, ingenuity, empathy, community, productivity, infrastructure, and they will very likely get up in the morning and build things anyway.

Now, look at it the other way around. Suppose that you have a perfectly good financial system and you remove all of the people, does the financial system fall apart? Ridiculously, 100% yes it will fail, who will use money it if there is nobody here? The cows? Duh.

We cannot have a rational discussion about the market capitalist system without also having a rational discussion about the social capitalist system. Yet, Social Capitalism is barely defined. Social capitalism is hidden behind command and control corporate systems and “intangibles” accounting.  Social Capitalism is constrained by invisible lines on a map; marginalized, taxed, oppressed and controlled by skin color, gender roles, marketing, politics, and conflict all in the name of my God and Country.

It is interesting to consider an invisible system designed to suppress a visible system that supports the invisible system (say that 3 times really fast….it sounds like someone letting the air out of the tires). The most obvious opportunity for the future is to stop letting the air out of the tires.

Luckily, social media is changing everything by acting as an alternative place for the exchange and storage of value. The weaker the financial system gets, the stronger social media systems will get; but not the other way around. Think about it like a system.

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USocial = SUPER SPAM

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On December 1, 2009

In General Information

USocial is now going after YouTube. These clever guy and gals have figured out a way to bypass the democracy of social media to bring is a new form of merchant class capitalism…SUPER SPAM.  For a small fee, you can get your message to the head of the line – in effect pushing the rest backwards.  Presumably for a bigger fee, you can get ahead of those who paid a smaller fee, and so forth.

Once the bastion of lobbyists and special interest groups, anyone with a few bucks can now pull themselves up the ladder by pushing other people down the ladder.  Once the domain of high powered PR firms and Marketing agents; just a few dollars cast among the USocial Gods delivers those long elusive eyeballs of the old radio/TV marketing paradigm.

Watch this one carefully kids.  Social Media has long proven uncontainable.  Saying that you can beat  social media at its own game is like saying you can repair a credit score.  Like a credit score, you can do more damage than good trying to steal what does not belong to you in an effort to boost your income.

Those eyeballs, those followers, and those “friends” do not belong to USocial and are therefore not theirs to sell.    They belong to you and I and we control them – or we don’t play.  If USocial keeps their client list secret, this would be the capital offense in social media space.

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The Voice of the Youth

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On September 29, 2009

In General Information

Does One size fit all?

The 40+ crowd is flooding to Facebook.  The 30+ massage their Linkedin profiles. The 20+ crowd is tweeting their hearts out.  What are the kids doing?  How are they organizing themselves?  After all, they are saddled with a 50 Trillion dollar debt liability and a warming planet courtesy of their Tenants.  I posted an article below about a High School Student from Issaquah Washington (read “Small Town USA”) with a head full of ideas.

Reading between lines:

Kids are looking for better ways to promote themselves to colleges, employers, and each other, with a twist; they want control and ownership of their data.  They see it as an extension of a business card rather that a bill board branding channel.  Yes, they are open for business and ready to produce insanely creative things.  However, there must be some intimacy in relationships which other social networking sites cannot provide. They seek quality over quantity in the next economic paradigm.  They seek simplicity and eschew the corporatism of  their media.

They are consummate sharers always aware of their own productivity.  Their new applications are a chain of productivity tools for other students creating a world where teenagers can find useful tips, tricks and products to get through the teen years successfully.  They are passionate about engaging the world on their level.  They are passionate about their role in providing value to others.  I, for one, welcome the prospect of turning the world over to it’s rightful owners – the kids.

Students develop Web sites for peers

By Christopher Huber

Skyline Running Start student Adam Sidialicherif has a lot of ideas floating around in his head these days. The self-taught Web developer has so many, he even maintains in his bedroom a list of Web applications he wants to write to help his peers with numerous aspects of life, he said.

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Why Are Leaders Failing?

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On September 18, 2009

In General Information

People look for leaders that inspire them to achieve innovative breakthroughs. People trust, or so we think, CEO’s to effectively lead their organizations so that employees can continue to get paid.

The confidence in leadership is waning and a new “leadership” is emerging. The new leadership is from and by the people. The reason for a shift in leadership is as follows:

1. Politicians have failed us with self interest and politics as usual. Usual no longer works for the people

2. CEO’s and management have failed to listen to the markets of conversations

3. Greed is out, efficiency is in and the old market is not adapt at “lean, mean and fast”

4. The people has lost trust in media, politicians and old management schemes

5. Advertising and marketing methods of the past are dead. 96% of the online ads get no responses. A rate of 3% at best is the return on direct mail, coupons and broadcast ads.

6. The market is no longer listening to the old market rather the market is listening to the people

7. People have been empowered and engaged to create their own markets and they follow a new kind of market leader. A leader who enables them to learn, grow and share with others whom have an affinity to their interest and beliefs.

8. New leaders are now  conversing with their own audience and there are many of them.  There are also a few leaders who are enabling many to engage, converse and build our own audience.

9. Conversations have never been so fluid, so reaching and so powerful.  The irony is that the power of speech has always been and will always be disruptive. History proves it so but we are in an era of making history that reinvents itself daily from the conversations.

10. Old leaders either adapt very quickly or die. The old game is over and the longer you try and play it the more it will cost the market, your investors and the people whom supply the market with commerce, the people.

Admit It, You are Out of Touch And Blinded By The Past

For politicians and corporate leaders the downfall of your empires is directly related to markets changing and you denying the change. If you haven’t noticed markets are now transparent. There is nothing you do that the market won’t notice and freely comment on, good, bad and indifferent. When you do good the market with follow you. When you do bad or do the same thing the market will leave you. Unless you recognize this shift your dead in the water.

Time is your enemy and denial is your your deathbed.  Being dead in the water means the next wave will topple your boat because its force is too big, too large and you can’t move fast enough to navigate around or over it.

Then again you may simply not have time or attention to even recognize that it just may be true and real.  In that case, move over for the new leader to replace you sooner than later.  Leaders are failing because they fail to change and fail to listen. Sorry for being so frank but I don’t have time to be politically correct. Get it?

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You Are The Algorithm

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On May 4, 2009

In General Information

You are the algorithm.

Google is an information company. Their corporate charter is to organize the World’s information.  Their limitation is that Google cannot organize knowledge because knowledge exists only within the consciousness of a person.   Instead, busy little Google spiders scour the Internet looking for high rates of change of information and they use that as a proxy for “knowledge”.

An economy is crawled

Google Spiders favor blogs because of the high frequency of updates, postings, tags, comments and keywords in comparison to static websites.  The logic goes as follows; if there is a lot of activity, something must be happening.  As a result, an entire industry has grown around the blogging and Search Engine Optimization business; listings are counted, raw data are analyzed, comments provide feedback loops.  Most notably, money is exchanged.

B-school tells us that that ROI can only be calculated from long term future projections, not short-term-recent-past spider activity.  If this “economy” cannot be projected through ROI, then how exactly is it projected?

Dynamic, like life itself

People are figuring out that the rate of change of information is the best indicator of value as well as the best way to create value. The last mile of social media is the next frontier of value creation as people will emulate ‘Google Spiders’ and scour their community for changing information, new ideas, improved information, and feedback loops to organize, categorize, and distribute.  This action will ultimately play out in new corporations built upon perfect dynamic information markets rather than third party selective information markets.  Exit Boston Globe, enter Twitter.

Organize this:

The key to unraveling the Innovation economy will be in refining, restructuring and organizing the profound relatedness between information, knowledge, and innovation.

Information is facts and data – this is the medium of exchange or “the currency”.  The rate at which the facts and the data change is a proxy for new knowledge being created somewhere and somehow. After all, if there is activity, something must be happening.   All of the things that people do with the results creates even more new knowledge – this is innovation.  Innovation creates new information. New currency is created because new information is created.  Knowledge expands.

There is something in it; otherwise people would not do it

We are seeing the tip of the iceberg; social media is the new engine of the innovation economy.  Where information becomes more perfect, markets become more efficient.  Where markets are more efficient, knowledge becomes more tangible.  Where knowledge is more tangible, innovation is more predictable.  Where innovation is more predictable, the innovation risk disappears.  The lower the risk, the cheaper and more abundant the venture capital.

People increasingly use social media to improve information, everywhere, any way that they can dream of.  They increasingly act locally and share globally to create opportunities for themselves and their communities.  People and their behavior is the algorithm of the innovation economy; monetize that. Google did.

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That Pesky Little Problem With Market Capitalism

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On December 11, 2008

In General Information

Technological change must always precede economic growth.  We are going about the process of market capitalism as if economic growth can precede technological change.  Somewhere along the line we have gotten the cart in front of the mule.

It seems that this situation can be fairly easily corrected – after all, it’s the same cart and the same mule.  All we need to do is get the same driver to point the same carrot on the same stick in the opposite direction; and the system should turn itself around.  Impossible we ask? Well, maybe not….yet.

The same species…

Economic growth and technological change are the same species; each is represented by human productivity.  If I take a loan to buy a house, the debt is “counted” as economic growth backed by my future productivity.  If I go to work and invent a method that provides a better way for people to accomplish something, that same productivity increases with my innovation.  They should hedge each other much like insurance.  The problem arises when we forget to count the mule.

If A = C and B = C, then A = B

If any two currencies are backed by the same standard, they should be readily convertible.  If Euro’s and Dollars are both backed by Gold, they would be convertible between each other and the market can simply choose to trade one or the other.  Arbitrage opportunities would keep the system balance.

This is the same case with debt and innovation; two currencies represented by the same standard, i.e., productivity.

What if a new currency was introduced and pegged to human productivity?  That currency would also be proportional to the dollar. Arbitrage opportunities between debt and innovation currencies would seek a balance. The two scorecards would hedge each other as they should.

It is going to happen eventually, why wait?

While this may seem odd to talk about one State, two currencies, it is not so odd to talk about what happens if the dollar fails.  People will start trading a different currency.   The Plumber will trade ideas with the lawyer who will trade with the doctor, carpenter, teacher, grocer, laborer, etc.  A computer enabled society will build a knowledge inventory of who knows what.  Reputations will arise thus organizing knowledge in the form of a financial instrument.  This social medium will be the tool that organizes trading schemes and establishing supply and demand.  An Innovation Bank will keep track of who owes what to whom and distribute wealth in the form of tangential innovation.  Venture “capital” will be the cheapest money in town – it’s like money in the bank for an innovation economy. This is in fact, the nature of society and largely the function it has served for thousands of years.

Little carrot on a big stick

The difference between now and any other time in history is that society is computer enabled.  Human knowledge has been held hostage behind the construct of “intangible assets” on a corporate balance sheet for too long.  There is a great deal of energy building up and it can now find a productive outlet through social media.  The best government policy is to accommodate what people will do naturally.  It would be extremely inexpensive to empower society to form an innovation economy to hedge market capitalism. People need a currency that is first and foremost natural for them to trade.   Later, Wall Street can convert and gamble at their peril. But first, point the stick in a different direction and the system will correct itself.

[The Ingenesist Project (https://ingenesist.com) has specified three web application which if deployed to social media would allow social capital, creative capital, and intellectual capital to become tangible inside social networks.]

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Social Media; The Opportunity of a Century

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On December 1, 2008

In General Information

The Perfect Storm:

We are at an historic time in human history; one that may never repeat itself again. The current financial crisis may provide just enough disruption for a completely new economic paradigm to emerge; the Innovation Economy.  We cannot squander this moment arguing over common logon for our Twitter and Facebook profiles; a far greater integration is required from Social Media.

Advertising is not the correct revenue model.

It is astonishing that Social Media, in general, has not figured out how to make money.  Social Media IS money.  All wealth on Earth was created from the social capital, creative capital, and intellectual capital of people – wealth creation is already crowd sourced.  Now, there is an opportunity for Social Media to harness this engine of economic growth and wealth creation – if they could only see it.

The problem is simple: Globalization is proceeding as if economic growth can occur before technological change. Some time in the past, we got these two things up mixed. It does not take money to make money; it takes innovation to make money.  Technological change MUST ALWAYS happen before real economic growth can occur.  Anything else is a transfer of wealth, not the creation of wealth. All that is unsustainable today – the economy, the environment, natural resources, energy – is due to this itsy bitsy anomaly of current market economics.   Today, we can easily correct this little flaw with almost a flip of a switch – but the window of opportunity will be short – and we need to be clever.

The idea that human knowledge is tangible and behaves individually and collectively like a financial instrument is still considered impossible.  The ability to place a market value on the social capital, creative capital, and intellectual capital of a team, community, or geographic population of people – let alone a social network – has never been accomplished.  This idea remains the Holy Grail of finance and one that Social Media is uniquely positioned to capture.  If the finance industry can invent “tangible derivatives” out of thin air paper, then we ought to be able to do the same with knowledge assets that live and breathe tangibly all around us.

If it looks like money, it will behave like money, guaranteed:

First, we need to build a knowledge inventory system that includes everyone; and which can be anonymously codified and amalgamated with logic in machine readable format (the Universal Decimal Classification System is a good candidate). Second, we need to sample our inventory in a community using the proverbial “Bell Curve”. Third, we need to develop a search engine that returns the probability that a strategic combination of knowledge assets can execute a given objective. Fourth, we need an innovation Bank that will “pull” knowledge surplus and “pull” knowledge deficits together from diverse communities.   (Please see the IEc101 at https://ingenesist.com)

This should not sound too weird; it is the same game that Wall Street plays.  The switch is flipped when we engage our innovation system with the financial system.

Go where the money is:

Social Media is perfectly positioned to develop these features in their products and in our communities. We first must understand that innovation is predictable.  We may not be able to say exactly where the innovation will lead, but we can be sure that if we place a group of strategically diversified persons in a room, innovation will happen.  If the fact of innovation is predictable, risks related to the invented can be pooled, morphed, or diversified.  If risk can be diversified, it can be hedged to zero.  If innovation has zero risk, Wall Street will salivate to issue “innovation bonds” to finance diverse communities of practice.  If innovation capital is inexpensive and accessible, a great amount of innovation will occur.  The anomaly of capital markets can be reversed, and the result will be sustainable economic growth.

Naturally, the compensation structure will be in the form of dividends, both financial and in social welfare.  New corporations will emerge and the old corporations will become more efficient. What is invented will tend to reflect social priorities rather than today’s short term Wall Street priorities.   America must innovate at an intense and sustained rate in order to compensate for the imbalance of debt economics that has been created in its absence.  Social Media can be, and must be, the infrastructure upon which an Innovation Economy is built.  Again, this opportunity is staring us straight in the eye.  This is the conversation that must be having today if we will meet the challenges of tomorrow.

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Social Media; The Central Bank for Knowledge Assets?

By

On November 20, 2008

In General Information

It is very interesting to watch Social Media follow familiar trajectories as earlier paradigms in finance.  I see many social media platforms struggling to make human knowledge tangible in their respective markets.  The challenge is so simple, yet so complex.  Let the litmus test for knowledge tangibility be as follows; “Can you buy groceries with it?”

The Romans Empire had a similar problem; how to sack Europe and bring home the booty.  The only thing most people had at the time were sheep, fish, and wine.  So the emperor created a coin that represented a peasant’s productivity in raising sheep, catching fish, and making wine – and it was a lot easier to collect taxes.  The conquest of a continent has far more to do with the social acceptance of the currency than the actual pillaging – pillaging, after all, would be counter productive in a social network.

Today the dollar also represents human productivity – except a ‘necessary flaw’ was introduced to finance innovation leading to fantastic worldwide economic growth from which many people benefit greatly.  Now, this flaw threatens to topple the whole system.  Money still represents productivity, except it now represents future productivity allocated to paying debt.  As long as innovation increases fast enough to outpace debt, everything is OK.  Problems happen when debt exceeds our structural ability to innovate.

We do not need to restructure the financial system – we need to restructure the innovation system.  The human race is exceedingly fortunate that the end game for debt economics will happen at the exact moment in history that the technology required to start a new game of sustainable innovation economics has arrived.   If done correctly, Social Media (computer enabled society) can become the most important human invention since to the printing press.

Today, human knowledge, in the form of social capital, creative capital, and intellectual capital, is captured and hidden inside corporations.  Each corporation has its own business plan, lexicon, culture, organization, structure, and processes by which human knowledge is exchanged in the creation of a “product”.  Outside the corporation, however, true knowledge assets are either invisible, incomplete, or only appear as a proxy of the corporation.  This leads to stagnation, silos, mis-allocation, vulnerability to external shock, and greatly limits the diversity needed for sustainable innovation.

In the 1700’s Banks printed their own currency – these were called “bank notes” because they were little notes that declared who had a surplus and who had a deficit of money relative to the bank.  People would trade these notes in society to purchase things, buy feed or seed, and to keep track of things.  Everyone had a job to do and the general flow of these notes is what “incorporated” townships. Unfortunately, such banking also lead to industrial stagnation, silos of wealth, and lack of diversification leading to corruption, bank failures, and ‘bottle necks’ in the flow of capital.

Barely 150 years ago, the U.S. government established a central banking system with common currency, common practices, common accounting, and common regulation. The system became much more efficient, diversified, and accessible across the landscape.  The industrial revolution, manufacturing revolution, lots of wars, the era of information, and the Internet Industries were all financed through a central banking system.  Human productivity increased at a tremendous rate and the relative wealth that we enjoy today is a tangible result of innovation.

Now the Pied Piper has come to take the children to sea.  The banking system needs to invent new, exotic, and increasingly risky financial instruments for trading your productivity in order to keep the game alive.  Meanwhile, the tangibility of human knowledge is stuck in an 18th century banking system.  There is no common knowledge inventory, there is no common accounting practice for skills and abilities, there is no way to measure social capital and creative capital – the system is too biased toward “intellectual capital” measured by Ivy League degrees and access to wealth.  Knowledge assets are not tangible, organized, classified, or collected in a society in any structured way.  “Can you buy groceries with it yet”?

With the emergence of Social Media, we have an extraordinary opportunity to make knowledge tangible outside the construct of a corporation much like banks notes became tangible outside the construct of a single township.  There are vast and crushing problems in the world today.  The only way out of this mess is to massively increase the rate of innovation in society.  Like off-shore drilling – vast wealth in the form of social capital, creative capital, and intellectual capital lays hidden beneath thousands of layers of philosophical limestone.  Social Media and the first amendment = drill baby, drill.

The only thing separating us from a debt economy and an innovation economy is social agreement. The philosophical chasm holding us back is about to be broken by The Ingenesist Project: In the current paradigm, money is backed by future productivity allocated to pay off today’s debt.  In the social media paradigm; money will be backed by future productivity created by today’s innovation.  At the end of the day money still represents productivity.  The conquest of a continent has far more to do with the acceptance of the currency than the actual pillaging.  Hey, why not buy groceries with it?

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The Ingenesist Project – press release

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On October 21, 2008

In General Information

We have launched The Ingenesist Project. The Innovation Economy is an absolutely huge and necessary step forward for all of us. The current financial system is unstable and it will fail. At best, the innovation economy can increase human productivity sufficiently to support the debt load. At worst, there needs to be a system of trade in place for society in the event of a crash or devaluation so that people can purchase the necessities until the recovery can take hold. So yes, this is serious business.

Anyone following this blog please spread the word. I need to get people to the point where they will read the 18 articles – after which, hopefully, their outlook on the tangibility of knowledge in social networks will be permanently altered.

My challenge, of course, is to make a very difficult subject matter easy to explain and compelling enough to call people to action. Those 18 articles condense 400 years of financial industry development and history into a few pages. Yes, the analogy between social networks and finance holds well. This is not easy to explain, but the solution to the financial mess is right under our noses. It’s almost too simple to see.

The forum has been added to solicit threaded comments to the 18 articles. This is the backbone to the open source development. I hope to build future posts on the comments that arise – a feedback loop. We will identify the sub components, partners, strategies, and action items together. Participants will pay each other in a new currency.

I will soon simplify and interpret the preferred embodiments from the patent which will illuminate the countless new-to-this-world business opportunities that will become available to entrepreneurs in this environment.

As a demonstration; vetting mechanisms make markets more efficient. Ebay has the feedback score, Craigslist has the flagging feature – this is fact. Social networks are perfectly suited to act in this manner across the entire spectrum of commerce. This is a multi-billion dollar industry that can be very easily monetized in the innovation economy. I hope that others can see this too. There is a great deal of wealth to be generated for each other.

I would like to thank all of the people who advise this program. I soon hope to invite a Board of Directors and formalize the growing concern that is The Ingenesist Project. Anyone reding this, I am an open networker on Linked in – sent me a invite and I’ll respond.

*************************************************

For immediate release:

The Ingenesist Project; Putting an End to Debt Economics

(Seattle) The Ingenesist Project is an open source economic development program that will challenge America’s financial meltdown head-on by creating an innovation economy trading rallods (dollar spelled backwards) backed by innovation instead of dollars that are backed by debt.

“Deficit spending is unsustainable. When the dollar crashes, People will need an alternate economy to trade in – one whose currency is backed by something tangible; and there is there is nothing more tangible than the human imagination, including gold”, says originator, Dan Robles. “Capitalism likes competition; well today, Social Networks are the ultimate competitor”

The Ingenesist Project has identified three relatively simple web applications which, when applied to Social Networks, will allow human intellect, social capital, and creativity to become tangible outside the construct of Wall Street and Corporations.

By definition, the rallod is pegged to the national debt, as such, The Ingenesist Project has 10 trillion rallods (and counting) to distribute. Participants in the Ingenesist Project Development Forum will award these rallods to each other on a reputation scale for their work in design, development, and improvement of the three web application that will release society from the shackles of debt economics.

The forum is open to anyone and participants can earn millions of rallods for their work in developing these applications.

The New ‘Stock’ Market

The Ingenesist Project has a patent pending for an Innovation Banking System to finance social innovation and will release all rights to the public domain.

“This is one of the most important patents applications published in our time. Countless ‘new-to-the-world’ business plans and patentable methods, systems, and devices will result from the The Ingenesist Project”, says Robles “Everything changes from the University System to the prioritization of global resources. Wall Street will be come the steward instead of the master”

Entrepreneurs are encouraged to patent, protect, or contain all intellectual property that they develop in the new economy and become as wealthy as they possibly can under the condition that they pay royalties, equity, or options to their knowledge inventory.

The entrepreneur’s “Secret-Sauce”, however, must be shared with The Ingenesist Project in order to improve the Percentile Search Engine Algorithm for the benefit of the public domain.

The Rallod

The U.S. National Debt is over 10 trillion dollars. Assuming deficit spending stops today, every man, woman, and child in the US is responsible for $33,500.00.

This means that $33,500.00 of every person’s productivity has already been spent. Obviously, the only way to pay the debt is to increase every person’s productivity by exactly $33,500.00.

The only sustainably way to increase human productivity is innovation. If the dollars crashes and pegs to the Rallod – the innovation economy will replace the debt economy and those who build it will become the bankers of tomorrow.

More Information:

Please review www.Ingenesist.com

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The Innovation Bank

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On September 18, 2008

In General Information

So now, what are the entrepreneurs going to do with this percentile search engine?

Entrepreneurs wander the earth looking for valuable things that are being used at a low level of productivity and they move those assets to a higher level of productivity and then pocket the difference, called profit.

Think pet rock, condo conversions, sand, corn, etc.,…it goes on forever.

The entrepreneur needs to have a clear view of what the asset is, the lower level of productivity, and the higher level of productivity of the asset. These three elements are the focus of all business plans. Then they set things in motion and give life to the market system.

When we look at financial banks we see the classic entrepreneurial activity. In the simplest form, banks do little more than find people who have a surplus of money and they match them with people who have a deficit of money.  Bankers have a clear view of the asset, the lower level of productivity and the higher level of productivity for the asset.

They pay a lower interest to the depositor than they do to the borrower and pocket the difference. In addition, they enjoy a multiplier effect that allows them to lend the same money many times effectively creating money from a promise to pay, or debt.

It is in the best interest of the bank to find rich people who will not need their money for a while, and poor people that have the best likelihood of paying the money back in time. This is to minimize the risk that the depositor will pull out their deposits and the risk that the borrower will not pay back the loan. The problem is that some assumptions need to be made, some of which may no longer be valid:

The bank assumes that the borrower has the knowledge required to execute the business plan that they are financing. Unfortunately, the credit score does not predict knowledge on future ventures.  For this reason, new ventures are not easy to finance.

The financial bank makes the assumption that the entrepreneur has the knowledge to execute a business plan that they seek money to fund.

On the other hand, the Innovation Bank makes the assumption that the entrepreneur has the money available to execute the business and is searching for the knowledge to do so.  This service will be required in the innovation economy since no single person can live long enough to possess as much knowledge as is required to manage the complexity of problems that face the World. We will need to mind meld.

The Innovation Bank simply matches most worthy knowledge surplus with most worthy knowledge deficit and a market is born.

The challenge for the innovation Bank is to match the most correct knowledge surplus to the most correct knowledge deficit. This is accomplished with the computer enabled knowledge inventory. A search can be conducted of the supply and demand for knowledge assets. The Percentile Search Engine will calculate the probability that the specific business objective will be successful.

The business plan for the entrepreneur is very simple but the implications are vast.

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The Percentile Search Engine

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On September 17, 2008

In General Information

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

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

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

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

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

Over time, these algorithms will far more valuable then the Patents and Trade Secrets created by them – this will allow technologies to be open sourced much more profitably and shared across more industries.

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

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