The Ingenesist Project

The Next Economic Paradigm

Tag: percentile

Social Value Creation: How To Manufacture Wisdom

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On October 29, 2010

In General Information

We call this wisdom

In the old days, the hiring manager was the person to know if you wanted to get a job. They would read your resume and compare it with the “bell curve” in their mind.  This bell curve contains a statistical sample of all similar situations that the manager has witnessed, the variables involved, and a range of outcomes observed across their long and illustrious career…Ohhhmmmmmm

We Call This Simulated Wisdom

Modern HR systems try to simulate this wisdom through a series of innovations such as key word search, structured interviews, personality tests, and employee incentives. Now we can use Google (an information company) to derive sort of a proxy for wisdom as we assess search results in our own image.  Facebook and Linkedin go a step further by providing us with another filter through which to pass judgement upon a future employee or partner.  The problem is that the more we look into these systems, the more they deliver back to us a reflection of ourselves…Ohhhmmmmm

Social Media vs. Normalized Intellectual, Social, and Creative Capital

The Data need to be Normalized

The world has become so strange, complex, technological, and interwoven, that no single person can possibly posses such a vast and broad set of experiences as to arrive at an optimized outcome every time.   Innovation favors strategic combination of diverse knowledge unlike the Industrial revolution which favored identical packets of similar knowledge.  The Innovation Economy will require a completely new approach to social value creation.

The Social Credit Score

Not unlike the FICO score, the knowledge inventory is a collection of potential knowledge events where the social network is a reporting agency that has a vested interest in meaningful knowledge events. Unlike FICO however, the variables for knowledge can be infinite (think of the Dewey Decimal System).  Also, a Social Credit Score would respond to positive events rather than a finite set of negative “hits”.

The Percentile Search Engine

Instead of just returning information, this new search engine must return probabilities from which an entrepreneur may test scenarios related to the likelihood of executing a particular business process at a known time, cost, proximity, ROI, etc.

Example

Innovation Economics

An entrepreneur may want to know if her team has enough knowledge to execute a business plan. Perhaps the team has too much knowledge and they should try something more valuable. Maybe the team does not have enough knowledge and they should attempt another opportunity or accumulate training.

Valuation of Knowledge  The search engine can look into a network and identify the supply and demand of a knowledge asset. If it is unavailable or too expensive, the search engine can adjust for price, risk, or options that may emerge at a later date.

Business Intelligence Organizations can scan each other’s knowledge inventory and decide to compete, cooperate, acquire, or evade.

Knowledge management If a key person retires, the entrepreneur would simulate the knowledge that is lost and reassign people strategically.

The Secret Sauce  Companies such as Disney and Boeing both use Engineers, each would have proprietary algorithm of knowledge that represents their “secret sauce” of success. These recipes can be adjusted and improved to reflect and preserve the wisdom of an organization. Over time, these algorithms will become 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.

Eventually, we will learn to manufacture wisdom …OhhhhMmmmmGeeeee

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Enterprise Prediction Markets Summit

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On May 17, 2010

In General Information

(Editor: I’ll be speaking at the following event on June 4th. If you are in the area or blogging issues in this genre of ideas, let me know and drop by. Look up the other speakers and you’ll find an extraordinary group of visionaries preparing to make this PM Cluster Summit a truly enlightening event.)

Enterprise Prediction Markets Summit:
Leading Enterprise Prediction Markets

Friday, June 4 2010 8:00am – 5:00pm

EVENT LOCATION: The Boeing Company: Integrated Aircraft Systems Lab Building 2-122, Conference Room #102L2 (Conference Center) 7701-14th Avenue South Seattle, Washington 98108 USA

EVENT REGION: US –Pacific Northwest


EVENT PURPOSE: This summit is for executives, directors, mangers, users and practitioners having immediate needs to apply collective intelligence networks and enterprise prediction market mechanisms to advance business outcomes through mastery of collective wisdom.


EVENT SPEAKERS: Dennis P. O’Donoghue (Boeing), Sharon Chiarella (Amazon.com), Arik Johnson (Aurora WDC), Dan Robles (The Ingenesist Project), Dr. Richard O. Zerbe, Jr. (Evans School of Public Affairs), Christel Alvarez, ConsensusPoint, George Neumann, George Daly Research Professor of Economics, (Iowa), Olav Opedal (Microsoft, Internet Security)


EVENT COST: $99

EVENT WEBSITE: http://pmclusters.com/Prediction%20Markets/SEA10.htm


EVENT CONTACT NAME: Jennifer Hulett

EVENT CONTACT PHONE: 714-784-0754

CONTACT EMAIL: Jennifer.Hulett@pmclusters.com


MUST ONE RSVP: Yes! No on-site registration

ATTIRE: Business Casual

BUSINESS CARDS: YES – Bring Business Cards


EVENT NOTES: The conference sessions are focused, practical and conversational. They are for executives, directors, mangers, users and practitioners having immediate needs to apply collective intelligence networks and market mechanisms to advance business outcomes through mastery of collective wisdom.


ORGANIZATION NOTES: The Prediction Market Clusters, founded in 2004, are the global industry commons and open community for prediction markets and collective intelligence networks worldwide. The open, agnostic network is a focused collaboration of vendors, academia, traders, users, developers, markets, regulators and stakeholders. The goal is to provide awareness, diffusion, adoption and pull-through for enterprise and consumer prediction markets. The Prediction Markets Cluster is the worldwide Next Practices network for collective intelligence networks practices, tools and theories.

PM Clusters

Prediction Market Clusters
http://www.pmclusters.com

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The Résumé Must Die

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On February 4, 2009

In General Information

Résumé: A French word for separating the body from the brain

We are entering a renewal in the work force.  The global imperative is for the United States to become an innovation economy now.  This is an entirely different animal than the Industrial revolution; I have long argued that the résumé system is by far the most archaic knowledge management “currency” of trade in use today.

The entire premise of the résumé is destitute, if not destructive, in the modern world.  Words on a computer screen are a very low level ‘media form’ being used to describe a very high ‘media form’; social, creative, and intellectual capital.  It’s like using crayons to design an aircraft.

If the key words are so important, why have any other words?

A manager always hires people that remind them of themselves.  They estimate the future success of a candidate based on their own limited, and often static, past experiences.  The world is moving so fast and has become so complex that no manager can possibly know enough to capitalize the future based on a viable statistical sample of past experiences – we’re all holding on for dear life in a hurricane of change.   The problems and opportunities of the future are so huge, so important, and happening so amazingly fast yet the allocation of human resources is worse than random for a candidate pool.

While the Ingenesist Project discusses a solution at great length, I’ll just stop complaining and share a few comments (self titled) that I’ve picked off some recent Human Resources Blogs:

***

1. And our future goes with it:

“Most recruiting systems I’ve seen screen out innovators. Any résumé that is unique, different or convention-defying gets surreptitiously put in the junk pile.”

2. Start by looking in the junk pile:

“The Innovation Economy requires that the talent that creates the most value for an organization must rise to the top.  Innovators are playing an increasing role in creating shareholder value – one might argue that they create the most shareholder value these days – and figuring out how to find and attract this very different breed of talent is one of the most critical initiatives you can launch within your organization.”

3. What part of “share holder value” are we having difficulty with?

“The most innovative people I have ever met don’t follow conventions in their experience or in their résumé.  Or, they get bored very quickly when they can’t innovate or are forced to focus on operations, and efficiency.  Most might look like (and even be) job hoppers”

4. Here is my favorite comment – I wish I could hug this person:

“I think it takes more than a résumé to screen an Innovator in or out. As blogs, blog posts, social networking, more powerful search tools, personal websites, the emergence of video on the web, talent platforms that offer CRM, etc. etc. etc. continue to become additional tools for an employer to consider in making a hiring decision, is the résumé still a currency for a candidate?”

***

We have an inventory and CAD model of every nut, rivet, and panel that goes on an airplane – why would we try to build anything without one?

So Please, let’s evolve out of the revolutionary times and develop a real community knowledge inventory.  It must be computer enabled and based on a taxonomy that everyone knows and understands.  It must be read, analyzed, sorted and vetted by social networks and communities of practice. It must integrate with  knowledge assets from anywhere in the world.   A self-perfecting algorithm must be developed for a predictive percentile search engine in a pull system that seeks, matches, and deploys the ‘secret sauce’ of success, specific to any application, anywhere, any time – and fast.

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Business Plans of the Innovation Economy

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On December 3, 2008

In General Information

There is no shortage of money in the world but there is plenty of risk. Most business failures are due to knowledge deficits such as the inexperienced management team, a poor assessment of market conditions, underestimating the amount of money needed, underestimating a competitor, loss of a key employee, poor understanding of the technology, etc. These are knowledge problems not financial problems, yet they can sink the most promising companies.

To solve the knowledge problems is to decrease the risk of innovating. To decrease the risk of innovating will decrease the cost of venture capital. Decreased cost of money to innovate will induce innovation economics.

With a computer enabled knowledge inventory in the correct format and a Percentile Search Engine that returns probabilities on strategic combination of assets, the business plan of the innovation economy becomes very simple; The Innovation Bank does one thing very well over and over again – it matches correct knowledge surplus with the correct knowledge deficit at any point in time for any strategic reason. This process is then repeated over and over in infinite different combination.

The first business structure is made up from two single knowledge transactions arranged in parallel – like a parallel circuit. This arrangement represents a brainstorming session between two or more people.

The Percentile Search Engine matches the person with the knowledge supply to a person with the knowledge demand. The transaction can be as simple as a conversation, sketch on a napkin, or white board flow chart. Each time the cycle goes around the new ideas of one person ignites a new ideas in the other person. Each time the transaction occurs, there is a net increase of new knowledge. The conclusion is usually some tangible action, system, or method. The conversation stops when no new knowledge can be created in either person – or when people just get tired (rate of change approaches zero).

The entrepreneur is very interested in the outcome of these conversations and uses the Percentile Search Engine to select, regulate, modify, adjust, analyze, and record the transactions. The Percentile Search Engine is used again to select diverse participants for the parallel business structure with the intention of producing a specific outcome.

The second business structure is made up from two single knowledge transactions arranged in series – like a series circuit. This arrangement represents the product development cycle.

Again, the Percentile Search Engine matches the person with the knowledge supply to a person with the knowledge demand. The transaction is a simple conversation and the outcome is a prototype process, system, or method. Each step in the series is an improvement to the method. Each time the transaction occurs, there is a net increase of new knowledge. The conclusion is the development of the system, business plan, or method. The conversation stops when the product is ready for another iteration or the market. The Percentile Search Engine is used again to select diverse participants to continue the series business structure with the intention of producing a specific outcome.

The entrepreneur is very interested in the outcome of these iterations and uses the Percentile Search Engine to select, regulate, modify, adjust, analyze, and record the transactions.

Now if we mix the parallel and series circuits, we form what looks like a neural network of parallel and series networks. Now, we are squarely in the regime of “designer” Social Networks. Participants are paid in micro-royalties instead of wages. By definition, a relatively small input produces a very large output – if it can be captured.  This will be the source of wealth creation from the new corporations of the Innovation Economy.

We determined in an earlier chapter that information, knowledge and innovation are related as mathematical derivatives.  The accounting system will identify innovation by measuring the rate of change of knowledge transfer within a social network.  Any number of current methods, systems, or innovation consultants can deal with this.  Similarly, in order to identify high rates of change of knowledge in a social network, the accounting system will measure high rates of change of information.  This too is quite simple using common systems, methods, consultants and tools.  No new infrastructure is required with the exception of the knowledge inventory, percentile search engine, and innovation bank.

The entrepreneur can now do what they do best; identify assets operating at low productivity and reallocate them to areas of high productivity by running them through an innovation system.  Remember, most businesses fail due to knowledge deficits.  To reduce or eliminate these risks will make the fact or innovation predictable and therefore negotiable.

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The Knowledge Inventory; Part 4

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On September 19, 2008

In General Information

Now, the machine readable resume is complete using numbers, symbols, and probabilities; we can quantify and qualify knowledge in the exact same format as a financial instrument. Now the knowledge looks like money. This individual is obviously a:

{20:95%,12:80%};[302+330]70%:(607+17)80%+[500/519]90%

Specialist in Social Interaction, communities of practice, and economics at the 70th percentile related to educational research at the 80th percentile. They have Background in applied mathematic and physics at the 90th percentile. They are a trained ethicist at the 75th percentile. English is 90th percentile and Spanish is 60th percentile.

Each person’s resume can now be combined to represent the collective intelligence of a team. This is not unlike an investment portfolio, baseball team, or insurance policies. This expression carries all of the information that an entrepreneur needs in order to estimate the probability that the team can execute a business plan.

The inventory can be used in many ways such as finding supply and demand in a certain geographic area, securing business loans or venture capital, buying insurance, or place a financial value on the venture. As the organization learns, the new knowledge is retained in the equation through weighted averages – like the secret sauce of success – and can be used again in another venture. If one person leaves the project, they can be simulated by others.

Later, we will see how an uncountable number of applications and new-to-the-world businesses may emerge.

The fun is just beginning…..

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The Innovation Bank

By

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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