Tag: seattle

Tangential Innovation Communities

On June 14, 2010

In an earlier article (Cluster Funk) I argued that Industrial clusters can lead to stagnation, vulnerability to external shocks, and the erosion of social capital. Since I’m not one to complain without also providing an alternative, this article argues that the future will favor technology clusters rather than industrial clusters.

Make it up as you go along

Technology clusters serve what we call the tangential innovation market – or diversity innovation dynamics. Don’t worry if you have not heard of these things, I’m making this up as I go along.

For example; composite materials technology is very useful in many applications like aircraft, medical devices, transportation, recreation, and even musical instruments. The airplane company has no intention of building cellos and the automobile company has no intention of building snow boards.

Why compete when you can collude?

As non-competing industries, they can readily share technology and people. The system is naturally diversified and inoculated against stagnation, shocks and silos; if one industry encounters hardship, people and capacity can shift easily to another industry preserving knowledge and expanding social networking benefit while the damaged industry heals or dies off. Corporations may not like this idea, but social networks should.

The Ingenesist Project goes a step further by modeling the business structure of tangential innovation markets as an integrated financial system. Suppose and Originator Company has a promising new composite technology idea but is unable to meet the ROI requirements of their stockholders? Today, such innovation would be shelved. In an innovation economy, tangential markets are factored into the business case.

New applications of social media will identify other industries that would be most worthy borrowers of your technology, if developed. The Innovation Bank can estimate the return on investment that can be expected through the tangential market as if it were another customer. The additional revenue projection would allow the originator to meet the ROI requirement prior to committing development funds.

Intellectual Property can be managed with contracts enforced through social network vetting. The originator can hold an option to see further development conducted by tangential users effectively multiplying their R&D reach and further adding to the expected return.

Then something magical will happen. At some point, the value of the tangential innovation market would exceed the value of the origination market. The originator will begin to specialize in pure innovation as a primary product and airplane applications as the secondary product. As all industries in the technology cluster begin sharing technology among each other, R&D costs and risks are effectively spread across industries. As risk is diversified away, the cost of venture capital approaches single digit rates.

Then, another magical thing will happen. As the mixing of people and ideas accelerates, the definition of corporate boundaries will become more fluid. Ownership will exist in the form of contracts among entrepreneurs now defined by social networks, options, and derivatives in a diverse innovation enterprise.

While the boom bust cycle of Industrial Clusters has brought us a great distance in economic development, technology clusters in an Innovation Economy supported by social networks may turn out to be vastly more efficient at economic growth without the perils of Cluster Funk.

Share this:

Two Sides Of The Social Value Equation

By Admin

On May 7, 2010

In General Information

There are two sides to the Social Value Equation – the creation of social value and the destruction of social value. There are countless examples where innovation destroys the value of prior technologies. There are also many instances where “progress”, perhaps in the form of a freeway or public structure, divides a community where strong social bonds once acted.

In the presentations that I give, I often cite the value of a bridge over a waterway. The bridge may cost 50 million dollars to build and maintain, but it increases human productivity by 50 billion in the life span of the bridge. We often cite a factor of 1:1000 for the valuation of the dollar to social currency.

Contrary to that, Jane Jacobs (renowned urban theorist and community activist) may argue, the bridge (and roadway) may divide a community or neighborhood. Where the community may once have been scaled for foot traffic, the new boundary may require a car to circumvent. The new road may divert old commercial traffic in many ways that are bad for a community. In such a case, the social capital destroyed by the bridge is in fact the dominant financial outcome.

So here I am, I just destroyed my own best analogy to demonstrate a point. Without vetting the complete transaction in the form of social currency, net “progress” of any kind is as easy to leverage backwards as well as forward at a rate of 1000:1.

Communities that seek to stop a disruptive development program will often organize to protest urban development decisions. Unfortunately, they are usually up against a calculation of economic impact that is dominated by dollar denominated currency. Without a “Social Currency” of their own, quantified and convertible to dollars, communities are doomed. Law suits will play out in the same manner where damages are non-quantifiable, and therefore non-existent.

Jane Jacobs also writes that a community that can place a value on their social currency – although I do not think she explicitly called it that – and can act to preserve value or increase value by their actions. Many communities from Greenwich Village to Boston have thrived under a social currency diverting projects away from sensitive communities. The Big Dig went underground in Boston much like the The viaduct replacement project will do the same Seattle. Granted, the Seattle project mainly preserves water and mountain views for million dollar condos, this concept, in fact, would be more critical to poorer communities than wealthy ones.

Obviously there is no way to impede progress. All innovations destroy prior value in the creation of greater value. The danger is when Wall Street priorities can dominate Social Priorities. Capitalism, for all the greatness it creates, is amoral. Capitalism is committed to dollar currency, and devoid of social obligation except to the degree that obligation is profitable – that is where social currency converts to capital currency.

Through the magic of the fractional reserve system, Banks create money backed by debt vs. deposits at a factor of 1:1000. Therefore, the convertibility of social currency with a capital currency at a similar factor of 1000:1 is essentially the only effective way to convert Social Priorities into Wall Street Priorities.

Share this:

You’ll Know It When You See It

By Admin

On October 20, 2009

In General Information

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

Not unlike a playground

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

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

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

Boomerang effect

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

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

You know it when you see it

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

Share this:

Gnomedex 9.0 Seattle

By Admin

On September 16, 2009

In General Information

I attended the Gnomedex 9.0 Social Media Conference in Seattle. While it was wonderfully informative and every single person that I met was engaged, interesting, and accomplished in some productive way related to social media, I was left with some troubling observations as well as some very inspiring moments.

Observation:

1. Trillions upon trillions of dollars are being transferred to Social Media with the persistent extinction of old media dinosaurs – does anyone care?

2. Advertising concerns, print media, corporate HR, were strikingly absent from the corporate vendors on site and in among the sponsors – they should have been hovering over in helicopters.

3. There were ONLY a few hundred people in attendance – there should have been a few hundred thousand (6619 Tweets sent).

4. This event should have been gold plated – it was not, which leads me to some of the inspiring moments.

Inspiring Moments:

1. Many of the presentations reflected social priorities like the environment, using social media to empower yourself and the people around you, and empowering less developed nations.

2. Relative absence of commercialization

3. Gnomedex 9.0, means that 9 have occurred and this is what it has “evolved to”. As a worthy social experiment in itself, this shows us what social media WILL evolve to

4. Building trust was a predominant theme

Read Between the lines:

Social media reflects social priorities, not Wall Street Priorities – in fact, the table has turned. For example: Twitter will be charging Corporations to view social media – after corporations failed to get people to pay them to view social media.

Every single business transaction is subject to a similar “reversal” relative to social media space. The World has no idea what’s coming down the tracks.

Share this:

Got a Life?

By Admin

On February 23, 2009

In General Information

Geographic Compatibility:

In the early 1990’s, traffic in Los Angeles was so horrendous, it could take hours to travel a dozen miles. Commuting was a nightmare and the last thing anyone wanted to do was sit in more traffic. As a single professional, every time I met a prospective lady friend, I had that elemental question in the back of my mind – and so did she: are we Geographically Compatible (GC)?

The sweet spot:

I recall many a magical conversation ending with that mutual inevitable shrug of the shoulders; a secret code for “have a nice life”. In Los Angeles, GC peaked in the sweet spot of 1-6 miles. After that, GC diminished roughly proportional to the square of distance with 20 miles as an absolute maximum. Any more was no closer or farther than, say, Nashville.

The cost of ownership:

Today, not only must we contend with traffic and the cost of owning a car, we must attend to a warming planet were every gallon of gas burned spews 19 lbs of CO2 to the atmosphere. In addition, we have a deepening deficit of the most valuable asset in our lives and the lives of those around us; time, bandwidth, productivity, sleep, money, innovation; it’s all the same convertible currency. All are wasted equally behind the wheel of an automobile.

Social Experiment:

With this in mind, I did a little experiment. I went to Linkedin and conducted a search for everyone within 6 miles of me. All that they offered was a 10 mile range and with keyword search too. The results were very interesting; not ideal but not too shabby. I tried the same with Facebook, and the best I could do was search by zip code. It was very awkward and the profile search feature only allowed me to query my existing contacts. I am guessing that there is some sort of security issue that restricts this type of searching. Too many nuts, flakes and stalks in that granola, I suppose.

Not unlike the LA dating scene, the future of innovation economics, global sustainability, quality of life, social support structure, family values, and money management will rely increasingly on GC; and the constraints will not end soon. Social Media must understand the monetization potential of GC and develop robust applications to support it.

If that is not enough convincing, try this:

‘The Jane Jacobs externality’ named after a transformational sociologist of the same name, suggests that concentrations of educated and skilled people attract companies and investment to a geographical area. The presence of such investment attracts more educated and skilled people to that area; also referred to as “intellectual capital”.

Harvard Professor and Author, Dr. Robert Putnam concluded that people acting in groups can produce far more economic growth faster and better than corporations and government combined. This is called “Social Capital”.

Carnegie Melon Professor and Author, Dr. Richard Florida, suggests that artists and engineers think more similarly 24/7/365, than managers and production workers. This is called “Creative Capital”.

Factors of production:

All three; intellectual capital, social capital, and creative capital are wholly and utterly dependent on GC. These are the factors of production of an Innovation Economy.

Evidence of these effects can be demonstrated by the civil rights movement, woman suffrage, neighborhood watch, Silicon Valley, Seattle, Greenwich Village, Austin Texas, Boston, Hollywood, Chicago, NYC, and many more locations where ‘wealth’ is located. What came first, the money or the people?

So, what part of monetization is Social Media having difficult with? The sweet spot is 1-6 miles, so get the hint and get it fast. Meanwhile, billions upon billions of magical conversations end with that inevitable shrug of the mouse; a secret code for “have a nice life”. I say, get a life.

Share this:

The Next Economic Paradigm

Tag: seattle

Support the Ingenesist Project