Tag: six sigma

The Accounting System Hack

On August 22, 2012

In the first post of this series, we identified the 5 components of a financial system and suggested that Zertify, Gamidox, and Exoquant would serve to simulate their functions in a parallel economy before taking over completely.

In order to accomplish this, we need to start with an accounting system hack. Fortunately, standard accounting practices are quite robust with double entry balancing of assets and liabilities. Luckily, the problems only arise with the definition of what is an asset and what is a liability. That is a relatively easy jailbreak.

The Price Is Wrong

The problem is that we “price” assets from low to high, from bad to good, and from loser to winner, etc., with little regard for proximity, environment, community, or time, etc. The financial system needs to artificially create losers in order to price the winners. This is fairly obvious for tangible assets like cars, tomatoes, and real estate, but not so much for so-called intangible assets like people. This is hugely inefficient on so many levels and therefore vulnerable to attack.

The collaborative advantage

Zertify classifies human knowledge assets on a scale of 1-6 beginning with “teacher” and ending with “student”. Students and teachers do not compete with each other and therefore intermediate levels represent various degrees of collaboration, not competition. The teacher bias represents supply of knowledge and student bias represents the demand for knowledge, this establishes a trade vector in our proto economy.

Technically, the 6 segments represent 6 standard deviations on a normal distribution. This allow for communities to organize around their diversity rather than recoil among their similarity. This arrangement also allows the for the usage of an important body of predictive mathematics.

Benign.

This simple hack is important because it is benign to the current economy and will not trigger an antigen. Corporations, governments, and communities already seek to match the right knowledge asset to the right demand asset for knowledge – this is actually improved under the new accounting system.

Therefore, the hack is true to the math because it provides the existing financial system with an equivalent predictive asset while eliminating irrelevant bias and costly competition.

The Resume Must Die

The objective would then be to move away from the resume system and establishing a community knowledge inventory system under a commons based ontology. Everyone would have their individual API which they own, manage, control and transact. A person’s CV would be expressed as a string of code that is anonymous until the point of transaction. A tremendous amount of data will be derived from Zertify which will feed into the next hack called The Value Game.

Social Enterprise; Rating Systems

By Admin

On October 31, 2008

In General Information

There is an ongoing discussion about the rating system for articles posted to a business oriented social network site that I belong to. While am not part of the discussion, my one and only post to that site had been rated very low despite the fact that I am recognized internationally in the subject matter of that particular article. I stopped posting articles to rated sites because the rating systems are flawed at the core of logic – Frankly, it’s too risky. As the creativity, originality, or controversy of the post increases, the disincentives to sharing it also increases. I don’t want my customers googling me to see this rating without also being able to google my reviewer. No sour grapes – I’d wear a D+ from Stephen Hawking as a badge of honor.

The objective of any business/social network in today’s world should be to make human knowledge more tangible outside the construct of the corporation, such that it emulates a financial instrument – at the end of the day, it’s about the money. Otherwise Social Networking amounts to active recreation – like guitar hero, or tubing; fun but somewhat trivial.

ALL financial instruments, without exception, are described in terms of a quantity and a quality. ALL quantity and quality measures for financial instruments are statistical in nature – that is, they fall on some kind of “bell curve”. This is true for EVERYTHING from a stock valuation to credit score to marketing demographics to health/home/life/car/business insurance, baseball players, GPA, etc. – the bell curve is ubiquitous. Whoever is not minimally familiar with the simplest basic concepts of a Normal Distribution, et al, is at a severe and unfortunate disadvantage in the innovation economy. This is how the world of money is organized, this is what money is, this is what Wall Street does – for better or worse, like it or not….it is what is.

One obvious failure of most Social network rating systems is the linear 1-5 “stars”. If there were 6 stars then at least we could have a leg up on applying the most valuable mathematical tools available from the world of wealth and value creation (hence, Six Sigma). Second – the bell curve is not linear and the reviewer needs to be aware of this. 6 stars would mean that a post falls (in some measure) between 97%-100% of all similar level posts ever read by the reviewer. 5 stars falls in the 85%-97% range; 4 stars, 50%-85%; 3 stars, 35%-50%; 2 stars, 3%-15%; 1 star 0-3%.

If Calculus isn’t your thing, consider this – the bell curve rating system makes the reviewer really think about who they are in the process, the responsibility they hold in the rating of others, and the implications of their ratings – too high, or too low. It would be good to know how many articles the reviewer has read and rated, the average of their ratings, as well as their own rating on articles published (is this staring to sound like EBay? – it should, at 25B market cap, they’re not silly people). Social accountability does wonders for market efficiency and wealth creation.

Social Networks are ideally suited for correctly rating their own knowledge inventories so that when their members go out in the new world trying to make a living, it is known to all that they have been vetted by a respected community. This increases the value of the member and it increases the value of the community in the market. Communities that empower and release great talent to a market actually empower themselves; Harvard, GE, Frank Zappa. This has happened at the local level since the stone ages.

What about our competitive instincts? There can only be one winner and the rest are losers, aren’t all good Capitalists supposed to decimate thy neighbor? Always remember, it is all about the perfect combination of average assets, not necessarily the single excessive asset that makes product most valuable in a market. The market for Toyotas is far greater than the market for Ferraris, yet each are competitive in their respective market. The studies of ‘beauty’ discovered a collection of perfectly average features – in the eye of the beholder, consistent with balance and harmony. So we’ll need to drop the win-lose culture on this one and worry about competing with the real threats that lie before us.

Sure, most people will complain about such a system because it is too complicated, too math-ish, not the easy tweet (OMG CUL8R!). But this is the reality of how money is organized – and disorganized (did I mention Wall Street yet?). There is no exception, there is no rational alternative – the world does not care if people agree with the way things are or if they understand the math.

Fortunately, once people learn to roll over this metaphysical speed bump, the rest is real easy as a vast world of possibility for generating extreme wealth in social networks will unfold before our eyes!! Knowledge tangibility is the Holy Grail of modern finance but Social Networks are at risk of squandering this unique and historical opportunity to paint this empty canvas in their own image. Act now, please – this chance may never happen again.

The Capitalization of Knowledge – The Virtuous Circle

By Admin

On September 18, 2008

In General Information

We have set up a new game for entrepreneurs to play called Innovation Economics. We have defined a currency and an inventory where knowledge is visible outside the construct of the corporation – and resident in social networks. We have also described a way for entrepreneurs to visualize the knowledge asset and the supply and the demand for knowledge assets. We have given them a tool for matching assets for profit. We have described how social networks will keep the game fair. We have outlined the structure of new business plans; the brain storming session, product development cycle, the neural network, and the multiplier effect. Future businesses will be built upon combination of these four structures and whatever else entrepreneurs can dream up.

We have described all of the pieces needed to form a new economy. Now we need to connect with the financial markets so that knowledge is readily convertible to other currencies.

For review;

With the financial bank, the entrepreneur assumes that they have the knowledge to execute a business plan and then they look for the money. The risk is that the entrepreneur does not in fact have enough knowledge.

With the Innovation Bank, we assume that we have the money, and we go to the bank to search for the knowledge. The risk is not having enough money to purchase sufficient expertise.

With both banks acting together – the risks cancel each other out and the innovation economy tends toward a ‘risk free’ cycle; the more knowledge you can assemble, the more money you can borrow. The more money you can assemble, the more knowledge you can assemble.

Now we have a virtuous circle. The more knowledge you have, the more money you can borrow; and the more money you have, the more knowledge you can borrow.

There is no shortage of money circling the globe – only a shortage of risk free places to put the money. The innovation economy is an environment of very high return for a very low risk and will attract a great deal of money to fund innovation enterprise.

Earlier we demonstrated that money represents human productivity. It follows that the places that have the greatest potential for increasing human productivity can create the greatest amount of wealth. Therefore, poor areas and marginalized economies with under utilized knowledge inventories or the injection of specific knowledge inventories, become the highest ROI centers in a risk-free system; a condition the explicitly favors the wealth equalization rather than wealth disparity.

The Next Economic Paradigm

Tag: six sigma

The Accounting System Hack

The Resume Must Die

Support the Ingenesist Project