The Ingenesist Project

The Next Economic Paradigm

Tag: social vetting

Intrinsic Banking

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On December 16, 2010

In General Information

Paper money does not have intrinsic value

Paper money has no intrinsic value. The word “Intrinsic” means: something that belongs to the essential nature or constitution of something else. The ‘intrinsic brightness of a star’ is a common definitive statement.  Synonyms of the word include: built-in, constitutional, hardwired, immanent, indigenous, integral, inherent, natural, etc.

“Society” is intrinsic to economics

The Bank is an important institution for vetting social value. Despite the observation where it seems money is created out of thin air, traditionally a bank looks into a community of people and their talents to identify “social value”.  This is the likelihood that a person or group of persons can execute a specific economic outcome in the community.  Then the bank provides them with a tool called money to represent and facilitate future productivity in the present time.  So it is not really “thin-air” – it is simply invisible social value.

Little Bank on the Prairie

In the old days, the banker was a member of the community and could judge social value on any number of intrinsic social characteristics such as social status, leadership, family values, education, personal habits, and community participation. Later, the credit score became a proxy for social value through the analysis of public data (where “public” became the proxy for “social”). The credit score was then assumed to convert social value directly into financial value.

The terms “proxy” and “intrinsic” are not the same thing.

“Brightness” is not a proxy for stars any more than “stars” are a proxy for brightness.  Yet, the distinction between intrinsic banking and proxy banking remains indistinct. An Intrinsic bank would be characterized where social value is intrinsic to the creation of financial value.

It’s all about Value

We created The Value Game as a new class of business methods to transform financial value back into social value – The Value Game performs the mirror-image effect in an economy as the credit score.  The value game increases the social value of the community enterprise by converting monetary value into social value.  Only then can the Credit Score sustainably convert social value back into financial value.

Who wants to become a Trillionaire?

The point of this discussion is not to slam banking, rather, it is to demonstrate that intrinsic banking does not formally exist – yet is must exist as a direct balance to traditional banking.  As such, intrinsic banking is at least as “Valuable” as the banking industry itself. Today we are entering an age where society MUST come up with a NEW way to store and exchange VALUE. Whoever really get’s this and pioneers Intrinsic Banking today (what it means, what it creates, and why) will become as mega-wealthy as traditional bankers, in the future.

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Social Media as a Vetting Mechanism

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On February 9, 2010

In General Information

Where the vetting mechanism fails, the system fails. This has happened in countless instances from the current financial crisis to nearly every product, market, environmental calamity, or political failure in recorded history – the referees who were supposed to keep their eye on the ball, did not. Likewise, where a vetting mechanism is effective, the system is efficient.

EBay does little more than defend the vetting mechanism (feedback system) and entrepreneurs do the rest. The credit score allows companies and people to capitalize and securitize assets. The US legal system keeps the game of commerce as fair as practical. Police officers and school boards keep our society safe and smart. We often overlook the importance of vetting in our communities.

Today, we find severe problems in finance and government and people are investing their knowledge assets in social media as the place to “store and exchange” their present and future productivity – instead of debt. As such, social vetting is taking many different forms to validate, qualify, and quantify those assets.

While the progression may not be noticeable, there will be a tipping point where the medium has built enough trust that it can support a currency. This new currency needs to be only a little bit more “trustworthy” than the currency it will replace. This is the point where knowledge becomes tangible.

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Twitter Vetting = Twetting?

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On September 14, 2009

In General Information

Picture Credit

There are 3 characteristics of financial instruments which make them tangible in a market:   They live in an inventory, they are exposed to vetting mechanisms, and they are subject to constraints.

Tangibility of knowledge:

Here at Conversational Currency we are constantly seeking examples where human knowledge behaves like a financial instrument because a true innovation economy will arise when all 3 characteristics are true for the ‘human knowledge’.

We believe that the platform for the Innovation Economy will be Socialized Media; not corporations, or government.  So we get excited when we see posts like this from Brian Solis via Matt Marshall regarding Twitter’s monetization plans.

Twitter to becoming the vetting mechanism for business intelligence.

Think about the credit score; a list of independent variables run through an algorithm that correlate with the likelihood that you’ll fulfill a financial obligation. I’ll leave the rest to your imagination…read between the lines:

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By Brian Solis:

Over at VentureBeat, Matt Marshall is reporting that Twitter will introduce its first revenue-generating series of premium services.

In an interview with co-founder Biz Stone, it was revealed that Twitter is in the initial phases of introducing commercial accounts to businesses seeking detailed analysis of activity in and around the brand on the popular network as well as other data not available to Twitter users directly.

In the next phase, Stone indicated that Twitter may also debut a new set of corporate-specific API’s that would allow the company to insert a customer layer over the profile and other aspects of the network to more effectively engage with the community, while increasing strategic visibility.

Stone revealed to Marshall, “Twitter will still be free for everybody and we’ll still tell them to go crazy with it. But, we’ve identified a selection of things that businesses say are helping to make them more profit.”

He further elucidated, “We want to build statistics or analytics that let users know — ‘How am I doing on Twitter?”

This news is the latest in a short series of information bursts following the company’s announcement that it is rolling out a new set of APIs to integrate geo-location into Tweets, mostly likely to contend with rising competition of geo-location networks such as Loopt and Four Square and also as a potential generator of hyper-local advertising revenue.

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Ponder this:

Social value lives in an emerging inventory that is ever increasing in granularity.  Corporations have very little control over public opinion –  except in retrospect – which amounts to a constraint on social value.  Now, Twitter is the vetting mechanism.  Wow, we’re getting closer to the next economic paradigm every day.

The implications are vast.  Now we shall ask a few question:

At what point will Corporate Innovation reflect social priorities over Wall Street priorities?

At what point will Wall Street Priorities reflect Social Priorities?

If the Wall Street Manifesto is to “return shareholder value” and Twitter is vetting “social values”, what is the value of Twitter and who is really holding/voting those shares?


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Treating the consequences, not the symptoms?

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On June 10, 2009

In General Information

Problems and opportunities are moving very fast. Problems are often so complex and so integrated across the globe that no single person can accumulate in a lifetime the experience needed to manage effectively.  The “top-down” management structure no longer has a statistically relevant sample of prior experiences from which to make essential decisions. Actions without wisdom have unintended consequences for yet unknown victims.

The Wisdom of Management

Managers manage through experience.  After many years in an industry, they can observe a situation and compare it to prior situations that they have encountered either through experience or formal education.

An effective manager can identify an issue, determine the probability that it will become a problem, and discuss the consequences of action or inaction.  Then they make similarly calculated decisions that either solves or manages the consequences of the problem.  The depth and breadth of a manager’s experience is called wisdom.

Duplicating Wisdom

In order to duplicate wisdom in a laboratory, scientists generate statistical events.  By duplicating a scenario 20-30 times, a range of outcomes becomes statistically relevant for predicting future outcomes and identifying the way things can influence the outcomes.  The idea behind the peer reviewed journals is to display the experiment to everyone for vetting.  If it survives vetting, it becomes part of the human body of knowledge until otherwise challenged.

Managing consequences

The rate of change has become extremely high and problems too complex to manage. Vetting mechanism are breaking down like levies against the dam in industries such as Banking, Insurance, automotive, medicine, education, environment, etc.  We are in a crisis of consequences where we can no longer manage the symptoms, only the consequences – forget about curing the disease.

Social Media: The Operating System of an Innovation Economy

The business plan of the new millennium will be the art and science of making information “less imperfect”.  In a condition of perfect information, everyone associated with an issue has the same information as everyone else.  Perfect information is what makes markets efficient and decisions rational.  Agreement is perfectly mutual, supply and demand are perfectly aligned, all risks are perfectly predictable and cause and effect are perfectly transparent.

Wisdom of Crowds

No single human can accumulate enough experience in a lifetime to manage the totality of human problems.  Perhaps the wisdom of crowds could be used to simulate one person that does.   This cannot, however, be a random collection of people acting in haphazard process.  The challenge is in finding the correct group of people who collectively replicate a condition of “perfect information”.  Then we must transform the perfect information into knowledge.  Finally, we need to transform that knowledge into innovation through entrepreneurial activity.

The Social Imperative

Social Networks need to form complete and detailed inventories of resident knowledge cataloged on a ‘bell curve’.  Social Networks must codify social capital, creative capital, and intellectual capital so that scientific methods can be used to predict and assemble unique collection of knowledge assets that capture statistically relevant collections of experiences. That unique set of knowledge assets must then be deployed precisely in a market.

By all indications, this is the direction that the integration of social media is trying to go.  It is now our social imperative that it gets there.

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The Currency of Transformation

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On May 19, 2009

In General Information

The words “conversation” and “convertibility” are really quite similar.

Information, knowledge and innovation are distinct phases of human intellect which are profoundly related.  The vehicle for transformation across these phases is the “conversation”.  As the medium of exchange, the conversation acts as a currency.   The speed at which these exchanges take place defines the value of a market – a good party is where everyone is engaged.  A good time is of the essence.

Changes in the value of the market defines the potential for value creation through conversation – a great party pulls more people into engagement and becomes a social movement; i.e., a marketing success.

Currency (money) and Current (time) and Current (force) are similar too!

Conversations exist as a state of shared information tied to a common and progressing theme.  The internet enables the propagation of conversations from two persons to millions of people.  The propagation of conversations is dependent on interest rates of the audience.  The rate of propagation accelerates with the transformation of information into knowledge by others in it’s path.  People are driven to entrepreneurial action when the alignment of information matches the environment that they observe.

Conversation is Currency

Currencies come in many different forms and the best ones are convertible – or can be transformed – into other currencies.  Our objective is to convert social currency, creative currency, and intellectual currency into a universal currency such as, but not necessarily, money.

Anything of value such as an option to exercise an action at a later date, or an equity position in the actions of others, or a mentorship opportunity with a great teacher are all convertible currencies.  Of course, this is nothing new; we pay money to buy a book, take a class, invest in start-ups, and teach our children.

An End to a Means:

What is new is that social media allows us to convert the other currencies before, after, and in between the conversion to money.  The option to convert to money is simply an option like any other option, not necessarily a means to an end.

Obviously we could pay money to buy a book, use that book to teach our children and hope our children can start up a new company, etc.  However, suppose we could pay money to buy a book, improve the book by adding information shared by others, teach hundreds of other people how to apply the ideas to their start-up, take an “knowledge equity” position in those hundreds of start ups, have access to the data that they produce, and write a book that improves the likelihood of successful start-ups.

The Interesting Thing About Interest Rates

The next economic paradigm will introduce thousands of convertible currencies in the form of infinite conversations.  Those currencies will be converted in infinite combinations for infinite applications each adding value to the conversation.  Relational data aggregation will match most worthy currencies and social vetting will manage the production process. The corporate silo will no longer form; therefore the exploitation of the creativity class will end.  Interest is not measured in terms of risk, but rather in terms of productivity where deficit spending is impossible. This is the currency of transformation.

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Social Media; The Engine of New Economic Growth

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On February 19, 2009

In General Information

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Business Models of the Future:

The great new social media business models of the future will be in the areas of “The Last Mile of social media” and “Social Vetting mechanisms”.   I have written about these two elements in the past.  However, this article will attempt to focus on how the future engine of economic growth can use social media platforms to power social capitalism.

The Last Mile:

The Last Mile of social media is where the rubber meets the road.  I can chat with people all over the world on Twitter and Facebook, but nothing happens until I walk out of the house and meet real people in real time to create a real business that really increases real human productivity.  If I can accomplish that, monetization is simple matter.

If everyone is harvesting ideas from all over the world, Last Mile technology is the key to bringing these ideas to the ground.  The new social enterprises will develop, support, enable, and service the structure for innovation in neighborhoods and communities.

Feel the Burn:

To understand the power of this paradigm; there is little doubt that the leader of the free world was elected by the Last Mile.  That is huge.  Now, when the Last Mile is in trouble with mounting layoffs, foreclosures, and wealth destruction, eyebrows are raised, headlines make the first page, and everyone is wondering what will happen in to the Last Mile.  In 1992, this author saw Los Angeles burn over a whole lot less than what’s coming down the pipes today.  This is not a game, this is very serious stuff.

Social Vetting:

Social Vetting, on the other hand, is less understood, but like a tornado there is nothing subtle about the forces that it can impart against the darkness of secrecy.  All markets become more efficient in the presence of an effective vetting mechanism, as such, monetization is a simple matter.  Conversely, the absence of vetting is the root of all corruption – as we are now painfully aware.

Begging for Mercy:

To understand the power of this paradigm; Facebook was recently brought to its knees by Social Vetting.  First, a social watchdog group noticed the change in the terms of service and set the dials on “viral”.  Facebook users organized immediately and lay siege to the core validity of a 3.5 billion dollar new media titan.  Within hours, Facebook was backpedaling. The 300 billion dollar marketing industry, ravenous for viewer impressions, was sent back to the drawing boardroom.  Meanwhile, legacy media spin took pot shots at Facebook’s inability to monetize the value it claims to create.  Again, this is not a game, this is serious business.

Role play

In each of these examples social media responded effectively to an existing injustice.  This presents the dire question:  If the Last Mile and Social Vetting can have such a profound effect in the REACTIVE role, what would be the underlying dynamic if applied in the PROACTIVE role ?

The Engine of Economic Growth:

Consider this: Social media has no problem scaling up, rather, it has a problem scaling down.  The Last Mile and Social Vetting represents the compression cycle of the new economic engine.  The spark of innovation ignites the secret sauce to scale upward.  With a repeatable cycle, we can literally create an engine of economic growth cycling from down-scaling to up-scaling, and back to down-scaling, and so forth, forever.  Each combustion cycle literally pumps value into an economic system.

Master of Puppets:

I’ll let the reader now ponder the cause and effect sequences of this proposition.  But I will leave one hint: Wall Street becomes the servant, not the master.  As such, monetization becomes a simple matter.

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