Tag: social

The Monetization Mystery

By Admin

On January 14, 2010

In General Information

OK, the social media buzz is getting a little stale folks.

Yes we know that social media is valuable.
Yes we know that lots of folks are doing it.
Yes we know that the predictive web is predicted.
Yes we all know that all this activity will mysteriously “monetize”

Show me how everyone is related and I’ll show you a new economic paradigm. Here is how they are not related:

They are not related by “earning” people’s trust today so you can shove your product down their throat tomorrow.
They are not related to collecting thumbnails.
They are not related to giving the g00gle alg00rithm an 00rgasm.
They are not related by “The 6 Steps to [Fill in The Gap]”.

The next economic paradigm is related to transformation.

People transform data into information
People transform information into knowledge
People transform knowledge into innovation
People transform innovation into data

Under a set of fundamental assumptions that:

All people are socially talented
All people are intellectually talented
All people are creatively talented
All people are good at something
Nobody is good at everything

This is how value is generated. This is where the mystery of monetization hides.

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Political Memoirs; The Money Shot?

By Admin

On January 6, 2010

In General Information

One must seriously ask, how exactly do political memoirs increase human productivity?

2009 marked the resurrection of the infamous “Book Deal” with lovely Ms. Palin and entourage leading the charge. However, books are not the actual product; it is the kindling (amazon pun intended) that they provide for endless fodder for the mainstream and new media. It’s the money shot.

Entering a mid-term election year with the future of our country in the balance, the onslaught of meaningless dribble will be epic. The national pundits will go wild fueling local media coverage as the authors engage in their cross-country tours of duty performing the perfunctory act of accomplishment.

There will be a wide audience of Americans asking themselves the same question:

Should the past be used to predict the future?

Karl Rove

Former deputy White House chief of staff’s book Courage and Consequence will be published on 9 March by Simon and Schuster’s Threshold Editions, a conservative imprint. Deal reported by US media at $2m.

Donald Rumsfeld

To be published in the autumn by Sentinel, an imprint of Penguin. No advance for the former defense secretary, share of proceeds to go to charity.

George W Bush

Autobiography, tentatively titled Decision Points, is to be published by Crown. Deal estimated at $7m.

Laura Bush

Her memoir is due in the spring from Scribner. Laura’s deal may be worth more than her husband’s. US media put it at $8m.

Dick Cheney

Scheduled for spring 2011, the former vice-president shares publisher with Rove. His deal is estimated at $2m.

What if this conversation has no currency?

What if we are reaching a tipping point? What if nobody cares anymore? What if none of this makes any sense to anyone? What if we can more accurately use the future to predict what really happened in the past?

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Is it Social Media or Corporate Media?

By Admin

On December 22, 2009

In General Information

Visionaries Ho!

There are no shortage of intelligent and visionary social media celebrities. They write great books about markets, social media tools, strategies, and on-line reputation for the benefit of the millions of people stuck on any part of the slippery social media learning curve. They are infinitely generous with their knowledge and share it freely at countless conferences, blog posts, and syndicated articles.

There is, however, one thing that most of these Guru’s have in common – they consult to and are paid by large corporations. I could be considered part of this crowd for whatever my influence is worth. So the question about causation is due – will social media develop as a function of corporate interaction with it?

If so, then it is not social media – it is corporate media.

This is no surprise, nor should there be any apparent concern, after all, everyone has to make a living and it is better that the corporations pay people to create content that benefits me. The practice is conducted quite ethically too -most readily disclose where their financial support comes from and we all benefit from free information that helps us keep the playing field as level as it can be.

But at the end of the day, it’s all about eye-balls and bullhorns. In order to produce eyeballs and bullhorns, people must be sitting at a computer or, at least, staring at a handset. The longer you can keep people interacting with the brand instead of interacting with each other, the better off everyone is, right?

Social Media Consumer Advocate

A consumer advocate is someone who helps look after the best interest of the consumer for product safety and false advertising. Social media is pushing the envelope of the corporate interaction with consumers. “Advertising” no longer lends itself to the objective review of a billboard, commercial, or public statement. Social Media Marketing is increasingly sophisticated and manipulative. The vulnerable people; children and elders are no less vulnerable on social media, and may be more.

Social anomalies?

Some of the emerging research related to social media is surprising with increased instances of what can be considered social anomalies:

– Infantilism; adults doing childish things like playing silly games in ‘public’
– Attention deficit hyperactivity disorder; constantly checking for updates and new photos,
– Depression and loneliness; preference of social media over real live interaction
– Narcissism; The excessive love or admiration of one’s image of their self.

Is it social because it is media or is it media because it is social?

We need to ask ourselves what is the difference between computer enabled reality and computer simulated reality. If we lose “causation” the entire body of analysis can be called into the question: is social media or is it corporate media?

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Pirates, Anarchy, and the Monetization of Social Media

By Admin

On December 11, 2009

In General Information

(Editor’s note: some ideas adapted from writings of Peter T. Leeson and introduces the idea of IOUs trading as a proxy for production. The monetization of social media will likely evolve from such an idea)

No sane blogger would post an article suggesting that anarchy is superior to government as a means of producing widespread cooperation…or would they?

As Milton Friedman put it, “government is essential both as a forum for determining the ‘rules of the game’ and as an umpire to interpret and enforce the rules decided upon.” Most great anarchist theories are duly faulted for significant problems coping with cheating and violence.

Nonetheless, large swaths or anarchy exist today. For example, there is no World Court to enforce World Law, if such laws existed. Nor is there a Global commercial law to enforce contracts between Global traders. Even at a local level there is no guarantee that the government will protect your property or enforce your contracts.

A common objection to anarchy is that without government the strong will plunder the weak because the weak have an inherent inability to protect themselves. How can self-governance alone protect the weak?

Social Piracy?

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The Social Media Paradox

By Admin

On December 2, 2009

In General Information

The very nature of the traditional corporation is called to question by the Social Media Paradox:

Definition (by me):

Social Media Paradox: The degree to which the act of engaging in the social media paradigm reduces one’s ability to engage in the pre-social media paradigm; and vice versa.

Success in social media requires humility, authenticity and commitment to the medium. Like a tattoo, that impression defines the person and is not easily removed – after all, everyone’s got to have some skin in the game.

Social media rewards people for doing what they are best at and saying what they feel to be most true. Furthermore, brands need to trust their employees to represent them – this means that they need to give up control of the message. The more they try to control the message, the less effective they are in a social medium.

Sounds like a great idea, but is it practical?

Many people still need to work for a living often find ourselves at the mercy of corporations for an actual paycheck. Social Media provides a free source of reference material on a new candidate. If a person is seen as edgy, ‘counter culture’, or defiant by any number of risk averse HR gatekeepers, one’s “old-paradigm” employability can be affected. The subtle irony that the those who best understand the medium can make themselves unemployable as a result.

The opposite is also true:

Read More

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Community Currency; Ithaca Hours

By Admin

On November 6, 2009

In General Information

Editor’s note: I found this copyrighted piece from all the way back in 1995. I find such history enlightening. As a researcher it allows me to eliminate certain variables such as Social Media, 9/11, TARP, GWB, BHO, Global Warming, and a host of other firebrand influences on public opinion and action. That said, the clarity is remarkable. Take strong note of the intention of fulfilling social priorities. Today, as our corporations and government (federal, state, and local) continue to cut social programs in order to service interest on debt, the void on social programs will induce an inevitable condition; Community Conversational Currency.

by Paul Glover

Originally published in IN CONTEXT #41, Summer 1995, Page 30
Copyright (c)1995, 1997 by Context Institute

Many communities are giving up waiting on large corporations or government to invest or provide jobs, and are instead building on their own strengths and resources.

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A Local Currency Primer-Comfort Dollars

By Admin

On November 2, 2009

In General Information

Douglas Rushkoff has an interesting post, indirectly on how local currency can spur social capital. As more corporate and governmental institutions fail to meet the needs of society, people will need a currency that they can trade among each other. If the dollar fails, the need will be dire.

The difficulties that will ultimately limit such enterprise is the inability to capitalize and securitize a social currency. Conversational Currency solves this problem by demonstrating how social media, if organized correctly, can simulate many of the functions of corporations and government. As such, people will ultimately trade the currency they trust most.

I like Douglas Rushkoff’s work. I suppose the ultimate test of concept would be if he finds this post and contacts us to integrate The Ingenesist Project and Conversational Currency into his thought leadership. Thanks Douglas!!

A Local Currency Primer-Comfort Dollars

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The Greatest Threat To Social Media

By Admin

On October 14, 2009

In General Information

I taught an undergraduate class in International Business this weekend in Mexicali, Mexico as part of an international assignment as Associate Faculty for City University of Seattle. I first taught in Mexico 15 years ago as visiting faculty during the NAFTA era where I spent 3 years conducting research which eventually lead to The Ingenesist Project.

My first year in Mexico back in 1994, I thought to myself, “Wow, I can change everything”. The next year, I thought to myself, “Wow, I can’t change anything”. The third year, I thought to myself, “Wow, why would I want to change anything, Mexico is doing just fine the way it is”.

At that time, I was referring to the cohesiveness of community, family values, complex social structure, community interdependence, generosity, empathy and personal warmth – despite their “Cold War” classification as a “Third World” country – that the Mexican people held forward to each other as well as visitors.

I also remember the huge city-wide parties (imagine a million person party) after the country won a big soccer match, or after a popular political candidate won and election, or during New Years, Christmas, and Easter, etc. Wow – what a magnificent place.

Fast forward to this past weekend; I was explaining the implications of the financial crisis relative to the changes that have taken place since NAFTA. Today, thousands of Global Corporations now surround the city like an advancing army, proud people are now working for wages, Euro/America centric textbooks chart their course into modernization, and pending currency shifts loom unpredictable in their speed and scope – the effects will likely not be in the best interest of the people who actually produce things. So, I deviated from the course material – If I didn’t do it, nobody else would. I included material on how to use Social Media.

Mexico still has it, but they are losing it – often in spectacular ways. It seems so natural that Social Media can have a tremendous impact in countries where the fabric of community is still essentially intact. Unfortunately, when people are held below a certain economic threshold, they simply do not have the time or the energy to organize as a community to impact social change. This is the greatest threat to the great promise of social media in Mexico … and the United States.

The following video, A nine-minute history of corporatism, articulates the conflict that I felt when teaching the courses on International Business in Mexico. Please watch – it is that important.

Life Inc. The Movie from Douglas Rushkoff on Vimeo.

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The Value of Social Currency

By Admin

On July 9, 2009

In General Information

How big is this opportunity?

Roughly 10% of the US gross Domestic Product can be attributed directly to the process of evaluating or examining transactions. This represents a 1.4 Trillion Dollar of value in a system that may be better organized, captured, and preserved through social networks and the conversations that they produce.

Social vetting on a scale that would allow social networks to monetize would require that communities organize their knowledge assets specifically for deployment to a market. All that an entrepreneur needs to do is fill this need.

What happens if they don’t?

The true cost of vetting may be calculated by what happens in the absence of oversight, transparency, and disclosure. When the vetting process fails, so too does the industry. The continuing financial crisis of 2008 was fueled by a failure to regulate mortgage backed securities. The financial Crisis of 2002 arose from a failed accounting (CPA) profession.

The losses due to the absence of vetting mechanism exceeds by many times the cost of having a system in place. The financial crises of 2002 and 2008 have together wiped out nearly 20 Trillion dollars of value and incurred high volatility to financial systems due to failed vetting mechanisms. The people who held the knowledge about the impending doom had no effective medium to share.

Who vets KNOWLEDGE assets?

The flow of money lives and dies by the vetting mechanism. CarFax, Experian, Ebay, Google owe their existence to the ability to vet information – However, they do not vet knowledge. The ability to deliver the right knowledge asset to the right place, at the right time for the right price is tantamount to being able to “manufacturing innovation”, that is, to print money. Inversely, the ability to foresee the result of specific knowledge assets deployed to specific business conditions is the Holy Grail of entrepreneurs.

Social networks can carry out this very important function of the Innovation economy; organize, locate, and develop knowledge assets in a form which can emulate a financial instrument.

How are things changing?

Emerging ideas such as conversational currency, relationship economics, innovation economics,. nd new ways to value intangibles are appearing in research blogs across the web. Disruptions to Global finance, environmental policy, and the emergence of global currencies are setting the stage for a huge transformation in how society organizes itself. Traditional industries such as print media, advertising, and banking are failing. Nothing is sacred except change.

Where are these communities, and what do they want?

Many communities exist today in a variety of forms and functions such as communities of practice, fellowships, service organizations, professional societies, trades groups, affinity groups, etc. Increasingly they are moving to Social Media such as Facebook groups, Linkedin groups, Affinity groups, aggregation groups, and political action groups. Communities are using social media technology to engage the knowledge domain contained within them.

As such, they will soon have ability to foresee the result of specific knowledge assets deployed to specific business conditions. This is the Holy Grail of modern civilization.

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Is the Corporate Structure Obsolete?

By Admin

On June 24, 2009

In General Information

The Social Media Production System

Social Media has demonstrated in many ways capable of meeting or exceeding the deliverable output of many traditional industries such as advertising, marketing, journalism, human resources, design, community organizing, education, and social vetting.

We have also seen social media form communities that increase productivity in manufacturing processes, software development, and project management. We have seen people self manage in social media to segregate and elevate good information away from bad information. We have seen communities act with logic, tact, and precision previously thought to be the province of top management guidance.

In short, we have seen social media replace or duplicate almost every structural element of the traditional corporation outside of the construct of corporations. Can social media provide a corporate structure in and among itself?

General Accounting Practices:

Corporations have an internal accounting system, internal processes, internal procedures, and often their own lexicon and unique job descriptions relative to their product. This is how a corporation stores knowledge and trades value internally and defends itself from external influence. The common thread is that each department is accounted, assessed, and compared in terms of money. Standard balance sheets are compared by banks and investors.

Social media uses the exchange of information, knowledge and new ideas to store value. Processes, procedures, job descriptions, and accounting are done in a public lexicon that everyone develops collectively. People share, trade, and exchange information, knowledge, and new ideas like tangible property; and they trade options on futures in the same. Increasingly, access to the community knowledge inventory is becoming a means be which people can convert productivity to money.

Standard Balance Sheet for Social Media

Most elements of a corporation can be duplicated in social media. For those parts that cannot, the entrepreneur will soon figure out how they can. The entrepreneur does not worry about money, they worry about productivity and the money always follows. The next paradigm of economic development will reside almost entirely on a statistical game of managing risk and return, matching surplus to deficit, and increasing human productivity in the operating system of Social Media. Every Newspaper that falls to Social Media is simply transferring its value to the new paradigm. That value is still in play. This trend will continue until a new currency representing that value is introduced.

Business Plans of the Future:

As you witness the progression of Social Media unfold, look for innovations that contain incentives for people to reorganize themselves. Look for similarities between new social media developments and traditional corporate departments. Look for businesses and institutions that support social vetting mechanisms, knowledge exchanges, and groups bringing together strategic combination of diverse knowledge assets, not just similar knowledge assets. Most importantly; look for the “Last Mile of Social Media”; diverse groups of 5-10 people living within a few miles of each other forming new enterprise.

Threats:

Finally, look for the threats that can corrupt an innovation economy. Social Media is currently responsible for trillions of dollars of productivity gains – all this money is still on the table for social entrepreneurs to monetize once the integration reaches a tipping point. Be watchful for attempts at censorship, attempts to monopolize information nodes, and the corporatizations of social networks. Wall Street was corrupted when the value of the currency became divorced from human productivity. Don’t let the same happen to Social Media.

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Who Owns Your Content?

By Admin

On February 21, 2009

In General Information

The epiphany:

Something very interesting happened when Facebook changed their terms of service. People who use the Facebook platform (for free) organized themselves using the (free) platform to threaten the core validity of the same (free) platform. This could not happen in any other industry.

Saving face?

Ownership is largely characterized by the ability of one party to restrict the access of another party. Judging by the results of this uprising, it seems that for all practical purposes, the users own their content and their impressions no matter what the TOS says. This is a very strong argument for the tangibility of social, creative, and intellectual capital.

Ownership Economics:

The fact that people own and care for their content is what makes Facebook work. Ownership is an extremely powerful force that drives intense participation and innovation. People will attend to their property, improve it, make it valuable, and create value for themselves and those around them. Really, when was the last time you washed a rented car?

Historical perspective:

Most history books present the Homestead Act of 1862 as the product of a wise and benevolent government seeking to reward worthy citizens of a great young nation for populating the vast Western territories. But that is not really true. Most of the land was already occupied by squatters who arrived disheveled, found a nice spot, built their small cabin, and farmed or hunted to sustain themselves. They could not be evicted or charged with trespassing because a “jury of their peers” was also composed of squatters.

Problems arose when squatters could not borrow money to improve the land because they did not hold a title to it. Legitimate landowners could not value their property if the land next door was untitled. Border disputes resulted in gun battles. Stealing was rampant. The children of squatters could not inherit the land without proper title. There was little incentive to produce anything beyond sustenance. When services and capital projects were required to support the increasing population, there was no tax base. Not unlike Facebook, this new frontier could not be monetized.

Wisdom in Government; not always an oxymoron:

Perhaps the greatest moment in government came with the realization that it is impossible to change the behavior of people, rather, the best strategy would be to accommodate what they are going to do anyway. So they legalized the squatters and gave them deed to their land. The occupants could sell or capitalize as they wished. Investment capital flooded the region and entrepreneurs improved the land and created enterprises. The government could then collect taxes proportional to the productivity of the citizens. The result was the development of the Western States as economic powerhouse that we know today.

Use it or lose it:

A very similar opportunity is presenting itself to Facebook and now the road to monetization should be crystal clear. They should go out of their way to create terms of service that protects the rights of each and every member to own and control their content in its entirety, forever.

Next, Facebook should develop applications that allow advertisers to bid for impressions directly with the users compensating them for their time. Users will build profiles that attract those seeking opinion, knowledge, feedback, wisdom AND SALES related to their products. Users should be able to control every aspect of their content including any means that they can dream up to legally create revenue from their social capital, creative capital, and intellectual capital. Facebook should develop a knowledge inventory of what users know and make it available to others like a “Public Library or knowledge assets”. Then they should develop applications to match knowledge surplus to knowledge deficit, etc. Let the trading begin.

The answer in their face:

If smart people can make money using Facebook just by doing what they are going to do anyway, they will flood the system with the most tangible forces in nature; social capital, creative capital, and intellectual capital. If Facebook can’t figure out how to monetize the asset staring them in their face, they will soon encounter a more powerful competitor – their own users.

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The Résumé Must Die

By Admin

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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Web 3.0; An Elephant Never Forgets

By Admin

On December 18, 2008

In General Information

The opportunity for America reminds me of the elephant that is convinced since birth that the slender rope tying him to the fence post is stronger than he. When the elephant grows up, he still believes the rope is stronger even though the elephant now has gained the strength to pull the whole building down. Americans are the 8000 pound elephant in the middle of the room. The question on everyone’s mind is: what will the elephant do next?

Throughout history, economists have determined the structure of business, enterprise, and commerce and wisely the government complies. With remarkable success over the last 150 years, corporations had been the source of most innovation sufficient to support the value of a currency. Fortunately, the corporation had become the center of economic policy while the knowledge inventory within them have been fenced inside the accounting term: “intangible assets”. Unfortunately, our corporations can no longer innovate efficiently enough to support the debt. Witnessing GM facing up to this very question, while the government manufactures money like taffy, seems a lot like feeding sugar calories to an elephant that is too big to fit out the door, dead or alive.

What the economists and many of the great visionaries of out time do not anticipate is the emergence of computer enabled society and the tangibility of knowledge outside the corporate structure through developments of social media. Web 3.0 is supposed to bring us a semantic web – a computer program will be able to read the elephant story above and determine whether it is about education, zoology, macramé, Interior decorating, taxidermy, building demolition, or cliché old business metaphors. Perhaps this is our little rope tied to the post as we wait for Mother Corpora to provide solutions. Get a grip, the only computer that can read, classify, and extract a thousand words for any photograph is between our collective big floppy ears. Web 3.0 will be semantic alright, except by the integration and capitalization of human knowledge through social media.

We spend billions on a human genome project to inventory our DNA, but nothing to inventory the knowledge as it exists naturally in society. We will build statistical models to forecast weather, elections, click-throughs, insurance, demographics, and mortgage risk; but nothing to predict the value of various combination of social capital, creative capital, and intellectual capital in society. We have search engines that match most worthy blog to most worthy keyword, but little to match most worthy mentor to most worthy apprentice. The top reasons why start-ups, businesses, innovations, and markets fail are due to the wrong knowledge in the wrong place at the wrong time. It seems that if we solve the knowledge inventory problem, then we can solve the innovation risk problem. That, in turn, will solve the money problem which solves the elephant problem. We need to release the great “intangible asset” into the wild world of tangibility and trust that it knows where to go.

Sometimes it just takes someone to give us permission to do things differently. So here I go: human knowledge is the most perfect, predictable, flexible, and valuable capital asset in our world. Knowledge can become far more tangible than anyone could have ever imagined. Information, knowledge, and innovation are profoundly related – separated they are useless, integrated they are wisdom. Everyone on earth innovates every day, period. The vast majority of people will do the right thing given the right incentives. With the next development of the Internet, we will have the tools to organize ourselves in a far more efficient manner than the command and control structure of a traditional corporation. Management can be outsourced too. Corporations respond to corporate priorities, social networks respond to social priorities. Which one sounds like a business case to curb global warming?

The Ingenesist Project specifies three web applications which if developed and deployed to social media will allow social capital, creative capital, and intellectual capital to become tangible outside the construct of the traditional corporation and inside social networks. Just because people have never organized themselves in an open sourced innovation economy before, does not mean that they never will. But once they do, well, let’s just say that an elephant never forgets.

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The Great Convergence

By Admin

On December 8, 2008

In General Information

Hey Kids, It’s 3D:

The objective of this article is to discuss the Great Convergence of computer enabled society. Social media must not be allowed to converge to a single apex – rather, it must converge to 3 distinct and tangible dimensions.

The factors of production for the industrial economy are land, labor, and capital. If you lose one, you can’t use the other two to build an SUV, for example. The factors of production for an innovation economy are social capital, creative capital, and intellectual capital. All production in the new economic paradigm will result from the allocation of a “secret sauce” of social capital, creative capital, and intellectual capital. Again, if you lose one, you can’t use the other two to build anything meaningful.

The congregation of congregations:

In order to find The Great Convergence, we simply need to examine Social Media to discover where social capital, creative capital, and intellectual capital tend to congregate.

One of the more obvious illustrations appears to be playing out between LinkedIn, Facebook, and Myspace. Many people use Linkedin for professional contacts (intellectual Capital), other people use Facebook for friends, family and more diverse associations (Social Capital), while many others use MySpace to post videos of their rock band, Artwork, or to discover the latest Mash up (Creative Capital). Of course there are many more social networks, lots of cross talk, different demographics, rants and raves, etc. I intentionally leave this analysis sparse as these conditions simply reflect the nature of The Great Convergence.

The Next Economic Paradigm:

We need to watch The Great Convergence with laser focus and deep personal interest because it will be extremely important for the development of what comes after the knowledge economy. Whatever form this next economic paradigm takes, globally and locally, will depend upon The Great Convergence. The Innovation Economy is the only wrench left in the toolbox for resolving the vast global problems that we face today.

The Innovation Economy must end global warming, restore financial accountability, enact sustainable enterprise, and institute renewable energy – or not. This is a huge burden to ask of the next “greatest generation”. It is clearly in everyone’s best interest to identify, encourage, and support The Great Convergence to form in 3D, before the old single-apex game “resets” and starts all over again, perhaps for the last time.

[The Ingenesist Project discusses this concept at length and identified various predictions, methods, and scenarios, including specifications for an Innovation Economy.]

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Finally, A Definition for Innovation

By Admin

On December 5, 2008

In General Information

Innovation: The rate of change in knowledge with respect to time

[In earlier post we identified the 5 essential elements of a market economy. What would be the currency of an innovation economy? Currency is anything that serves as a medium of exchange, a stored value, and a standard of value. Basically we are asking; What are those things that people are out in the World trading among each other today?]

Today, innovation is repeatedly cited as the only thing that can get us out of the financial/environmental/sustainability conditions that find our ourselves in, yet the most common definitions for this term are deeply and tragically flawed.

Most definitions for innovation boil down to: “a new idea introduced that has an economic outcome” or “something new that is useful”. While these definitions match some observations, they are reflective and “You know it when you see it”. As such, there is little to define innovation before it happens or to make more of it from this definition. It is like defining “Art” as the thing that people stare at. Unfortunately, this is just the beginning of our troubles.

“Innovation is a new idea introduced that has an economic outcome” is impossible.

This definition defines one unknown quantity (innovation) with four other unknown quantities: what is new; what is an idea; what constitutes “introduced”; and what is an economic outcome? From High School Algebra we know that you cannot solve one equation with two unknowns – let alone four. There is little that you, I or anyone else can do to satisfy this definition. Therefore, it is not useful.

Granted, this definition sells plenty of ad copy as the guru of the week wax-poetic over those four pesky unknown thingies. I found one consultant who claims that innovation has 51 variables and only he can solve that matrix – for a price.

What is the truth about the phenomenon of Innovation?

A useful definition must clarify the subject in a manner that is repeatable and measurable.

If we look at history we know that economic “benefit” and innovation are mutually dependent – you can’t have one without the other. Wealth has been created by increasing human productivity through innovation in agriculture, manufacturing, computers, etc.

Next, we observe that information, knowledge and innovation are also mutually dependent – you cannot have one without the other two. Wealth is created by integrating information, knowledge and innovation.

Next; look at our society; everywhere we turn, people are collecting information from each other, building their knowledge, and innovating together, i.e., coming up with better ways to do things. All of these little exchanges obviously add up to something because things like IPods and Airplanes get built and lots of stuff rolls off assembly lines.

Innovation is anything that increases human productivity

Next we can say that information, knowledge and innovation can be related as follows:

Information is defined as facts and data

This should not surprise anyone.

Knowledge is proportional to the rate of change of information (facts and data) over time.

This is a little trickier to grasp. But any good teacher knows that information must be introduced in a certain order and at a certain speed before the information can become knowledge – this is called learning. Learning is a mental process for turning information from a book, a lecture, or personal experience into knowledge that can be used later. Therefore, knowledge is proportional to the rate of change of information and can only exist inside a person’s head.

Innovation is proportional to the rate of change of knowledge over time

trickier still, but for example; everyone has had an ‘Ah-Ha!’ moment during a brainstorming session, some incredible event that we witness, or even after some real bad mistake that we made. The Ah-Ha moment is a spike in our knowledge that happens in a very short period of time. Innovation is related to this high rate of change of knowledge. Then we blurt it out, or write it down, or make a sketch, give a lecture, in the form of information, etc.

Definition of Innovation:

a. Innovation is anything that increasing human productivity.
b. Innovation is proportional to the rate of change of knowledge and information.

Admittedly, not as sexy in the sound bite but this definition does include all conversations, sketches, dreams, and ideas of all people on Earth and allows them to combine with the sketches, dreams, ideas, of all people on Earth to become designs, methods, and processes which further combine to become products, systems, and institutions, etc.

Let entrepreneurs worry about the economic outcome

Since innovation can be difficult to observe directly. Our new definition allows us to use a proxy that is easier for entrepreneurs to see. For example; if you want to identify innovation as it is happening, simply look for high rates of change of knowledge in a community. If you want to create innovation, do things that create high rates of change of knowledge. Likewise, if you want to identify knowledge, look for high rates of change of information. If you want to create knowledge, do things that create high rates of change of information.

We need to give the entrepreneur a game they can win. The key is that everyone must be included in the game. This is a definition that can be used by anyone and everyone, in fact, it already is.

notes:

[Anyone familiar with differential Calculus can see an equation forming where Innovation is the derivative of knowledge and knowledge is the derivative of information. Calculus is the study of change like geometry is the study of space. Since the mathematics is beyond the scope of this article, I’ll finish with the following analogy for defining information, knowledge, and innovation more intuitively: “Information is to knowledge is to innovation what distance is to velocity is to acceleration”]

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The Next Great American “Hail Mary” Pass

By Admin

On December 2, 2008

In General Information

The Game

The knowledge economy will be outsourced to low cost countries. There is little rational analysis that suggests otherwise. Information, knowledge and innovation are profoundly connected – lose one and you lose the other two … and so goes our innovation potential. The very technology invented and developed by American knowledge workers is the exact same technology that now constrains them. This is not the fault of corporation or of the financial system – they are behaving exactly as expected; a dog will hunt. This is the limitation of the knowledge economy itself – let me explain.

It is very easy and inexpensive for the rest of the world to just watch what the United States does, copy what works and reject what does not work, and then effectively compete. The rest of the World now speaks English so they can now jump on the Internet and learn everything they need to know about us while we are largely unable to reciprocate. In addition, money is global and does not need a visa to work in another country. All of these things stack up against both the US knowledge and foreign knowledge workers. If left alone, these conditions will not go away any time soon.

As a nation, America is either at the edge of something really good or something really bad. We need to do something so radical, so audacious, and so creative, that the rest of the world will shake their heads in disbelief at how America always comes up with an unbelievable play just when the game looks like it is over. It’s called The Great American Hail Mary Pass.

The Competition

First we must realize that America does not have anyone else to copy or compete with in order to climb to that next rung on the economic development ladder except ourselves. Many Americans are in denial that we too must also develop just like we claim other countries must do. In the past, we have relied on shocks to the global system in order to move forward; usually in the form of wars, but obviously, as a modern innovation strategy, warfare has severe limitations. Maybe we just don’t know how to develop on our own. Perhaps the current financial crisis may be the disruption that we need to see those next few critical steps that we need to take.

The Field

Here are some other historical facts to consider. Like all previous development phases, the next economic paradigm will be derived from the earlier economy by integrating the tools of that earlier economy – in this case, the knowledge economy. We have painfully learned that intellectual capital can be found and duplicated almost anywhere on Earth. However, social capital and creative capital cannot be easily sourced elsewhere. Both China and India have political or cultural constraints on social capital and creative capital – so they cannot compete with us here. This is where the next Great American Hail Mary pass needs to go.

The Team

America has a distinct comparative advantage over most of the World in our cultural diversity, global language, and freedoms of assembly, expression, and association. In addition, and likely as a result, America is inventing one of the most profound technological advancements in human history. One which has the potential to secure American economic prosperity for many generations into the future.

The Play

Social Media has the potential – if we are clever – to allow human knowledge and interaction to become tangible outside the construct of a corporation. The new economic paradigm will have factors of production of social capital, creative capital, and intellectual capital, instead of the classical land, labor, and monetary capital model. That means that a team, community, or a social network can be capitalized directly much like a corporation, or any financial instrument in itself, as a means toward increasing human productivity. Admittedly, and as space allows, this is a very vague definition of an innovation economy, but the implications are sweeping and vast. A more detailed structure and description is specified at https://ingenesist.com.

The Ball

It is imperative that knowledge workers recognize this opportunity. We must have a national conversation about the next great leap and not just dwell on the current quagmire or roll over while the dark ages set in. It is essential that we recognize our responsibility to ourselves, our communities, and the planet to build a sustainable economy that reflects long term social priorities rather than short term profit taking – this is ultimately in the best interest of even the short term profit takers! Finally, it is our responsibilities to continue developing this great Internet technology that the generation before us created for peaceful, open, and productive means; and obviously never intended to enable a race to the bottom.

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Social Media; The Opportunity of a Century

By Admin

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 Admin

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 Tangibility of Knowledge

By Admin

On November 9, 2008

In General Information

Knowledge Tangibility should be the most important conversation in Social Media circles given the current financial situation in America.

I lived through financial devaluation in another country and the effects were crushing: after the run on the banks, there will be a run on Walmart. People will buy TVs, small appliances, shoes, and useful stuff that will hold more value tomorrow that they cost today. These items may become a de facto currency of trade. Americans will be astonished by how fast a devaluation event plays out; hours and days, not months or years. When things settle down, the government will retire the old dollar and introduce a new currency at an exchange of, say, 1 megabuck equals 1000 old dollars. Then the chips are cleared, assets are transferred, and the same game can start all over again.

The difference is that for the first time in history, there is a window of opportunity for social media technology to break this cycle. Please let me explain:

Suppose that a BMW costs $50,000 dollars and a KIA costs $10,000 dollars. These prices reflect the quantity and quality of the car in terms of availability and popular amenities such as, handling, road noise, comfort, status, etc. Suppose the government introduces a new currency called the “megabuck”. Suppose the government pegs the megabuck to cars saying that all cars will have a value of 30,000 megabucks. Since these cars are not equal, people will begin trading; the BMW will be bid up to 50,000 megabucks and the Kia will be bid down to 10,000 megabucks based on supply and demand – right back where they started.

Admittedly an oversimplification, but the point is does not matter what you call the currency – the most important thing is the quantity and quality of the asset. This brings us back to the idea of knowledge tangibility.

Suppose that, on average, 1 hour of human labor is worth 20 megabucks. As above, hard labor will be bid up while soft labor would be bid down. The same is not really true with knowledge because knowledge is invisible and it can’t be counted with bricks or bushels. There is no knowledge inventory in America’s communities. Therefore, there is no way to establish supply and demand for knowledge assets. People in a community do not know what other people in the community know. This is where social networks will make a huge difference.

Human knowledge, if formatted correctly, would make an excellent asset upon which to peg a currency. Today, accountants say that human knowledge is “intangible” but social media demonstrates otherwise; human knowledge is simply invisible – hidden inside corporations under the thumb of Wall Street. Social media demonstrates that knowledge assets are itching to be release to the public domain in a highly tangible manner. Believe it or not, we are now 95% of the way toward real knowledge tangibility today. We should be very excited about this because everything changes.

Like the example with the cars, we need to have a comprehensive inventory of the knowledge assets in our communities so that they can be strategically combined into productive organizations. This inventory must be formatted in terms of quantity and quality and include all knowledge living including social, creative, and intellectual capital. If done correctly, it will not matter what happens to the dollar or what currency is used as a scorecard, the value of human knowledge assets will remain intact.

Again, the value is in the asset, not the currency – it is in you, me, and our diverse communities who will favor community priorities rather than Wall Street priorities. This is how where we will find equity, sustainability, and fairness in a capitalist system.

The Ingenesist Project has specified exactly how to create knowledge tangibility in a capitalist model using 3 simple web applications for Social Networks; a Knowledge Inventory, a Percentile Search Engine, and an Innovation Bank. Please read the intro and the articles on page IEc101. If you agree, please pass it on. If you do not agree, please help us make it better. If you don’t understand, email me. This needs to happen fast and unfortunately nobody will do it for us – we must do it ourselves.

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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.

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The Credit Score Analogy; Part 2

By Admin

On September 17, 2008

In General Information

Now we look for a similar situation for Knowledge Markets.

In the cuurent times, the hiring manager is the person to know if you want to get a job. The manager would read your resume and compare it with “bell curve” in their brain about what has worked or not worked in their past. This was a great system for the industrial economy, but it falls far short in the innovation economy.

The world is evolving so fast with new technology, new disciplines, and global cultures that what worked in the past may not work in the future. Innovation favors different combinations of knowledge where the Industrial economy favored similar knowledge. A hiring manager may not accumulate sufficient experience in a lifetime to make a proper assessment in the complexities of a diverse, global, and technical future market.

If we look in society, there are many vetting mechanism in place. Social networks are by far among the most exciting and important new technology that can serve this purpose. Social networks must now evolve to become a local vetting mechanism for knowledge assets.

Just like the reporting agencies in the credit system, Social Networks can serve an extremely valuable function in permitting human knowledge to emulate a financial instrument by acting as the “Recording Agencies” who have verified the asset in terms of quality and quantity. The knolwedge Inventory acts as the independent variables that are used to calculate the probability of market success. The difference is that the credit score measures mostly negative events while the new system will seek only positive events and can be designed to give the participants much greater influence on how they appear to the market.

One thing is missing. The credit score uses the FICO equation; Innovation Economics will use something called the Percentile Search Engine.

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The Credit Score Analogy; Part 1

By Admin

On September 17, 2008

In General Information

We have defined the currency, the factors of production, and the inventory of the Innovation Economy; we destroyed the old resume system and turned it into a computer language that makes knowledge appear like money in the eyes of the entrepreneur.

Now, we need a system that keeps the game free and fair. For example; EBay does little more than protect the feedback system, Craigslist uses community flagging, Linkedin keeps track of comments and contacts, etc. All markets must have a vetting mechanism in order to operate efficiently. Entrepreneurs do not invest in places without a good legal system and where property rights are not protected. When vetting fails, investors leave – It is that important.

In the Innovation Economy, the knowledge market is analogous to the credit market.

In the old days, the banker was the person to know if you wanted to be successful in town. If you needed to borrow money to start a business or buy a house, the banker would review your work history and financial records as well as your reputation in the community where you both live. If you were deemed an acceptable risk, the banker would lend you money from the deposits of local companies and individuals.

Then an engineer named Bill Fair and mathematician Earl Isaac created the first behavior scoring system to predict credit risk. They formed the Fair Isaac Corporation FICO and their invention came to be known as the FICO credit score. With the credit score, the local banker is almost irrelevant; now a Saudi Billionaire can lend money to a young couple in Boise to buy their first home – and neither of them are aware of the other. The credit score is responsible for the creation of a lot of wealth because it made many more entrepreneurs who invested borrowed money in business. The credit score even allows you to recover if you hit hard times – you just pay more a little interest until you prove yourself solvent again.

The credit score isolates about 22 or so measurements of financial activity and puts them on a bell curve relative to everyone else. These include how much debt you have, how much your assets are worth, your income, etc. These ratings are run through the FICO Equation and out pops your credit score. Anyone can now predict the likelihood that you will default on your obligation.

All of the data that feed FICO are collected from public records, your employer, and the people who you borrow money from – all of these organizations have a vested interest in a system of correct credit scores.

It is interesting that you and I do not compete for our credit score because it is not a ranking system. The old saying “No credit is worse than bad credit”, although inaccurate, is cited often because with bad credit, you are visible to the system and it can adjust to find a suitable interest rate. With no credit, you are simply invisible.

We lose some privacy with FICO, but we accept these terms well because they provides us with tremendous benefit to finance a business, automobile, or a home without needing to save cash. Likewise, we lose some privacy engaging each other on the Internet and in our community, however, the benefit of Social Networks far exceed many perceived privacy issues.

My personal complaint with credit scores is that they track largely negative events and seem to predict failure. What if we had a system that tracks success and used that data topredict varying degrees of success.

In the next section, we will identify the institutions that exist in society and how Social Networks can act to duplicate the benefits of the credit score without the downsides….watch

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