Tag: standard deviation

In American society there is a persistent ideology of winners and losers; there can only be one winner and the rest are losers. We rank things in a very linear way; 1st, 2nd, 3rd, etc. Sports analogies dominate many business expressions; low ball, hail mary pass, ball’s in your court, etc. Our culture is to protect one’s position at all cost, shield away all attackers and decimate our competition. This way of thinking was effective in the industrial economy but today with the emergence of social networks it keeps us from understanding how knowledge actually exists in a community – it lives on a bell curve.

If I examine a group of people on the streets of Seattle in the area of mathematics – I would get a bell curve. If I examined engineering school students in mathematics, I would still get a bell curve. If I examined engineering professors, I would still get a bell curve.

In the Innovation Economy, there are no winners or losers, only different markets. There is a perfectly legitimate market for a Ferrari and there is a perfectly legitimate market for a KIA – in fact the market for KIAs is bigger than the market for Ferrari, so the idea that we compete with each other may no longer be appropriate. In fact, according to game theory priciples, it may not actually be the best strategy to be number one in a single talent – rather, being slightly above average in many diverse talents, on average, pays more for the majority of people engaged in innovation economics.

This is important. All of the tools, methods, and equations in the world of banking, finance, and insurance use interpretations related to this type curve when they try to figure out the value of an asset in the particular market. This is very important for making knowledge look and behave like money. Again, there are no winners or losers, only different markets.

We will need to come up with a way to sample and normalize knowledge in a community. In some ways we already do: Ebay uses a rating system, we rate comments on blogs, best answers to questions, Google placement, number of contacts, college GPA, credit score, etc. So rating are everywhere – there is nothing new here.

Here is what we need to do to make knowledge tangible in a community: when a local community of practice meets, everyone needs define the knowledge that the community shares, then everyone needs to find their place on the right bell curve. Each specialty and proficiency level is a different market. For example, a photography community there may be some competition for who can operate a camera better – but there is competition anyway. The competition disappears when one photographer is also a musician and nature enthusiast while another is also a baseball player and likes political contests. They would each own a unique market; still life and action respectively – and they can now cooperate instead of compete.

In fact, rather than fighting for first place by beating up your competitors, the best strategy in a market may be to have an average level of expertise in as many subjects as possible rather than being the best at one or two obscure areas. It depends on the market – it always has and it always will.

An entrepreneur will not make a bet without odds. We are giving the entrepreneur the information that they need to create wealth. Again, There are no winners or losers, only different markets.