Tag: value

We Got It Backwards

On October 4, 2010

The History of Financial Innovation

The invention of the wheel, wedge, and pulley came long before the invention of credit scores, CDO’s, and International Trade Agreements.

Technological Change must always precede economic growth – economic growth cannot sustainably precede technological change. If you throw money at a problem, you are not guaranteed technological change. If you throw technological change at a problem, you are guaranteed money.

The Tiny Flaw of Market Capitalism

We are going about the process of globalization as if economic growth can precede technological change. This is the tiny flaw of market capitalism and it is unsustainable. In short, we’ve gotten it backwards and continuing on this course prevents us from seeing the future.

The flaw is easy to correct. The Ingenesist Project has specified two for-profit business methods, “The Value Game” and “Zertify.com” which if deployed today in Social Media could accomplish this. These business methods are committed to the public domain. The only thing standing in the way is a social agreement.

Let me know if you agree

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Social Capitalism And The ROI For Social Media

By Admin

On September 9, 2010

In General Information

Social Capitalism can be summed up as Classical Capitalism except with the factors of production swapped from “Land, Labor, Financial Capital” to “Social Capital, Creative Capital, and Intellectual Capital”.

This video introduces a new way of looking at social media valuation. It should be obvious by now that people create value in social media – otherwise they would not do it. The monetization paradox is stuck on “how can this value expressed as a financial instrument”?

If you engage your clients in the same currency that they are trading among themselves, the greater the likelihood you will realize the value of the new media phenomenon.

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The Mastery of Time

By Admin

On September 4, 2010

In General Information

When I was in Music School, I learned some very important things about Time.

As a drummer / percussionist the mastery of time is more important than even the instrument itself. My instructor would place a metronome in front of me and ask me to clap my hands to the beep. If he could hear any part of the beep through my clap, I failed.

The expectation was that I must mask every beep entirely at any tempo – indefinitely and seemingly without effort. The truism is that if the instructor could not hear the beep, then neither could I. True mastery of time means that the metronome must become irrelevant.

I struggled with this challenge for an incredible amount of hours over many many months practicing this seemingly simple exercise. One day, my instructor said “it’s not about knowing where the beep is, it is about creating the space where the beep is not”. In other words: understand the space between the beeps – the emptiness, the void, the silence – and let that become the basis of your musical expression.

From then on – I could nail the beep.

When we listen to music, we derive value from the transformation of one beat to the next and the transformation of one bar to the next, one phrase to the next, and one section to the next, etc. Value is what gets created between our actions – but without actions, there is nothing to contain that value.

Social currencies resemble this dynamic in many ways. While money marks the metronome’s beep, the creative expression happens somewhere between the money – the emptiness, the void, the silence. Let this become the basis of human economic expression, not the beep itself. Value is what gets created between our actions – let’s capture it there. The true mastery of time means that the metronome must become irrelevant.

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Social Capitalism and The Innovation Bond

By Admin

On August 18, 2010

In General Information

We know the Venture Capitalists look for returns of 1000% on their investments. We also know that Corporate innovation (as reflected by the S&P 500) enjoys a long term median return rate of about 9-10%

It follows to reason that all of the innovation that could return somewhere between 10% and 1000% goes largely un-capitalized. This does not mean that the innovation does not exist – it only means that it is invisible to any existing financial system, it is accounted as “intangible” – or worse, it shows up as a liability.

Parents caring for children, Children caring for elderly parents, Mentors educating proteges, groups of people organizing, sharing knowledge, and growing families – all increase the net productivity of society. Legions of people creating options and opportunities for themselves and each other in communities, social media, and extended networks – all increase the value stored in communities. Billions of people-hours inventing better ways to do the things that they do, compensating for the shortcomings of governments and corporations – all of this innovation falls into the range between 10% and 1000% ROI, yet, remains invisible and un-capitalized.

Social media as a whole is growing at well over 200% per year where every single interaction creates incremental multiples of social value – otherwise people would not do it (to say that people are irrational is to say that markets are irrational). Where is all that value going? Meanwhile, in the current Global financial debt crisis, institutions that hold huge amounts of cash are scouring the globe for pockets of low-risk productivity as sanctuary from volatile financial markets.

Now, suppose that an innovation bond were to come along which produces a risk adjusted return of, say, 15%. This means that human productivity is being reliably increased somewhere in a community by only 15% per year. If this were the case across a broad sector of inter-related communities where productivity were denominated in a fungible currency, investors would seek refuge in the Innovation Bond. If the Innovation Bond returned say, 20% or more – all the money in the world may drop the debt based currency in favor of the innovation based currency by seeking refuge in innovation bonds. Yes, I said it – “all the money in the world”. Now, get over it.

Proceeds would be distributed to organized communities whose knowledge inventory is formatted like a financial instrument in the form of entrepreneurship. Proceeds would go to communities where the probability of success is known long before the bets are made in the form of Cheap Venture Capital. Proceeds would go to communities where productivity is defined by an un-corruptible algorithm through decreased volatility coefficients. Proceeds would go to communities where assets are valued accurately by true supply and true demand. Proceeds would go to less developed communities with the highest social arbitrage potential rather than those with the most powerful marketers and lobbyists. Most importantly, money would go to corporations that adopt the innovation economy. The stronger the institutions of Social Capital become, the greater the value of an innovation bond. New production of goods and services would reflect these social priorities in the True Value Game.

In effect, Social Priorities will drive Wall Street priorities instead of Wall Street priorities driving Social Priorities – that is Social Capitalism

In the future, there will be only one sustainable investment left – people, communities, and their natural willingness and ability to be productive with their time. The rest is history.

***

Material based on video series here

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Trading Money in for Value

By Admin

On May 14, 2010

In General Information

Money is a convenient way to store and exchange value. Unless the world enters into a free trade agreement with Martians, Earth is the physical boundary of all existing value.

No matter what a monetary currency is called or how it behaves in the financial system, by definition, it can never represent any more than the value that exists on Earth.

Value is reflected by “Market Capitalization” of corporation, Roads, Bridges, infrastructure, armies, education, food, real estate, and all so-called tangible things. Intangibles such as human resources, public assets, and shared natural resources are only valuable to the extent that people depend on those resources for survival. Not surprisingly, “tangible” means all things that can be controlled and “intangible” means everything else.

However, if you look at how all value is created, it all eventually boils down to human knowledge. All control and influence over human knowledge boils down to the individual. All Value on Earth is stored between our collective ears. In order to fully assess the global financial system, there must be a corresponding global inventory of human knowledge. There is no body of any influence in the world proposing this as a means of defining solvency.

Meanwhile, the social media revolution is slowly introducing a global knowledge inventory to financial markets with effects that are becoming increasingly profound. In case you have not noticed, money no longer represents value, it represents the control of value. Social media is disrupting who, what, when, where, and how all the value can or cannot be controlled.

With every new exotic financial maneuver, the monetary currency becomes increasingly divorced from the value of human productivity. With every new advancement in social media applications, human productivity is becoming less controlled by money. Watch the news – the battle fields are all about who what when where and how someone can control what is between your ears.

Not surprisingly, governments, marketers, advertisers and even academia are the first and most public victims of losing control of their message. Their message is being re-written by forces outside their control.

This is serious – Don’t let anyone try to convince you that the value of social currency is not hedging the value of financial currency.

Today, we are on the cusp of the greatest revolution that the world has ever known. The control of money may go to the banks but the control of value will not. It will happen when people decide it will happen. Perhaps they already have…2012 anyone?

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Social Currency and Anonymity

By Admin

On April 24, 2010

In General Information

The subject of privacy and anonymity are again rising up with the latest move by Facebook to integrate updates across the Internet onto the Facebook platform.

Conspiracy theories about Facebook and the CIA continue to flourish. Meanwhile, the marketing and advertising industry seems poised to reboot their dwindling influence under a new cloak and dagger of social media data hustling and predictive demographics rather than playing by new rules of engagement.

Money is one thing and value is another.

I am astonished that people willingly and freely give up huge volumes of information about themselves when they really don’t have to. In earlier times, marketers and advertisers would pay a great deal of money for far less information that people give them for free. People do not understand the value that is stored between their ears or how easy it would be to set up an alternate economy that trades in social currencies.

If advertisers can pay someone to cold call me, to graph my data across the web, or sneak around my social networks, then they can certainly pay me to answer the phone.

The Ingenesist Project specifies an Innovation Economy built on the platform of social media. While that thesis is extensive, let me summarize that the primordial soup of the Innovation Economy is called the Knowledge Asset Inventory.

Anonymous assets

One essential element of the new economic paradigm is the ability to combine knowledge assets so that innovation becomes predictable and therefore capitalized. However, a side effect is that such code makes the individual containers anonymous. Marketers will have to pay you to find you. here is why:

Now think about it this way – if you remove 20-dollar bill from your wallet to buy a Latte, you do not know (nor do you care) whether the last transaction performed by that 20-dollar bill was a donation to a charitable cause or a drug deal. The dollar bill is anonymous – but you, as an asset, are not.

Social Currency is a Social Imperative

Dollar denominated money is a system to control social currency at a leverage factor of 1000:1. Take away the dollar currency, and the leverage disappears. Add a social currency and the national debt disappears.

Almost as a bonus, it is an absolute impossibility for marketers and advertisers to store and exchange value denominated in a social currency without extraordinary changes to the way they engage their clients….like, uhm, …don’t waste our time.

If we are smart, we can shut down the privacy issue in a hurry – anonymity of knowledge assets is the key.

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The 1:1000 Rule; A Social Currency Imperative

By Admin

On April 22, 2010

In General Information

What’s the difference between money and value?

Today, I saw yet another doom gloom economic forecast with the proverbial exponential graph of interest-on-debt climbing out to the stratosphere. The prognosis is the same; all bad, very ‘all bad’ things will happen.

So I wonder, to whom is all this interest being paid? Where is all that money stored? It has to belong to someone or be represented by something on the planet Earth, after all, money makes the world go around.

The 1000:1 rule

If I were to take, for example, NOA, the National Oceanographic Agency, and ask someone a Goldman Sachs to place a value on it, they would add up the replacement value of all the ships and weather satellites and come up with a number like, say, 4 Billion Dollars.

Now, if I were to calculate the increase in human productivity that result directly from the ability to forecast the weather – for the purposes of food production, managing all modes of transportation, Energy production, and tangential resource allocation – the value of NOA would be in well in excess of 4 Trillion dollars. This is a factor of over 1000 between the value of the same object in financial currency and social currency.

A bridge spans a waterway and carries 50,000 cars and trucks per day. An alternate route would take each vehicle at least 1 hour longer per day to cross the waterway. 50 billion dollars worth of social value is created over the life of the bridge that cost 50 million to construct; a 1000:1 leverage ratio.

A single Boeing 747 costs 100 million dollars but increases human productivity (including influence ripples) by 100 billion dollars over the service life of the aircraft compared to the nearest alternative mode of transportation. Again, 1000:1

That’s the difference between money and value.

The problem arises because our financial system is not able to articulate true value of social currency using a dollar denominated currency so social value remains invisible, not non-existant. Maybe the financial system does not want to articulate social value. After all, dollar denominated currency represents control of social value at a ratio of 1:1000. It’s about control

9.6 Trillion dollars was spent to educate every American. Just because a “corporation” does not exist to employ them and utilize their talents to the highest productivity level, does not mean that the talent and value does not exist. According to the 1:1000 rule, The GDP of the US in Social Currency is a minimum of 9,600 Trillion. What deficit?

It is about control. The dollar has a 1:1000 control leverage over social currency. It is not at all surprising to see social media expand at the rate proportional to that which the doom-gloom crowd predicts that the financial system will collapse. They are related, they hedge each other. Don’t let anyone convince you otherwise.

Again, the imminent collapse of the financial system – no matter what the ‘doom gloom’ crowd says – does not mean that value does not exist; it simply means that the dollar will no longer control the value; that is, the social value wedged between people’s ears is free to be capitalized and securitized directly. We need to capture social currency in a new financial paradigm.

Social currency is not a buzz word, it’s an imperative – it is the Ingenesist Project

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Dollar vs Rallod-A Mirror Image Economy

By Admin

On February 4, 2010

In General Information

The problem with the American Dollar is that it is backed by future productivity in the form of debt – that is, our “promise” to pay off the debt. We know this because if America signaled that it was not willing or able to pay it’s debt, the dollar would cease to be used as a trading mechanism.

Innovation is also a promise backed by future productivity. By innovating in a new processes, method, system, or product today you are making a promise to increase productivity tomorrow.

Therefore, debt and innovation are blood brothers or mirror images of the other – they are both “currencies” (means of storing value) backed by future productivity. We can build a new economy around this concept which effectively weeds out the bad parts and keeps the good parts of the institutions and infrastructure that are already in place. After all, two currencies backed by the same underlying asset would be fully convertable

After all, the definition of a crook is someone who steals someone else’s productivity. May the best currency win.

Dollar vs Rallod-A Mirror Image Economy

Update: 03/2015 I recently stumbled upon this definition in a Gamification Wiki concerning the Rallod. Thanks for the shout out!!

Rallod (Dollar spelt backwards) is concept developed by Dan Robles as a social capital currency which is based on the future productivity of innovation. He uses the Bizarro world featured in DC superman comics to provide an explanation of how his concept works. He distinguishes between normal economics revolving around Land, Labour and Capital and social capital which revolves around intellectual, social and creative capital. What is tangible in the normal world is intangible in the Bizarro world and vice versa. Robles believs the two worlds are mirror images of each other.

Visit www.badgeville.com to learn about the global gamification leader

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Video: Intellectual Property in the Social Media Cloud

By Admin

On February 3, 2010

In General Information

The Patent system is slow, static, and expensive. Sure it’s great for corporations and wealthy institutions, but what about the rest of us? How do we get paid for our intellectual property? We make rapid fire decisions every day that can make or break markets – who’s got time to patent?

Or maybe the last thing that Wall Street wants is for Engineers, Architects, designers, and creative people to get “royalties” on their work. That is What Wall Street does, they collect the royalties of the creative people in America….until now. Social media is a social contract, IP is our currency.

Image credit

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Social Isolation Funnel

By Admin

On November 13, 2009

In General Information

You don’t stand a chance.

Social Influence Marketing (SIM) is becoming more sophisticated at finding you in your social space than you are in avoiding Social Influence Marketing (Advertising). A new set of theories and systems have been deployed on how to engage you in conversation, grab your response data, funnel you into the pitch, induce credit card labor, and draw out your social broadcast. Guess what, your social media sites are helping them….

Flirting with the enemy

The greatest problem that social media created for advertisers was to disperse the crowd from the once treasured “captive audience” of the radio/TV days to millions of individual affinity outlets. Blasting the message home is no longer a function of Ad spend. However, marketers are smart and social media sites are corporations too – now these forces are converging with unimaginable voracity.

They have you figured out.

In a quest for monetization, popular sites now provide “data services” to the brands. Such data empowers, once again, the advertiser over the viewer. Why not provide “data service” to the users about what the brands pay for and what information they are mining about users? If Brands are not comfortable with disclosing such information – should we be comfortable about teaching our “human nature” to them?

As social sites increasingly develop stickiness applications to retain the audience, new innovations are directed to that old business TV/Radio model rather than reinforcing the reason why social media emerged in the first place. At some point, it becomes the best interest of the social site to meet the Wall Street expectation of “tangible output” over the user expectation of increased productivity. In other words, keep people glued to the LCD and don’t empower them to enter their communities to innovate social change.

Once users lose the ability to reject a brand message, we’re all right back where we started from.

People need to meet each other in real life to do real things. The best way to retain the original power of social media is to disperse once again. Micro-social networks reflecting communities of interest need to form in proximity to each member. Each community of interest must combine with other highly local social networks to share ideas, create local innovation, and enforce social priorities.

Hide your data in your own data:

Each time a different affinity group meets with another affinity group, the demographic data changes – it becomes renewed, refreshed and remains in the possession of the community. This is where the value is, people can own it of they knew it’s theirs – and Brands can access far more value by supporting communities rather than by isolating communities.

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Building The Social Economy

By Admin

On November 4, 2009

In General Information

The following summary from Hannah Del Porto does a great job in identifying the State of the Art in Building The Social Economy. Such “Thought Infrastructure” is essential to what will evolve into the next economic paradigm. For years, we have specified an Innovation Economy Built on Social Media platform. The thesis is published Here.

The key, we believe, is for the Social Financial System to emulate the critical components of the Monetary Financial Systems that support capitalization. Hence, “Social Capitalism” will emerge as a replacement for both Socialism and Capitalism. We are deeply excited in observing this integration of knowledge assets

Thanks Hannah!!!

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Critical Value of Conversational Currency

By Admin

On September 25, 2009

In General Information

Can the value of conversation fluctuate when compared to a “basket of conversational currencies”? The translation is as follows; If several conversations are taking place at the same time, does yours hold more or less value depending on the value of the others?

Same as a Lie?

If you ask a newspaper whose lead story was trumped by an unexpected celebrity death, the answer is yes. If you tell a political activist whose rational message is lost to more radical activists, the answer is yes. If your speech is interrupted by a heckler, the answer is yes. If you are caught lying about your Nuke Plant, the outcome is unintentionally the same – a loss of credibility, value, equity, and associated increase in risk, volatility, etc.

In today’s world of floating currencies, almost every currency rises and falls against other currencies at one time or another. But a currency that is persistently weak or continually falling relative to others presents a problem. If the dollar’s value were to continue to fall to new lows, eventually this would trigger rising inflation pressures. That’s because inflation can be defined as the loss of purchasing power of a unit of currency.

Inflationary Pressure on Conversational Currency?

Likewise, weak and falling conversational currencies are also bad for growth, since they scare away investment by another conversant. Who wants to invest time and knowledge in a conversation if there exists the real possibility that one’s investment will be eroded by a falling currency? At the very least investors require special incentives (i.e., premiums) to invest in an conversation with a weak currency.

Incentives Packages of Social Media Space

Weak conversational currencies are symptomatic of a variety of factors: cheap talk, lack of references, weak economic growth prospects, lack of confidence in the other participants, weak currency demand, and bad fiscal policies (e.g., wasteful discussion, high cost of participation, low quality venue or presentation). Strong conversational currencies, on the other hand, typically reflect tight topic control, vetting policy, strong growth prospects, confidence among participants, strong currency demand, and good fiscal policies.

The Critical Breath Mint

For better or worse, in order to “mint” conversational Currency, a discussion must be made accessible to largest audience possible. The discussion must also be directed to those most “qualified” to engage in the discussion. When the value of the conversational currency reaches a low level threshold in either factor, the discussion ends with no resolution to continue and no tangential discussions taking place. This can often be attributed to disruptive innovation making old conversations obsolete. But it can also happen to worthy conversations infected by a parasite such as spam, hecklers, radicalization, flame wars, and emotional versus rational articulation, vendetta, sabotage, etc.

Critical Level of Conversational Currency

The critical level of conversational currency is where supply and demand cross. The value of conversational currency will be determined by the ability to match the most worthy knowledge surplus with the most worthy knowledge deficit. We use the financial analogy because the idea is the same – a currency is a currency. Many of the same rules, methods, and calculus hold. What is missing in Social Media are an inventory and accounting system for knowledge assets. While such systems are emerging on FaceBook, Twitter, Linkedin, etc. Some intervention is needed to integrate a social media system we can bank on, literally and figuratively.

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Good Blogging is Good Business

By Admin

On September 24, 2009

In General Information

Bankers do not care about money, they care about the rate of change in money – Interest Rates, ROI, and CAPM make the world go around.

Static web presence is getting squashed by dynamic content. The best party has the best conversation. It’s not the quality of life, it’s the quality of living. Countless expressions in business and culture reflect this idea.

I would like to thank John Ryan for this analysis:

***

More proof that blogging is smart business. Just make sure that whoever is blogging is a good writer and is committed to being consistent.

Otherwise, it will be a waste of time. You can either have your developers include a blog in your web experience or use free tools like WordPress to link to your website.
From Hubspot:

If you blog, you know that it’s good for your business.

But how — and how much?

To answer to those questions, I looked at data from 1,531 HubSpot customers (mostly small- and medium-sized businesses). 795 of the businesses in my sample blogged, 736 didn’t.

The data was crystal clear: Companies that blog have far better marketing results. Specifically, the average company that blogs has:

* 55% more visitors

* 97% more inbound links

* 434% more indexed pages

Why are website visitors important? Because more visitors mean more people to convert to leads and sales.

Why are inbound links important? Because they signal authority to search engines, thus increasing your chances of getting found in those search engines.

Why are indexed pages important? The more pages you have on your site, the more chances you have of getting found in search engines.

****

Thanks again John. The value of any innovation is in the transformation. Starbucks transforms 25 cents worth of milk, beans, and water into a 2 dollar cup of coffee = 800% return. The laws of leveraging conversation applies equally effectively in conversation as in finance where astonishing returns are not uncommon. We really need to start thinking about Conversation like a financial instrument capable of all the capitalistic magic that derivatives, bonds, options, and securitization methods offer.

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It Takes Currency to Make Currency

By Admin

On August 11, 2009

In General Information

If you’re a Flash game developer, you are concerned with how you can make a living from your creative and intellectual services. Fortunately there is a payment system so workable, that it may actually work. Game developers can charge money both for their games, and for things within their games.

Here’s how it works:

1.   Player pays real money to buy fake money within the game.
2.   Player spends fake money on virtual stuff.
3.   Virtual stuff increases the value of the game.

The game developer can technically charge for whatever they like: level packs, hats, extended versions/director’s cuts, etc, etc. The sky’s the limit.

These types of transactions have been very popular in places like Korea for a long time, and it was amusing to see the initial resistance and resentment in North America to the idea. Meanwhile, North American Pioneers of such systems are drowning in money.

The Right [virtual] Stuff:

Now, suppose that Social Media could be modeled after a huge game where people act based on a set of incentives like, say, connecting with friends, accumulating followers for their blog, finding proverbial “gold rings” like employment opportunities, business opportunity, spiritual growth, professional advice, cheap airfare, fun things to do, product reviews, or political activism…just to name a few.

Suppose that in order to get from one level of the game to the next, they need to engage in conversation with another player. Anyone who has been on Linkedin, Twitter, or Facebook long enough knows that the “right virtual stuff” is sometimes hard to acquire. Twitter finally broke the mold with applications that now “sell” followers (I wonder if there were any Flash Developers behind this innovation).

A Mutually Inclusive Game:

Now, suppose the game was mutual such that some players need you a little bit more than you need them and they are willing to invest in your connection. Similarly, suppose you need some players a little more than they need you and you too are willing to invest for their connection. Finally, all players know that a mutual link between two appropriate players substantially increases the value of both players relative to the game.

It Takes Currency to Make Currency.

Immediately the engine of entrepreneurialism will ignite as people figure out new ways to play the game. With a trillion dollar advertising industry, a trillion dollar Professional Placement industry, and a trillion dollar recreation/leisure/entertainment/family industry on the ropes, you can guarantee that innovation will be absolutely intense. Welcome to the Innovation Economy.

(Editor’s note: This article was inspired by a piece authored by Ryan and can be found here)

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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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The New Economic Paradigm; Part 5: The Entrepreneurs

By Admin

On April 9, 2009

In General Information

There is no shortage of entrepreneurs in this world.

6 Billion of them wander the Earth looking for assets that exists at a low state of productivity waiting to be elevated to a higher state of productivity.

The entrepreneur must first be able to identify an asset as an asset. Next they need to identify the lower level of productivity and they need to be able to imagine the higher potential level of productivity. The entrepreneur must identify and manage some risk, perform leadership tasks; and as a result, elevate the asset to the higher state of productivity. Profit is the difference between the lower and the higher state – minus expenses.

Unfortunately, today this process starts at the forest and ends at the junkyard.

This is how our economic system is organized. The next economic paradigm flips that idea over. Instead of accounting for natural resources as the tangible element and human knowledge as the intangibles element; the next economic paradigm must account for the natural resource as the intangible element and the human knowledge as the tangible element.

The current problem is not that knowledge is intangible; rather, knowledge is simply invisible.

The Ingenesist Project will make knowledge assets visible by provisioning all of the information that an entrepreneur now needs to identify the knowledge asset and the associated states of productivity. Entrepreneurs can then increase human productivity using knowledge assets applied to natural resources, instead of natural resources applied to consumption. The implications are vast.

Returning to the financial analogy:

With a financial bank, the entrepreneur assumes that they have the knowledge required to execute a business plan and the go to the Financial Institution to borrow the money.

With an “Innovation Bank” the entrepreneur assumes that they have the money to execute the business plan, and they go to the innovation institution to borrow the knowledge.

While this may sound trivial, the implications are vast:

1. A virtuous circle now exists between society and the financial system
2. Profit is derived from increasing human productivity not natural resource exploitation.

Economics is the science of incentives:

A financial Bank seeks to match a surplus of money with a deficit of money. It is in the best interest of the bank to find rich people who will not need their money for a while, and poor people have the best likelihood of paying the money back in time. The process assumes that the borrower has the knowledge required to execute a business plan when they seek to borrow money. However, that FICO score does not measure knowledge explicitly, so little incentive exists to make it tangible. All of the top ten reasons why businesses fail are due to failures of knowledge. The financial system is collapsing under the weight of failed knowledge.

By contrast, the Innovation Bank seeks to find people who have a surplus of knowledge and people who have a deficit of knowledge about what they intend to produce. The innovation bank then uses a series of statistical calculus (the same calculus as the credit/insurance/risk management professions) to match most worthy surplus of knowledge assets to most worthy deficit of knowledge assets. Here, the opposite assumption is made; everyone assumes that the borrower has the money required to execute the business plan and they go to the innovation bank to borrow the knowledge. People have an incentive to accumulate knowledge.

Simplicity that defies comprehension:

The business plan for the new entrepreneur is deceptively simple to do and nearly impossible to monopolize; anyone can do it not just the wealthy and their chosen few. The next 3 modules will outline how new enterprises will be constructed from the virtuous circle created between the financial bank and the innovation bank. This changes everything …. and did I mention that the implications are vast?

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The Next Economic Paradigm; Part 4: Institutions

By Admin

On April 7, 2009

In General Information

In part 1, we introduced a new paradigm of economic growth; the innovation economy. In part 2, we identified information as the currency of trade for an innovation economy and we defined that currency’s relationship to knowledge and innovation. In part 3 we demonstrated a structure for a knowledge Inventory that would enable an Innovation Economy. In this module, we will discuss the institutions in social media that could keep an Innovation Economy, free, fair, and equitable.

In civil society, there are laws and regulations that protect our constitutional rights; these are essential institutions.

The legal system of the United States is extremely expensive, however, the expenditure is necessary to keep the society upright, productive and prevent it from falling into chaos. Where a country’s legal system fails, so does its economy. Entrepreneurs do not invest in places without a good legal system and where property rights are not protected. It is that important. Investment abhors risk.

Arguably, the most important element of the Innovation Economy will be the vetting mechanism.

Fortunately, social media has the potential to serve this function; in fact in many cases it already does. A feedback system supports Ebay ($35B Cap), community flagging supports Craigslist (40M ads/mo), peer review supports Linkedin (150M users). These are not small numbers. All markets must have a vetting mechanism in order to operate efficiently and if done correctly, social vetting has vast economic implications for an Innovation Economy.

First, let’s return to our financial analogy.

In the old days, the banker was the person to know if you wanted to be successful in town. But with the emergence of the credit score, the “banker” became digitized; now a Saudi Billionaire can lend money to a young couple in Boise to buy their first home – and neither is aware of the other. The credit score is responsible for the creation of great wealth because many more entrepreneurs could borrow money to invest in enterprise.

The credit score is statistical in nature; it isolates about 30 or so indicators of your 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 because these same organizations have a vested interest in a system of correct credit scores.

We are competing with ourselves.

It is interesting that you and I do not compete for our credit score because it is not a ranking system. On the other hand, with no credit, we are invisible and the system shuts us out. With bad credit, the system shuts us out. We lose some freedom and privacy, 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.

Now we will draw the comparable analogy from the social media.

In the old days, the hiring manager was the person to know if you wanted to get a job. They would read your resume and compare it with “bell curve” in their experience about what has worked or not worked in their past. This worked great in the industrial economy, but it falls far short in the innovation economy. Innovation favors strategic combination of diverse knowledge where the Industrial economy favored identical packets of similar knowledge.

Not unlike the FICO score, the knowledge inventory is a collection of statistical variables and the social network is the reporting agencies who have a vested interest in a system of correct values. Unlike FICO however, the variables are infinite and it responds to positive event input.
Social networks are by far among the most exciting and important new technology for an Innovation Economy.

Social networks must now evolve to become the vetting institutions for knowledge assets.

All the pieces are almost in place; now we need to develop a new type of search engine.

The Percentile Search Engine is generic term for the ability to make statistical predictions about all types and combinations of knowledge Assets in a network. Conceptually, the percentile search engine is where all of the equations that we use to analyze financial assets are now applied to knowledge assets. The main characteristic is that the search engine returns probabilities for the entrepreneur to test scenarios.

For example; an entrepreneur may want to know if her team has enough knowledge to execute a business plan. Perhaps the team has too much knowledge and they should try something more valuable. Maybe the team does not have enough knowledge and they should attempt another opportunity or accumulate training.

The search engine can look into a network and identify the supply and demand of a knowledge asset. If it is unavailable or too expensive, the search engine can adjust for price, risk, or options that may emerge at a later date.

Talent will bid up to their productivity value, and brokers will bid down to their productivity value.

Competitors can scan each other’s knowledge inventory to compete, cooperate, acquire, or evade. If a key person retires, the entrepreneur would simulate the knowledge that is lost and reassign people strategically. All of these scenarios can be examines prior to spending money. They can be made during the project cycle, or after the project is completed. Lessons learned can be used to adjust the algorithm perfecting it over time.

For example: companies such as Disney and Boeing both use Engineers, each would have proprietary algorithm of knowledge that represents their “secret sauce” of success. These recipes can be adjusted and improved to reflect and preserve the wisdom of an organization.

When the innovation economy will catches fire….

Over time, these algorithms will far more valuable then the Patents and Trade Secrets created by them – this will allow technologies to be open sourced much more profitably and shared across more industries.

In the next module, we will talk about the entrepreneurs.

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The Next Economic Paradigm; Part 3: Knowledge Inventory

By Admin

On April 6, 2009

In General Information

Welcome back to the New Economic Paradigm Series. The objective is to develop an innovation system that emulates the financial system. In order to do this, we look for the social component that could best duplicate the function of the closest corresponding financial system component.

Part 2 discussed the currency of trade. Part 3 will discuss the inventory of knowledge assets.

Most companies have an inventory of every nut, bolt, rivet, or panel that they need to build something tangible. In innovation economy, we will need to have an inventory to assemble knowledge assets so that we can build something tangible and support the currency.

Your resume is like a book about you. Conversely, every book that you have read has become part of your knowledge inventory.

Every experience you have had, every conversation you have participated in, every new idea that tried, successful of failed, is part of your knowledge inventory. The things that you like to do, things that you do not like to do, and things that you do not know are part of this inventory and the way it is organized in your consciousness.

The Dewey Decimal System is a way to catalog information in books. Keep in mind that The Dewey System is archaic; however, it does provide us with some key insights:

From our earlier definition; to organize information is to organize a proxy for knowledge and innovation.

The decimal classification structure has a great advantage for the computer and mathematical analysis. Additionally, tens of thousands of librarians are fluent and most people in the US have at least a minimal familiarity with it.

For a quick review, the body of written information is divided into 10 main categories. Each main category is divided into 10 more categories and each of those are divided into 10 categories – and this can go on forever.

It is useful to note that the Dewey Decimal classification has a bias toward the three factors of production for the innovation economy; Social capital, creative capital, and intellectual capital:

Most resume reading programs just pick up key words, so why have any other words?

Your resume can be a series of Dewey numbers instead of words and computers can tag the numbers as they do key words today. For example:

302, 307, 330, 607, 17, 500, 519

If your mind were a library and you attempted to map it all out, one would see that everything is related in some way – intuitively, this is what defines you. If we looked into your world, we would discover a huge network of experiences, books read, lessons learned, and people encountered.

We would find a system of knowledge rather than random facts that you have organized. Your likes and dislikes would be reflected in what you do and do not want to do. Everyone is different – nobody is the same. Everyone innovates, everyone has knowledge, and everyone shares information.

If we add some mathematical symbols and Boolean logic, perhaps we could capture the system of knowledge a little better. Your resume may now look like this:

{20,12};[302 AND 307], (330):[607 AND 17] OR [500/519]

Now need to make this look like money. Before our knowledge can behave like a financial instrument we need to add one additional factor – the quality of the knowledge.

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. 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 it keeps us from understanding how knowledge actually exists in a community.

We need to switch to a bell curve distribution for knowledge assets because it better reflects reality and eliminates unproductive competition; there are no winners or losers, just different markets.

There is a perfectly legitimate market for a Porsche as there is for a Toyota.

Statistical distributions are used extensively in finance to value financial instruments; we need to do the same now for our knowledge assets. To make financial sense out of our random world, we must classify knowledge assets on a bell curve. Consider the following resume:

{20:95%,12:80%};[302 AND 330]70%:(607 AND 17)80% OR [500/519]90%

This person is a specialist in Social Interaction and economics at the 70th percentile related to educational research at the 80th percentile. She (or he) has a Background in applied mathematics and physics at the 90th percentile. She (or he) is a trained ethicist at the 75th percentile, philosopher, and artist specializing in musical theory and orchestration at the 50th percentile. Fluent English and Spanish

Now, we have a system of numbers and symbols represent the knowledge of the person in a tangible manner.

Keep in mind that this is only a demonstration, however, we see some key advantages:

1.    The Inventory is Infinite and expandable to any field of knowledge
2.    Paints a picture of knowledge and not simply a list of information about a person.
3.    Machine enabled, programmable, and readable.

Now, all of the tools, methods, and equations in the world of banking, finance, and insurance can be used to combine, amalgamate, and diversify knowledge assets in an innovation market.

Your resume can now be combined with other resumes to represent the collective knowledge of a community. This expression carries all of the information that an entrepreneur needs in order to estimate the probability that the community can execute a business plan. We will discuss predictive characteristics extensively in future modules.

In the next section, we will talk about the institutions that exist in our communities through computer enabled society which will keep this game free, fair – and most importantly, equitable.

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The Next Economic Paradigm; Part 2, Currency

By Admin

On April 5, 2009

In General Information

Welcome to part 2 of the New Economic Paradigm series.

In part 1 we determined that money represents human productivity and the only way to sustainably create wealth was to innovate.

Then we identified the flaw that money lives in a complex and integrated system while Innovation does not, rather, innovation is isolated, random, non-integrated and subservient to the financial system.

This module discusses the currency of the innovation economy.

A Currency is anything that serves as a medium of exchange, a stored value, and a standard of value.

We all know that Dollar denominated money is a medium of exchange – but it does not represent gold or silver or even oil, it represents human productivity. Money, and therefore all financial instruments store value related to human productivity.

When we look into society throughout history, everywhere people are trading information and ideas with each other at some velocity. The Internet and social media (machine enabled society) has sped this process up to incredible rates. All of this information adds up to something because obviously things get built and stuff rolls off assembly lines. Furthermore, people act on information obtained from each other to produce things.

The currency of trade for the next economic paradigm must represent this “stock exchange”

Intuitively we know that information, knowledge and innovation are profoundly related to each other. In fact, if you don’t have one, you can’t have the other two. Our currency of trade must represent all three; information, knowledge, and innovation. Therefore, we need to redefine these terms in a manner that relates them.

First we must define ‘information’. That’s easy, information is facts and data.

Next we need to define ‘knowledge’ in terms of information: Any good teacher can tell you that information must be introduced in a certain sequence and at a certain speed in order for the student to learn. Knowledge is therefore proportional to the rate of change of information.

For the purposes of this analysis, we will use the following definition: Innovation is defined by the rate of change of knowledge where knowledge is defined by the rate of change of information. For example; everyone has had an ‘Ah-Ha!’ moment during a brain storming session, or after making a mistake, or after witnessing a profound event. The AH-HA moment represents a very high rate of change in our knowledge that occurs in a very short period of time.

According to this definition, every idea, conversation, dream, design, sketch, or discovery experienced and shared between two or more people is an innovation.

Math students can see that this definition sets up a differential equation that we can use to model the innovation system computationally – something that cannot be done with the current definitions.

Now let’s look at the “economic outcome” part

The factors of production for the industrial economy are land labor and capital. Entrepreneurs allocate these three factors in different combination in the formation and growth of corporations. If any of these factors of production are missing, dysfunctional, or corrupted – the corporation stops producing.

We have learned that in the knowledge economy, the location of knowledge work is highly mobile – so “Land” does not have the same significance for making things as it did 100 years ago.

What about labor? Knowledge workers analyze situations, manage many variables, and create unique solutions. They do not really produce identical knowledge pieces like a machine operator or a production worker. Everything they see and do becomes part of their relevant knowledge set: 24/7/365. The idea of an 8 hour day and pay-by-the-hour are no longer relevant.

Capital is money needed to build future structures, buy machines and to pay wages. Today, money provides access to information. The current economic meltdown demonstrates that where the information is corrupted, the money is corrupted – and so becomes everything connected to the money.

We now see that many old economic principles do not work quite as well in the new economies. Yet, the Land, Labor, and Capital theory is still the foundation of much of today’s corporate, academic, government, financial, and social thinking.

Using our definition for innovation, we can see that the innovation economy will emerge from the rate of change of the knowledge economy. Today we are witnessing an astonishing growth in social media and a breakdown of traditional media for the dissemination of information.

The factors of production for the new currency are Intellectual Capital, Social Capital, and Creative Capital.

Intellectual Capital is also called Human Capital – and suggests that concentrations of educated and motivated people attract investors to employ them and invest in the communities where they reside. This investment attracts other intelligent people who in turn attract more investment thereby creating a cycle of economic growth

The Social Capital Model suggests that people acting in communities can create better solutions, greater accountability, and more economic growth than management, governments, or bureaucracy can induce on their own. Examples of Social Capital include Civil Rights Movement, community watch organizations, Democratic Government, Social Networking, and notably, recent political changes events.

The Creative Capital model, suggests that engineers and scientists think more like artists and musicians than like production workers – their ideas come 24/7/365 – and that an environment of tolerance, diversity, and openness promotes creative output.

A Currency is anything that serves as a medium of exchange, a stored value, and a standard of value.

In the current financial economy, the currency is a dollar. The rate of change of the currency is called appreciation, depreciation, or “interest”. The rate of change of interest is the growth rate or compounding. These are very familiar conditions in finance and the basis for a company’s stock price.

In the innovation economy, information is the currency. Knowledge is the rate of change of information, and innovation is the rate of change of knowledge.

This will become a very familiar and useful relationship in the innovation economy.

For example, innovation is difficult to measure directly. However, we can measure the rate of change of knowledge as a proxy for innovation. It is difficult to measure knowledge. However, we can measure the rate of change of information as a proxy for knowledge.

In finance and calculus, these are called derivatives.

In the next module we will discuss the inventory and accounting system for an innovation economy.

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Is The Banking System Corrupted?

By Admin

On March 9, 2009

In General Information

The following video series is one of the most important videos that you can watch right now. These were published in 2006 but it’s the best place to start understanding the current crisis. It will also give you an understanding of what Barak Obama is doing and why.

Finally, after viewing these videos, you will have a greater understanding of what money is, what the future holds, and why the Ingenesist Project is therefore so Important.

Part 1/5; Cartels Robbing the Public

Part 2/5; How Money is Created

Part 3/5; Money Is Debt

Part 4/5; Monetary Reform

Part 5/5; Warning About the New World Order.

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Tag: value

The History of Financial Innovation

The Tiny Flaw of Market Capitalism

Let me know if you agree

The only thing that fits all of those criteria is ‘Time’

Anonymous assets

Social Currency is a Social Imperative

Dollar vs Rallod-A Mirror Image Economy

You don’t stand a chance.

Flirting with the enemy

They have you figured out.

Once users lose the ability to reject a brand message, we’re all right back where we started from.

Hide your data in your own data: