The Next Economic Paradigm

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Making Money

The Ingenesist Project: Making Money

Nobel Economist Robert Solow calculated that 80% of economic growth is the result of advances in technology. This Makes sense. Technology makes us more productive.

However, GDP measures the products, not the producers. Engineers, Scientists, and Technologists are responsible for ideation, design, and implementation of new and improved technology.

Unfortunately, Engineers, Scientists and Technologists are classified as “intangibles” Intangibles are, in turn, classified as expenses to be minimized, not investment to be maximized.

Here’s the good news… 80% of the true global economy is simply hidden from view. Trillions upon trillions of dollars are sitting on the table waiting to be measured into existence. Can you see it?

The Ingenesist Project uses game theory, blockchain, and Artificial Intelligence to convert Intangible Assets into a tangible form.

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Analysis

The purpose of this video is to synthesize the simplest interpretation of value and test that against prevailing economic principals. Engineers, scientists and technologists are treated as EXPENSES, let that sink in. If they are not assets, then they are LIABILITIES… full stop. This is a clear, present and vastly consequential flaw that must be addressed by someone somewhere.

Otherwise, if there is no institution willing or able to defend this flawed economic principal, then it is super-vulnerable to disruption. We need to maximize innovation, not minimize innovation. There needs to be a wholistic and systemic approach to solving problems in the world. We must head off global systemic risks. As clever and experienced as the VC community is, they cannot be expected to pick and choose winners and losers in the next economic paradigm.

There is far more ‘money to be made’ by shifting engineers, scientists, and technologists to the ASSET column of the global balance sheet.

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An Invisible Economy

An Invisible Economy: The Ingenesist Project

A firefighter is worth millions of dollars per hour preserving lives and property…  but only when there is a fire. A Fire Protection Engineer can design thousands of buildings that will never burn.

In the absence of a fire, the true value of the Scientists, Engineers, and Technologists is invisible. But the value of their economic contribution continues to persist.

What if we could measure the true value of intangible assets into present value existence. A massive new asset class would be unlocked.

The Ingenesist Project uses Game Theory, Blockchain, and Artificial Intelligence to convert intangible assets into tangible form, at scale. There is no shortage of money, only a shortage of imagination.

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Analysis

The purpose of this video is to demonstrate how engineers, scientists, and technologists remove RISK from complex systems. Risk is directly correlated to “return” and, therefore, profits.

So what happens to all of that value that a single diligent engineer creates when they remove all of the risk? Is it paid to the engineer? no. Is it returned to the non-victims of the calamity averted? no. Is captured by the the banking system as some form of arbitrage? Yes, absolutely, yes.

This is the deep dark secrets of finance. Don’t let the engineers, scientists, and technologists know that they are paid 2-20% of what they are worth. They may want free stuff like healthcare, job security, or royalties, or else they’ll go build something else that pays better social dividends. Can’t have that.

Obviously the question becomes, what happens when there are no more engineers to eliminate risk? There is a tipping point and we are dangerously close to approaching it. These things are easy to measure, assess, and resolve but there needs to be an institution able to secure material facts and assert the economics of those facts.

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A Tiny Flaw

A Tiny Flaw. The Ingenesist Project

What if there was a tiny and nearly imperceptible flaw in Market Capitalism that could be easily corrected? To do so would solve many of society’s most pressing needs without disrupting the institutions upon which we depend.

Technological change must always precede economic growth. We are going about the business of civilization as if economic growth must always precede technological change. It’s like driving a car while looking through a mirror. In other words, money is not the cause of innovation. Money is the result of innovation. The implications of this tiny flaw impacts everything from Climate Change and Social Equity to Venture Capital and Global Debt. 

It started with classical economic theory. In the 1700’s economic inputs such as Land, Labor, and Capital were easy to measure. The products that resulted from these inputs were also easy to measure. However, in the 1700’s; social, creative, and intellectual inputs by humans were not so easy to measure. Accountants call them intangibles, but they are simply “invisibles”. 

Today, this is an easier problem to solve.  Ironically, technological Change has brought us new ways to measure intangible assets. All we need to do is convert them to a tangible form.  The resulting economic growth will far exceed global debt because there is no such thing as “not enough money to innovate”.  Together we can correct A Tiny Flaw   

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Analysis

This is largely the initial video in the series and the first that we published. Attention should be drawn to the idea that maybe there is a tiny flaw that can be easily corrected. Instead of trying to solve every single problem that is strangling civilization as we know it, we could solve one single problem and the other problems will solve themselves.

The question becomes: are we too vested in our misery to even consider such a possibility? Are we so narcissistic to believe that our particular problem is the one that must be solved even if it worsens someone else’s problem? Are we all expecting the “other guy” to change and that will make your world work? Good luck with that.

The flaw is no tiny, so hidden, yet so obvious that it defies the imagination. All we need to do is measure ourselves differently. Who is stopping us from doing this? nobody. What law says we can’t do this? There is none. And if we do correct the flaw, who suffers? No one.

Will we do it?

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A Knowledge Inventory System

A Knowledge Inventory System; The Ingenesist Project

Have you ever wondered why the credits at the end of a movie are printed so small and scroll by so fast? The credits are not there for your benefit. The credits exist for the benefit of the movie industry.

Film production is a highly intellectual, creative, and social enterprise. In other words, Hollywood is denominated by knowledge assets.   The rolling credits serve as a knowledge asset inventory system for all things needed to make the next movie.

Everything revolves around being on the credits or being known by people on the credits. This is how people find each other.  The rolling credits make this possible. Not unlike a blockchain, in order to cheat the system, one must alter every instance of the celluloid reel or digital file.

Engineering, science and technology are also social, creative, and intellectual industries fueled by knowledge assets. Not unlike a blockchain, engineering processes are irreversible and immutable.

When we look at a sturdy bridge, or magnificent structure, or a brilliant piece of software, there is no easy way to find the people who are responsible for a specific element of that work. The Ingenesist Project uses game theory, blockchain, and Artificial Intelligence to create a knowledge asset inventory so that Engineers, Scientists, and Technologists can find each other.

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Analysis

Engineering and science have long been compared to the Arts as a creative profession. The point of this video is to demonstrate how other creative professions deal with the intangibles gap. While the Hollywood system has its own set of pros and cons, the comparison is worthwhile. Notably, the arts often compensate creators with “royalties” while engineering, science, and technology most often pay hourly wages.

In addition, there are comparably fewer barriers, silos, or human resource management hurdles to navigate for artists. They don’t attempt to reduce a 4-dimensional performance down to a 2-dimensional CV/resumé. Instead, they can submit the 4D performance as their resumé. A great deal of efficiency is retained.

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An Algorithm For Innovation

An Algorithm For Innovation; The Ingenesist Project

A useful definition allows people to identify, replicate, or measure the subject being defined.  Yet the best definition we have for Innovation is basically, “You know it when you see it”.

How can we sustain our world if we cannot even define the sole instrument of change? 

Have you ever had an epiphany? That ah-ha moment that comes from deep within… …when suddenly your knowledge about something grows exponentially within a very short period of time? Let’s call that “innovation”, where one large innovation is comprised of many smaller innovations.

In order to measure innovation, all you need to do is measure the rate of change of knowledge with respect to time. You don’t need Calculus to recognize this as an algorithm for innovation … but it helps. 

If that idea doesn’t change the world, nothing will.

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Analysis

Innovation is a great mystery that does not need to be. Everyone innovates – it is necessary for survival. Yet the magic and mystique of the innovator is a cultural phenomenon that forms the foundation of tech social status. Innovation is denominated in money – if you are not flush with cash, then you are not an innovator. Only VC can be innovators due to their ability to navigate financial markets. It almost seems that the more difficult it is to identify something, greater scarcity can be assigned to it. With greater scarcity come greater value. Again, when we become vested in our own misery, progress grinds to a halt.

This is all quite counter productive.

The problems of the future will require innovation, creation, new ideas, and vast execution at an astonishing scale. In order to achieve true economic sustainability, we need to a metric to denominate true value, not propped up scarcity value.

It is relatively easy to create and measure where high rates of change are occurring in a community or society. It is then relatively easy to observe what innovations take place as a result. This isn’t exactly a unicorn farm, but you probably can’t have a unicorn without these conditions in the first place. It is then only a matter of memorializing these conditions in a tangible form.

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Dividends of Innovation

The Dividends of Innovation

Innovation is not linear  Modern civilization did not begin 10,000 years ago with 250 Trillion dollars sitting in a box somewhere in the desert.

Money was measured into existence as a function of the things that scientists, engineers, and technologists built. Innovations such as the wheel, wedge, and lever came long before the invention of International Trade Agreements Innovations in machinery, transportation and energy enabled advances in sanitation, healthcare, and computers

Yet, the wheel, wedge, and lever are more important and more widely applied than ever. Wouldn’t it make more sense if we developed a monetary system backed by the dividends of innovation rather than the gravity of debt?

The Ingenesist Project uses game theory, blockchain, and artificial intelligence to measure the true economic contribution of engineers, scientists, and technologists.

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Analysis

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How It Works

How It Works; The Ingenesist Project

The Ingenesist Project Uses Game Theory, Blockchain, and Artificial Intelligence to convert intangible assets to a more tangible form.

Part One: Observe The game is based on a system of claims and validations among a population of players. 

Part Two: Measure Blockchain acts like a giant datalogger that captures time-value data of game transactions.

Part 3: Predict The Percentile Search Engine predicts the likelihood  various combinations of players would produce novel outcomes. 

These three applications acting together create a virtuous circle that converts intangible assets into a more tangible form. Join The Ingenesist Project

Analysis

In almost every video, we make the statement that The Ingenesist Project uses game theory, blockchain, and AI to make intangible assets more tangible. This sounds pretty complicated, so how do you explain it in under a minute? The audience deserves to know how we intend to deliver on the promises that we are making.

The answer to this, and almost every engineering or scientific problem, boils down to making observations, measuring outcomes, and predicting future results. The same should be true here.

We’ve also stated that engineers remove risk from complex systems. Risk assessment follows a similar sequence; first you need to identify the risk exposure, then you need predict the likelihood it will manifest, then you need to measure the consequences of the event.

The game sets things into motion, the blockchain records the motion, and the AI reads the recorded motion and predicts the next point on the curve.

So what may seem like a very complicated and jargon laden geek storm is actually an extremely simply set of tasks that almost everyone already practices in the professional lives. Why reinvent the wheel?

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Network Effects

Network Effects: The Ingenesist Project

To borrow from a famous quote:  “Uber, owns no vehicles… Google and Facebook create no content… Alibaba holds no inventory… Airbnb owns no real estate….” But they have a combined value of almost 3 Trillion dollars. This is very interesting.

Whereas most companies are priced according to strict financial performance, Network platforms provide a virtual bridge that connects people to each other. They are priced proportional to the square of the number of human connections they serve.

This is known as Metcalfe’s Law of Network Value. If network platforms create a virtual bridge connecting people, why can’t we value real bridges using Metcalfe’s law?  Why can’t we value roads, airports, buildings and all manner of engineering, scientific, and technological infrastructure as proportional to the connections they serve? 

The Ingenesist project uses game theory, blockchain, and artificial Intelligence to convert intangible assets into a more tangible form. Join The Ingenesist Project

Analysis

We often say that Engineers, Scientists, and technologists need only to measure themselves differently in order to become “more tangible”. Most people’s eyes glaze over as if we’re living in some fantasy world. This video demonstrates that principal exactly as it happens with network platforms that are popping up everywhere around us. Really, we’re not making this up.

Metcalfe’s law arose from the telecommunications industry to measure the utility of telephone connections. The value of the network grows exponentially with the number of points in contact. Let’s start by saying that telephone networks themselves are a creation of engineering and scientific professions.

The engineering value of a bridge is equal to it’s replacement cost – so that’s what they pay engineers to create one. However, the economic value of the bridge includes every transaction, truck delivery, soccer game, doctor appointment, and math class that resulted from the ability for 10,000 people per day to cross the river.

Facebook, Google, Alibaba, AirBnB, et al, could not exist if they were valued according to their replacement cost. Imagine what amazing works of engineering, science, and innovation are non-existant today only because it is valued incorrectly.

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Risk And Return

Risk and Return

As the saying goes, money makes the World go around. This may not be entirely true.

Where risk is high, the cost of money is high. Where risk is low, the cost of money is low. Engineers, scientists, and technologists specialize in removing risk from complex systems.  So, why is there never enough money to mitigate the world’s most pressing risks?

Fortunately, all we need to do is reorganize engineers, scientists, and technologists and the money will surely follow

The Ingenesist Project uses game theory, blockchain technology, and Artificial Intelligence to reorganize the engineering and scientific professions. 

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Analysis

This video poses a legitimate question. If there is money to be made by mitigating risk, why are Engineers, Scientists, and technologists classified as expenses (liabilities), and not assets on global balance sheets?

It’s amazing how vested we are in this staggering little flaw in market Capitalism.

Key Phrase: Risk and Return

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The Innovation Standard

The Innovation Standard: The Ingenesist Project

Solving the problems of the future will require humans to innovate at an astonishing rate… … far greater than anything our existing economic system can support. In order to achieve this, there must be a fundamental shift in how knowledge assets are measured, curated, and exchanged.

Today, a traditional bank distributes money backed by your promise of FUTURE productivity. Innovation is also a promise backed by FUTURE productivity. Two currencies backed by the same underlying asset are readily convertible.

In the future, an Innovation Bank, would issue currency backed directly by the true value of innovation. All we need to do is measure ourselves differently. 

The Ingenesist Project uses game theory, blockchain, and Artificial Intelligence to convert intangible assets into a more tangible form.

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Analysis

The Innovation Standard is a reference to the Gold Standard or the Debt Standard, or the Oil Standard, etc. Whatever the standard, it needs to represent human productivity or else nobody would work in exchange for it (think about that for a sec).

The problems that face the world are global and they are systemic. That means that free markets technically don’t exist and the next thing that needs to be produced is the thing that society needs. Sure everyone wants a new Lambo, but it’s not very useful if the roads are too rough to drive it. Sure.Bitcoin is awesome but it’s contingent on a reliable energy grid. Sure, I love AI and much as the next geek but who’s going to read my content if they lack education to act on it?

Money as we know it just does not move fast enough. It does not represent the true productivity of Moms and Dads, soccer coaches, engineers, Scientists, teachers, and event organizers. Money needs to be produced as thenet sum of productive human behaviors. People know what problem needs to be solved next and if you give them the tools to fix things, they will.

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The Law of Nurture

Competition is one way of arriving at the optimal solution to a problem. Some call it the “Law of Nature”, survival of the fittest – where the  final score can only be One to Zero. Unfortunately, in order to feed the winner, we must cultivate suitable losers.  Evolution is slow and inefficient as a business optimization tool.   

The laws of Nature provide infinitely more examples of collaboration than competition.  Even if one player does not win today, their capacity to innovate remains to continuously improve the game for everyone later … if we let them. 

The Ingenesist Project uses game theory, blockchain, and artificial intelligence to convert intangible assets into a more tangible form.   Join The Ingenesist Project

Analysis:

This video acknowledges the value of competition as a solution optimization tool. So competition is not being called into question. However, a different problem involves preserving the knowledge, innovation, and wisdom that was created in the act of competition so that they can be developed in future or tangential problem solving environments.

Economics is the science of incentives which invariably invokes the discipline of game theory. we do have complete control over how a game is played, how players are preserved (or destroyed) and how equity is distributed. As such, we have complete control over the sustainability of the game which is ultimately in the best interest of everyone.

The conclusion is that a game which maximizes the health and welfare of the players ultimately maximizes the value of the game.

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A Virtuous Circle

A Virtuous Circle:

A bank won’t lend money to a project that is not insured. An insurance company will not underwrite a project that is not properly engineered. Engineering projects need to be financed to cover the cost of design and construction.

This is the Virtuous Circle of economic development. If any part of this cycle is broken, incomplete or corrupted, economic development fails.  

Financial institutions simply issue paper receipts called “Money” to represent the actual things that engineers, scientists, and technologists create.

Money is, in fact, the intangible asset and engineering is the tangible asset! We’ve gotten it backwards.

When a virtuous circle reverses itself, it becomes a vicious circle. This is where we are today Fortunately, this is an easier problem to solve. The Ingenesist Project uses Game Theory, Blockchain, and Artificial Intelligence to reverse this vicious circle. 

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Analysis:

The purpose of this video is to introduce the big picture of how the Innovation Bank will integrate with existing financial networks to make the production cycle more efficient and more responsive to systemic risk.

The point of this video is to isolate the idea that our global economy is an interrelated system with 3 critical components that must be integrated and operating at peak efficiency in order for the economy to serve global citizens equitably.

The challenges of the future will require humans to innovate at an astonishing rate – far more rapidly than our current financial system can support. There is no way that Venture Capital – our current “best bet” – can respond to the speed, breadth, and depth of technological change.

The problem ahead is systemic risk. It is not possible for a collection of competing VC to pick the winners and the losers of the next economic paradigm. Unintentionally, the the VC system may cause more damage than good.

This idea is useful for when we introduce the game, blockchain, and AI components – the blockchain serves as a check valve that allows the virtuous circle to spin in only one direction. The game mechanics provide the energy to keep the virtuous circle spinning in the right direction, Augmented Intelligence will help identify what components of the system are operating optimally so that innovation can be applied correctly.

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Decentralization Of Engineering, Science, and Technology

Decentralization is the rallying cry of the Blockchain Movement.

Few people realize that the Science, Engineering, and Technology professions are already decentralized. Unlike Banking and Finance, there are no all-powerful incumbents that must be vanquished. And the laws of Nature already apply to everyone.

Instead, Scientists, Engineers, and Technologists are contained by innumerable silos that have little to do with the Natural Laws  We are segregated by jurisdiction, academia, ontology, corporations, politics, Trade Groups, Societies, international borders, and much more.

We represent 5% of the workforce but are responsible for 80% of economic growth. But collectively, we are weak, disorganized and powerless to prioritize the needs of our World. The only thing standing in our way, is ourselves. This is a much different problem than decentralization.

The Ingenesist Project uses Game Theory, Blockchain and Artificial Intelligence to remove the silos that divide us.

Analysis:

The single point of this video was to introduce the distinction that a centralized institution and a collection of compartmentalized institutions may have similar characteristics to the participants, but are not the same thing. The former is far more difficult to disrupt while the latter is entirely vulnerable to disruption. This represents a huge opportunity for those who can see the distinction.

This idea plays a central role in the execution of The Innovation Bank. Where many see a stone wall of resistance to change, there may actually exists a paper veneer.

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A Tale From The Crypto

Have you ever wondered why a soccer goal has a net? The purpose of the net is to provide a visual contrast so that 50,000 observers can immediately reach a consensus that something very important has happened. 

After that, a digital token is awarded to the team that scored a goal.  The digital token also secures valuable business intelligence like game strategy, player stats, league standings, revenue, and everything else.

However,  the consensus is by far the most important part.   With the consensus, a player can make a lot of money.  Without the consensus, they are invisible.  With the consensus, the community can invest in a new stadium. Without the consensus, we can only play at the school yard. With the consensus, the economy flourishes. Without the consensus, it fails. 

Lots of crypto projects have these same pieces. But mostly, they are mixed up.  The Ingenesist Project uses Game Theory, Blockchain, and Artificial Intelligence to secure community consensus.

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So, What’s The Deal With FedCoin?

Federal Reserve Announces Digital Currency

Federal Reserve Announces Digital Currency

This week brought the announcement that the Federal Reserve will study the possibility of issuing a digital currency. If the government builds it correctly, the result could be the greatest advancement in human civilization since the invention of the wheel. If the government builds it incorrectly, they may just validate every other crypto more than their own. Neither outcome is trivial.

We are engineers — the type that makes airplanes that plane, bridges that bridge, and elevators that elevate. The type of engineers that supply electricity to people and their Bitcoin – which was likewise created by engineers on an interface platform that was (you guessed it!) created by engineers. No offense to bankers, lawyers, and politicians, but they can’t do what engineers can do for an economy. So let’s leave them out of this discussion for now, and work with what’s obvious to engineers.

Yes absolutely, a Central Bank Digital Currency (CBDG) is a great idea

But like anything in engineering, the devil is in the details. First, the dollar is already digital so any improvement would need to be less centralized and that means blockchain. We also know that the proof-of-work consensus algorithm is too energy intensive so it must be proof-of-stake, or equivalent.

No intrinsic value equals no value, period. The CBDG must represent something real and useful, otherwise nobody will produce stuff in exchange for it. The Federal Reserve needs to figure out what tangible metric will bring the digital currency into existence. For example, the dollar represents aggregate US human productivity.

Aggregate Technological Change (ATC)

The new CBDC should not be issued as a function of Gross Domestic Product (GDP). The dollar already does this. Rather, the new CBDC should be issued against a new metric called Aggregate Technological Change (ATC). Technological change is a fancy word for “innovation” resulting in an increase of human productivity. This is the domain of Engineers and Scientists.

With this arrangement, the dollar and the CBDC would be fully convertible because they both represent the same asset class i.e., human productivity. The two currencies would be supplemental and complementary to each other. They would check and balance the other. At some point they will become the intrinsic basis for the other. A condition can then emerge where it becomes more profitable for Digital Capitalists to preserve the underlying asset rather than consume it. Ultimately, that underlying asset is the continued productivity and preservation of Planet Earth and her inhabitants.

The missing piece:

We need to come up with a reliable system to identify and measure the fact of innovation before it happens. The Ingenesist Project is developing a novel business method and platform combining game theory, actuarial math and blockchain technology to convert intangible assets into tangible assets. The issuance of each unit of CBDC can then represent the intrinsic value of this new asset class.

We are not bankers and we are not saying that this is final answer. However, we are certainly early pioneers in the topic of a supplemental US digital currency long before the Federal Bank Announcement. Our work in this area has been published (juried) by the NSPE, ASCE, ASME, NAIC/CIPR, NSF, and many others.

A few key points:

  • If built correctly, a CBDC is a great idea
  • If not, the CBDC may be no better or worse than a digital dollar.
  • No intrinsic value means no value. Period.
  • Money must represent human productivity. Otherwise, no one will produce stuff in exchange for it.
  • The underlying asset is Earth and her inhabitants – and must be preserved, not consumed.

Conclusion

So there you have it — an engineer’s interpretation of the new Central Bank Digital Currency.

The next time you’re sitting on an aircraft separated from instant death by .040 inches of aluminum skin, please feel free to disagree with your engineers and scientists. Now that I think of it, what is a perfect analogy for the state of the world!

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Definition Of Innovation

Figure it out as you go along.
Image by David Mark from Pixabay

It is not as easy as it may seem to find a working definition of innovation. There are as many definitions as there are experts claiming to hold the secrets of innovation. The simplest definition of innovation that I could summarize based on top sources is as follows:

Definition of Innovation 1: A new idea resulting in an economic outcome.

The problem with this definition is that you cannot solve solve one equation with two or more unknowns. What is new? What is an idea?, and What constitutes an economic outcome? Finally, How can we identify innovation before it happens? These are significant barriers. I spoke with one VC about this problem and his response was:

Definition of Innovation 2: “I know it when I see it”

A definition is supposed to be distinct and precise. One should be able to predict, identify, or anticipate the object based on its definition. It appears that innovation can only be defined after the fact and not before, by most accounts. As a result, we treat innovation as if it were random or accidental or so unique that only a gifted few possess the ability to achieve it. This is important because innovation is the single most important determinant of achieving a sustainable economic environment.

Economics is the science of incentives. Calculus is the science of change.

When I was about 6 years old I got my first bicycle. It was a single data point sitting under the Christmas Tree. It came with a little pamphlet with lots of information on how to use it. My first attempt started just like the pamphlet described, until I crashed. The promise of stylish and speedy mobility was a strong incentive. Each time I crashed, my knowledge of bike riding increased at a very rapid pace as I developed new ideas about balance, coordination, and impact. I frantically innovated solutions to my problems until I was successful. As I progressed to bigger bikes and various motorcycles, I developed the ability to anticipate reactions to future obstacles based on a so called wealth of past experiences. I had developed Wisdom.

Toddlers can be readily observed innovating ways to carefully descend the stairs backwards on their tummy. This thought sequence repeats itself continuously throughout their formative years and into adulthood. A wise person is generally witnessed a great many outcomes and always seems to know what to do, when to do it, and why it should be done.

Hang on as this is going to get a little bit wonky:

Most engineers and scientists would recognize the following as a differential equation. The relationship between data, information, knowledge innovation, and wisdom are classic derivatives:

  • The value of information is derived from the value of the data
  • The value of knowledge is derived from the value of the information
  • The value of innovation is derived from the value of the knowledge
  • The value of wisdom is derived from the value of the innovation

This is the basis of the WIKiD Tools algorithm (Wisdom, Innovation, Knowledge, information, Data) developed by The Innovation Bank

Definition of Innovation 3: Innovation is proportional to the rate of change of knowledge with respect to time.

I certainly don’t expect a call from Merriam-Webster or widespread agreement from the innovation consultants any time soon. What is important is that this definition does not contradict any of the other definitions. And, it can be easily expressed as an algorithm suitable for machine learning, with data points that can be identified, measured, and validated.

We can now go about he business of creating conditions where knowledge is allowed to increases at a very high rate. Innovation cannot happen in a vacuum.

The Holy Grail of Finance

Predicting the fact of Innovation before it happens is the holy grail of finance. While many corporations and venture capitalists are somewhat successful at identifying a single product that will produce an economic outcome, they do it at the expense of foregoing the ecosystem from which that product arose. As such, predicting the Return on Investment (ROI) may be easily skewed by ignoring the broader social consequences of the product. Deficiencies in data, information, knowledge, and wisdom are the leading factors in start-up failures, not innovation.

Using a sports analogy, competition is a good way at arriving at the best solution to a specific objective. But in order to arrive at a single winner, you must first manufacture 10 times more losers. While conflict and competition is indeed entertaining, this is a very expensive and inefficient way to go about meeting the needs of consumers, let alone a crowded planet.

Intrinsic Value

Innovation is ubiquitous, interconnected, and interdependent on a sequence of factors shared across diverse people and places. Innovation is the intrinsic characteristic of our species and wholly responsible for the advancement of civilization itself. Everyone groans about how money is losing its intrinsic value because of inflation, corruption, or runaway national debt. As a result, cryptocurrencies conveniently drop the idea of intrinsic value altogether. People look to government, charismatic leaders, academia, and industry to solve staggering systemic risk and environmental collapse – to no avail.

Yet, all along, there may just be an extremely simple and inexpensive way to represent the intrinsic nature of innovation as the basis of value that we can quite literally pay for our own preservation. The following chapters describe this method. Please join us at The Ingenesist Project

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What Single Problem Must All Engineers Solve?

What single problem must all engineers solve
Image by Iván Tamás from Pixabay

What single problem must all engineers solve? Hint, the answer so simple, you can’t even see it.

The Paradox of Invisibility:

A firefighter may be worth a million dollars per hour when there is a fire and they courageously save lives and salvage property. The value of the firefighter is derived from the severity of the fire. On the other hand, a fire protection engineer can design a thousand buildings that cannot burn. But the true economic value of the engineer cannot be measured in the absence of a fire. The same can be said of aircraft that do not crash, bridges that do not collapse, and pandemics that do not spread, etc.

What single problem must all engineers solve?

Answer: engineers remove risk from complex systems. This is true for every single engineer and may even serve as an adequate definition for engineering at large. Engineers increase human productivity by reducing the risk to human life and property when confronted with the natural constraints such as gravity, temperature, impact, etc. The value of engineering is literally immeasurable.

But wait, risk can be measured. Insurance companies and financial institutions do it all the time. The method is a little bit counterintuitive, but actually quite simple and well suited for computational analysis. A simple example is presented below to lay out the data process which may be scaled by machine learning and instrumentation. All data must be true and validated in order for the math to work out. Here goes:

A Simple Example:

Consider 10 identical cabins in the forest. Each has a replacement cost of $10,000 dollars. It is well documented that one will burn down every year but nobody knows which one is next. So each owner needs to hold $10,000 dollars in the bank in case their cabin burns down. Because all of the cabins have the same replacement value and all have the same likelihood of burning, the cabin owners determine that they can each throw $1000 into a pooled savings account every year and whosever cabin burns can use the money to rebuild. So instead of tying up $10K each, cabin owners must only hold $1K each. The remaining $90K total can be released for investments and economic growth. This is called a “mutual”and it is the foundation of the insurance industry.

Engineers solve risk in 3 ways:

Engineers follow a similar thought pattern when addressing problems – this is so natural that they often don’t realize they are doing it.

  1. They first invent ways to identify the existence of a peril.
  2. Then they invent ways to reduce the probability that the peril will happen.
  3. Finally, they invent ways to reduce the severity of consequences if the peril does happen.

Each of these actions are identifiable, verifiable, and measurable.

The Innovation Bank:

The Innovation Bank would serve as a data logger to curate the validated claims of all fire protection engineers which can be analyzed to estimate how much risk has been removed from the “fire economy”. This value can be represented as a cryptographic token (on a dedicated blockchain) that may be purchased by banks, insurance companies, municipalities, corporations and property owners to access the database to better understand their specific risk exposures across a wider spectrum of ignition sources.

The value of the tokens compensates the engineers to perform more comprehensive fire safety surveys and mitigation strategies. This positive feedback loop eventually reducing total risk the near zero.

This same token can be applied to all engineers and scientist for all applicable physical and environmental risk reduction.

The World is on fire

The example above describes only one example of one peril related to one engineering discipline. The reality that confronts civilization today include multiple complex global systemic risks impacting nearly every facet of life on Earth. These include, but are not limited to, climate change, pandemics, political instability, grinding debt, wealth inequality, and more.

The only way to untangle every contributing risk exposure and replace it with comprehensive solutions that do not break the bank is to introduce a parallel financial system that hedges the one currently being stretched to the limits. A digital token that represents Engineering and Scientific risk mitigation would be mutually convertible with national currencies and therefore taxable and transparent to regulatory standards. The two currencies would hedge each other. This is what a balanced budget could look like.

Additional Information

Thank you for your time reading this article. please continue reading articles from this blog. Our juried paper published by the American Society of Professional Engineers called: The Innovation Bank; Blockchain Technology and the Decentralization of the Engineering Professions. Also, please see our other publications at: Select Publications and Lectures .

Please contact us if you have any questions or ideas. Again, thank you.

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What Is An Innovation Bank?

What is an Innovation Bank?
Image by Gerd Altmann from Pixabay

What is an Innovation Bank? At first blush, an Innovation Bank sounds like a place where innovators can make money for developing their ideas. Sort of like venture capital.  But if we drill down a little further and look at how a traditional bank actually functions, we find a far more interesting opportunity.

People go to a bank and borrow money to, say, buy a house.  Most people think that the bank is sitting on a bunch of cash in some savings account waiting to buy your house for you until you can pay them back. This is not entirely true. 

Money is measured into existence.

When you sign the loan papers, you are committing your future productivity as collateral for the loan.  From the simple act of signing a document, you create an asset called “my future productivity”. Through the miracle of fractional reserves banking, the bank can then conjure into existence the net present value of your future productivity to settle the note on your house.  Money is literally measured into existence where your promise to pay is the underlying asset. The house is the game incentive that motivates you to go to work. Your productivity combined with everyone else’s forms the basis of your national currency.

Most people are shocked when they see how simple this process is. Money must represents human productivity – otherwise nobody would work in exchange for it.  Debt is just a fancy name for future productivity, which is productivity nonetheless. The bank is the place where this accounting ledger is secured, not so much the money.  

The image in the mirror.

Innovation and debt have a lot in common – for better or worse, they both represent future productivity. If debt can be used to measure money into existence, then innovation can be used to measure money into existence as well.  The difference is that the consumption of objects that you make is easier to measure than the innovations required to create them. In a way, venture capital is an aberration – the thing that should not need to exist if we could measure innovation in any other way.  The Innovation Bank was developed to solve the innovation paradox.   

The Innovation Paradox

The invention of the wheel, wedge, and pulley came long before the invention of international trade agreements. Technological change must always precede economic growth, yet innovators still need money (economic growth) before they can afford to create technological change. This is the innovation paradox.   We are living in the mirror image of the economy that was supposed to happen — and we think this is reality. The financial system has gotten it backwards.  Corporations and VC can select and prioritize what gets engineered and what does not, but there is little regard for the wholistic nature of innovation – to preserve scarce resources rather than consume them. As a result, the true potential for value creation by the innovators of the world goes fallow. 

The Innovation Bank resolves the innovation paradox by issuing a digital token on a native blockchain that represents the intrinsic future productivity of engineers and scientists. Not unlike a traditional bank, the Innovation Bank also employs a ledger, a value game, and actuarial math. Also like a traditional bank, a claim and the validation process represent the act of committing an asset that represents future productivity.  The interconnections of these assets provides important data driven business intelligence to a market.  The market responds by placing a value on the token to incentivizes production of more innovation.

Taken together, The Innovation Bank prints money in the exact same way using the same systems, methods, and institutions as traditional banking. The difference is that The Innovation Bank increases human productivity whereas a traditional bank consumes it.       

Additional Information

Thank you for your time reading this article. please continue reading articles from this blog. Our juried paper published by the American Society of Professional Engineers called: The Innovation Bank; Blockchain Technology and the Decentralization of the Engineering Professions. Also, please see our other publications at: Select Publications and Lectures .

Please contact us if you have any questions or ideas. Again, thank you.

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The Innovation Bank Project Overview

The Innovation Bank applies to All Branches of the STEM professions

Image by Gerd Altmann from Pixabay

The Innovation Bank is an autonomous network platform applicable to all branches of technical services enterprise. The platform is governed by game theory, actuarial math, and blockchain technology. The purpose is to capitalizing the STEM professions.

The Innovation Bank Project Overview

The objective is to reward individual practitioners to establish physical facts in collaboration with other practitioners. Knowledge, innovation, and wisdom may be discerned from these interactions. Where such metrics exist, intangible “in-situ” knowledge assets may then be capitalized in a manner analogous to how tangible assets are capitalized in the existing economic system.

Past research has demonstrated individual components of the Innovation Bank within various for-profit enterprise settings. This current effort is unique in its attempt to integrate these components in an autonomous public network.

Several factors need to be taken into consideration:

Engineering is an essential industry – it is essential that the Innovation Bank is complementary rather than disruptive to existing institutions and operations.

All STEM professionals and practitioners are unified and enabled for cross-discipline interaction.

Practitioners are economically compensated within the platform for their contributions to the Innovation Bank. Compensation is proportional to the value of the contribution.

Practitioners own, control and hold title to their identification, and thus, their specific transaction records.

Specific Outcomes:

The initial funding for The Innovation Bank will result in the production of a minimum viable product comprised of an operational native blockchain with decentralized governance, algorithmic token allocation, and database auditing system (block explorer). These outcomes will be suitable for research, analysis, development and future growth within the professional and academic STEM communities. This test bed will allow us to develop means, methods, and metrics for advancing the above considerations.

Intellectual Merit:

The purpose of the Innovation bank is to unify the STEM professionals in society at large. Typically, STEM professionals are segmented by institutions with mismatched ontologies, competitive restraints, or regulatory limitations. While such hierarchical arrangements were well-serving in earlier times, new tools exist allowing network platforms to efficiently deliver value at speed, and at scale.

The core activity of the Innovation Bank is to develop worthy claims such that a qualified validator would be willing to be permanently and immutably associated with the claimant. This union forms a node with two branches for which each would be compensated in proportion to their total stake in the system. A network graph is thus formed from the interconnectivity of aggregate nodes and branches.

The dominant game strategy for each individual would be to allocate knowledge resources to where they are needed most rather than where profits are most assured. Financial value is derived from the dynamic metadata embedded in the aggregate network yielding business intelligence which would command a premium over static non-validated data.

Broader Impacts:

Economic growth is contingent on technological change – this is the exclusive domain of STEM professionals and practitioners. There is currently no reliable way to directly measure the impact of technological change on economic growth. Pricing and allocation are often irrational. Engineers, scientists, technologists, and mathematicians, serve to remove risk from complex systems ranging from consumer products to public infrastructure and the natural environment.

The Implications of the Innovation Bank includes the reduction of systemic risks and improved allocation of natural and intellectual resources. In essence, The Innovation Bank will gradually replace Consumption Capitalism with “Preservation Capitalism”. The introduction of a new risk-backed asset class would amplify the missions of existing institutions such as universities, corporations, finance, insurance, and government.

Given a game that everyone can potentially win, universal engagement in STEM education and STEM applications would become a dominant social policy strategy. More information can be found at The Ingenesist Project. Please contact us for more information regarding The Innovation Bank Project Overview or please read the the following paper:

The Innovation Bank; Blockchain Technology and the Decentralization of Engineering Professions

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Four Reasons Why Engineers and Scientists Need Their Own Blockchain

Image by Pete 😀 from Pixabay

Many blockchains exist for many reasons, but none are built for the purpose of discerning physical fact from digital fiction. Where other industries use blockchain to correct their flaws, a blockchain of engineers and scientists can amplify their superpowers. Our ability to leverage truth may be the most powerful tool available to shift political priorities toward resolving our most pressing Global challenges.

For almost a decade, we have been writing about how four important aspects of blockchain technology could create thousands of times more value if applied to the engineering and scientific professions rather than the financial industry. We have also been amazed by the early ambivalence, reluctance, and often visceral resistance among some professional engineering societies, educational institutions, and engineering enterprise leaders, toward this technology.

Engineers and scientists need to reorganize ourselves fast if we are to have any expectation of pulling out of our flaming planetary tailspin of social, monetary, and ecological unrest.

The Thing That Happened.

Blockchain blew onto the scene with the Bitcoin white paper published in 2008. This technology was coincident with the 2008 financial crisis which had exposed near-fatal structural vulnerabilities in our financial system — going so far as to suggest a new form of currency could be developed. Blockchain introduced the idea of immutability to the financial system where laws had failed, thus code as law became the mantra.

An essential part of this arrangement is that there must be no overarching organization that can act against the consensus of the entire community and alter any transaction after the fact. This is broadly called “decentralization”. This puts many financial transactions at odds with governments who enforce laws (i.e., law is law). That struggle continues.

1. Immutability is our superpower.

Unlike the financial industries, engineers and scientist are abundantly familiar with immutability. You can’t return the lumber to the forest. An airplane can’t be un-crashed. You can’t un-pour concrete. In fact, all scientific processes are irreversible – that is what entropy is all about. In effect, blockchain would be far better suited to represent the immutability of the underlying asset rather than the flimsy paper that represents said asset. This makes more sense.

2. Engineers and Scientists are Already Decentralized.

Earlier, I complained about about resistance by the engineering institutions. What if this flaw is actually a feature? The experience taught us that there is no singular engineering or scientific authority that can sufficiently control or enforce its will on any of the others. Rather, we found engineers and scientists to be sequestered behind a multitude of organizational silos such as corporations, professional societies, ontologies, jurisdiction, national boundaries, academic titles, etc. Even if they wanted to change, they could not find each other to do so. It is no wonder that intellectual capital is called “Intangible” on a corporate balance sheet. In effect, the engineering and scientific professions are already decentralized. All we need to do is measure ourselves into a “tangible” existence.

3. Widespread Consensus Already Exists.

There is likely no greater consensus in human civilization than the laws of Nature. Every Noun on Earth is subject to these laws without exception. The scientific method, considered the greatest innovation in human history, provides us with a means to update, modify, correct, and replace old consensus with renewed consensus. Everything else can be expressed as the probability that a consensus exists. The scientific method is able to defend against failures in a manner not unlike the Byzantine General’s problem upon which much cryptography is based.

4. A Stable and Convertible Token

Money represents productivity as measured by Gross Domestic Product. Dollars represent American productivity, Yen represent Japanese productivity, etc. Yet nearly 80% of all increases in GDP can be attributed to technological change. This is the domain of engineers and scientists. Therefore, a token representing engineering and scientific productivity also directly represents GDP. In other words, we can print money.

Here’s the Good News

Blockchain technology was invented by engineers as a direct analogy of the engineering process – not finance. This is actually very good news because nobody controls a monopoly on intellectual capital which must be fought, beaten, and dismantled in order for engineers and scientists to reorganize. Engineers and scientists can build their own blockchain that represents their work-product and govern the presentation of physical fact over digital fiction. Engineers can exist with out Blockchain but blockchain can’t exist without engineers. This is a game we can easily win.

A Blockchain Of Engineers and Scientists

Financial products are fictitious representations of real things and therefore easily manipulated into many forms while the asset that they represent remains physically unchanged (suitably called “hypothecation”). There exists a powerful technology that is abundant and cheap and that can directly express physical fact as a monetary unit rather than financial fiction.

If we work together, global engineers and scientists can simply walk onto the economic landscape unchallenged to begin altering the development priorities for the World. No kidding. Again, there is nothing standing in our way, except our own unwillingness to change. This may be the most important opportunities that has ever been presented to the Sciences.

Please, let’s not squander it.

Please read this important paper:

The Innovation Bank and the Decentralization of The Engineering and Scientific Professions

Blockchain Is Better for Engineering. Global Engineers and Scientists must adopt Blockchain Technology to directly enforce physical fact over financial fiction.

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The Innovation Bank Empowers Global Engineers and Scientists

Global risk requires global engineers and scientists

The Innovation Bank may be the most important advancement of the Post-Covid Era. The global pandemic is only a symptom of larger systemic risks that are challenging our world. Climate change, wealth disparity, access to work, education and health care are all global problems manifesting as racism, fear, distrust, and division in local communities. The pandemic further demonstrates how centralized control structures are tragically out-performed by a networked attacker. Rather, legacy control structure fomented social unrest even further. The term “Going Viral” takes on a new and dangerous meaning.

Lessons Learned

What if we can take what we have learned from new technologies, new ideas, and new organizational systems that are currently deployed in networked platforms, and apply them toward mitigation global systemic risk? If Uber is a data service cloud with cars at the end of it, and AirBnB is a data service cloud with beds at the end of it, then imagine The Innovation Bank as a data service cloud with engineers and scientists at both ends of it. This article provides a framework for decentralizing global engineers and scientists. The Innovation Bank is an auto-funding platform devised to address global systemic risks.

Measuring Invisible Value Into Existence

The Innovation Bank use blockchain technology, game theory, and actuarial math to measure and calculate the direct economic contribution of engineers and scientists. STEM professionals create knowledge assets by making claims and validating claims related to physical fact. The platform produces a cryptographic token which serves to permanently record these assets set in time. Business intelligence is created by mapping interactions among engineers and scientists. This imparts value upon the tokens and incentivizes increased rate of production of knowledge assets. The tokens are then used as payment to fund engineering and scientific works that address the world’s most pressing problems.

Supply and Demand For Knowledge Assets

Our current monetary system creates money in a similar way. The value of money is supported by the supply and demand for the things that people produce as measured by Gross Domestic Product (GDP). It is usually easy to measure the quantity and quality of things on the GDP. It is difficult to measure intangible assets such as intellectual capital, creativity, and innovation. The Innovation Bank converts intangibles assets into tangible assets in the form of predictive data which can be easily measured.

The Innovation Bank; Blockchain Technology and the Decentralization of Engineering Professions

The economic value of Engineers and Scientists is measured by applying blockchain technology, game theory, and actuarial math (risk analysis) to a networked platform of global STEM professionals. The nature of risk is volatility – unpredictable outcomes. If we can measure knowledge assets directly, we can trade predictable outcomes efficiently, and therefore manufacture predictable outcomes as we would products and services. This is how we can “balance the books” between our tangible and intangible assets.

Again, this is an important paper. Please let me know if you have any questions, ideas or contributions for this project. Thank you.

(10 minute video summary)

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You Can’t Buy Global Solutions with Local Money

Courtesy of Wikimedia Foundation

epSos.de, CC BY 2.0, via Wikimedia Commons

We are all familiar with the sentiment “if only there were more money, all our problems would be solved”. That is only about 20% true. The Innovation Bank is a system being built to solve the other 80% of our problems.

Money as we know it is a generalized accounting of all the things that humans produce. For example, Gross Domestic Product measures tangible value, it does not measure intangible value. Yet 80% of technological change can be attributed to intangible value creation (Solow, R). These include social capital, creative capital, and intellectual capital.

We need to form a new type of money that measures the other 80% of the economy — the invisible stuff. This is where the big solutions are. Solving Global Problems requires global solutions that must all use the same units of account. VC and the USPTO try to do this, but only a tiny percentage of intangible value ever gets converted to tangible assets in this way. We need something better, comprehensive, and scalable.

Data as Currency

Data is emerging as a new form of currency which can be used to visualize, predict, and assess the value of intangible assets. The problem is that bad news is thousands of times more “tangible” than good news. A single attacker on Social Media can sink a business because nobody counts the 1000 perfectly satisfactory prior transactions. As David Mustaine elegantly croons “Peace sells but who’s buying?” Another version of Stanley McChrystal’s “The good guys need to be right 100% of the time, the bad guys only need to be right once.” This can put a horrible skew on things and AI can’t fix it.

The “good intangible” data needs to be proactively curated as part of one’s everyday professional activity record. There needs to be a simple interface where a person can produce a claim, and that claim can be verified by a recipient or observer. Then we can creating a data node with two at least two branches that can be aggregated with everyone else’s transactions. The resulting dataset, while enormous, would yield a tangible measure of social, creative, and intellectual capital.

Most importantly, this dataset needs to be populated and in direct control by the persons whose transaction record is being curated. It is important that this system is decentralized since the data will be extremely valuable. Someone else will gladly do it for us with every manner of IoT sensor, AI bot, or some old-school regulatory hurdle.

The Innovation Bank

The Innovation Bank uses game theory and blockchain technology for the purpose of curating valuable, truthful, productive, and validated “good data” created by people and their productive interactions with each other. There is no entry for bad news. The Innovation Bank rewards the users with a cryptographic token that memorializing their transactions. The tokens may then be exchanged for access to the metadata curated by others on the platform. This technique for delivering the right asset to the right place at the right time thereby releasing the other 80% of economic value produced by society.

In short, The Innovation Bank is auto-funded by creating a form of money that measures the remaining 80% of economic output. The Innovation Bank incentivizes high impact solutions precisely when and where they are needed most. There is a market for that, all we need to do is measure it into existence.

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Commercializing Ancillary Innovation

“Technological Change Must precede economic growth. We are going about the process of Globalization as if economic growth can precede technological change – this is not sustainable” – D. Robles

The Ingenesist Project is deploying our blockchain based ancillary innovation solution to important projects and institutions in the US. By representing intangible assets as tangible, and using a novel tokenization strategy, ancillary innovation can be equitably deployed thereby restoring the balance between technological change and economic growth.

Commercializing Innovation

The successful commercialization techniques of novel ideas or research has evolved over the ages into an elaborate techno-legal-fiscal monstrosity of regulations and gatekeepers.  It did not start this way and it may not need to continue this way.    

All innovation stands on the shoulder of some prior innovation – e.g., the wheel, wedge, and lever are still ubiquitous in modern life.  Innovation has always existed, but was greatly accelerated by the creation of the Scientific Method, considered as one of the most important advancements in human thinking.   The Scientific Methods required inventors to determine causation and enforce the discipline of disproving the null hypothesis as a condition of validity.    

The Patent system was created in the 1790 and is largely responsible for the industrial revolution by giving inventors a temporary monopoly so that they can develop their works.  The cotton gin, the steam locomotive, Portland Cement, the electric generator and propeller were patented during these times.  Eli Whitney, Faraday, Edison, The Wright Brothers, Henry Ford all benefited from the patent systems as did society as a whole.  

As secondary inventions were built over primary inventions, the velocity of innovation increased dramatically.  This cause a financial disconnect where the new inventions could not be funded directly from the revenue generated from prior inventions. Things became more complex in the age of computers and internet where all prior patents could be “re-invented” on a computer of over the Internet ushering an era of very rapid innovation across every industry. 

Today, the velocity at which total innovation occurs vastly out-paces the velocity of the mainstream financial means for funding – as was the original intent of the Patent System.  The result was an inversion whereas technological change once preceded economic growth providing a means to fund continued innovation.  Now “economic growth (capitalization)” must precede technological change in order to fund innovation.  This is an unnatural condition that gives rise to various debt related instruments and institutions such as “venture capital” who select winners and losers based on factors that may not be driven by the unity and advancement of society as intended by the patent system. 

Most new ideas are abundant, unable to be restrained, dynamic and interdependent. Most ideas include elements of human nature or intangible value that simply cannot be expressed in the legal terms of a patents.   There is now a very large gap between the patentable invention and the commercialized invention.  Nearly all of the activity in this gap is innovative and intangible in nature, that is; commercializing a novel invention is likewise novel.

Ancillary Innovation:

Where Secondary Innovation is defined as a new or deliberate application or modification of an existing ideas, methods, or device.  Ancillary Innovation refers to the provision of necessary support to the primary activities or operation of an organization, institution, industry, or system.  Ironically, ancillary innovation may be the greatest untapped opportunity for primary innovation since the invention of the Patent system. 

Commercializing Ancillary Innovation differs in many ways than primary or secondary innovation. 

For example, even if a marketing study demonstrates that a primary innovation will fail in a certain demographic, the ancillary innovators were successful regardless of the impact on the primary invention.  Killing a bad idea early is the hallmark of Capitalism.  In fact, the value of the Ancillary innovation staff becomes increasingly honed with each experience being applied to the next market study until the support professional is regarded as having wisdom. 

The nature of statistics is that an experimenter can observe a small sample of normally distributed events, and calculate the probability that the next observation will fall within a prescribed size, condition, performance, etc.  Managers are generally characterized by their experience and thus their wisdom I being able to, say, assign the correct allocation of resources or priorities, etc. 

Many accelerators, incubators, and venture capital firms serve in the capacity of ancillary innovation.  They are run by people whose past experience is sufficiently (statistically) populated with failures and successes such that the probability of success in the ancillary innovation process is increased when given a new set of circumstances. 

It is also worth mentioning that the value of the commercializing ancillary innovation far exceeds the value of the commercializing primary innovation, yet it is possibly the least understood.  Furthermore, an enormous amount of innovation never reaches fruition for lack of ancillary innovation resources.  It seems somewhat odd that so much technological innovation would be allocated to making a mundane passenger vehicle .5 seconds faster on its 0-60 time when the same technology could elevate entire communities from poverty.  The difference is the prioritization of ancillary innovation. 

Primary originators often receive a very small percentage for their contribution to the ancillary enterprise. The value of the commercializing ancillary innovation may be characterized by the quantity and quality of risk removed from commercialization; as compared to a risk-free hypothetical value of the primary investment alone. 

Reasons why most startups fail. 

The primary commercialization risks can be taken from a typical list of top reasons why startups fail.  The following example is from a VC firm Quake Capital https://medium.com/swlh/the-top-10-reasons-startups-fail-ab3196d70568

Each of these failure modes exist due to an absence of ancillary innovation of some kind.  Each requires a deep and highly specialized set of knowledge assets to mitigate.  No single experience set can mitigate all of them, and most inventors are lacking most or all of the skills required to cover the ancillary innovation roles.   

1. Lack of market need (42%): Metaphorically Is your product a vitamin or a Painkiller.   

2. Lack of cash (29%): Many startups run into money problems /short runway.

3. Wrong team (23%): Having a cohesive group of highly motivated, persistent, and diversely skilled people is crucial for startup success

4. Too much competition (19%): A second-mover advantage allows new competitors to quickly capture market share that you helped validate.

5. Pricing issues (18%): Figuring out how to price the product. 

6. Poor product (17%): founders sometimes release products that don’t fully appeal to customers.  

7. Business model (17%): Lacking a monetization strategy. Failing to find ways to scale. 

8. Ineffective marketing (14%): not understanding how to get one’s product into the hands of the target market.

9. Not customer-centric (14%): Many startups fail to obtain customer feedback and act on it.

10. Poor timing (13%): Airbnb’s success can be attributed to its impeccable timing, as it “came out right during the height of the recession when people really needed extra money. 

Conclusion:

The ancillary innovation process satisfies the demand of the scientific method by forcing the inventor to understand causation and disprove the null hypothesis of failure.  These ideals describe the role of the ancillary innovator.

The ability to assemble a specific combination of diverse knowledge assets deployed at the right time and the right place would not only mitigate risk, but if properly measured, would be able to quantify the value of risk mitigation in a tangible form that can be directly monetized.   

It is essential that the time required to deploy ancillary innovation is vastly decreased from current methods, systems, and institutions.  This is necessary in order to restore the natural and equitable intentions of the Patent system so that primary innovation can directly capitalize its own iterations. 

The Ingenesist Project is deploying our Blockchain Based Ancillary Innovation solution to important projects and institutions in the US. By making intangible assets tangible, ancillary innovation can be readily monetized therefore restoring the sustainable balance between technological change and economic growth.

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The Game of Zero

The Game of Zero was developed in order to populate the knowledge inventory. The purpose of GOZ is to introduce a constraint to Curiosumé which produces an equal amount of supply and demand for knowledge assets. The reason for this is to incentivise the formation of a market between and among knowledge asset holders.

(The Game of Zero (GOZ) is a subset of The Value Game (TVG) which may be found by searching this site.)

In order for a player to advance in a Value Game, the claims that they make in forming their Curiosumé must be verified by another game player and registered as a combined transaction record on the Knowledge inventory. 

In order to create a dynamic market of data, information, knowledge, innovation and Wisdom, each player must register as both surplus and deficit knowledge assets (teacher and students).  A score of surplus (what one knows) must be balanced by a score of deficit, (what one wants to learn) in order for the player to create tokens. 

Introduction: As the name suggests, game mechanics are employed to move the production forward.  Incentives consist of a combination of intrinsic motivations as well as financial compensation.  A knowledge inventory is expressed from an ontology that brings context to interactions.  The two-way flow of information is expressed as a simple bell-curve distribution for states of knowledge ranging from teacher (+1,+2,+3 Sigmas) to student (-1,-2,-3 Sigmas).   

The Game of Zero gets its name from the only constraint that is applied:  each participant MUST have a total score of ZERO.

Formation of Knowledge Inventory:

Ontology is a difficult topic to address universally because every company, institution, and every affinity group has their own specific means and methods for defining themselves in terms of ontology. 

Example: the following is the Wikipedia Ontology:

Generalized Knowledge Inventory:

Top Level Wikipedia Categories   -3s -2s -1s +1s +2s +3s
General Reference       X    
Culture and The Arts       X    
Geography and Places     X      
Health and Fitness   X        
History and Events     X      
Human Activity   X        
Mathematics and Logic         X  
Natural and Physical Sciences         X  
People and Self   X        
Philosophy and Thinking       X    
Religion and Belief Systems X          
Society and Social Sciences       X    
Technology and Applied Sciences           X
TOTAL = 0 -3 -6 -2 +4 +4 +3
Absolute Value = 22            

Claim your Intellectual Property:

  • Earn Power by claiming your IP blocks. 
  • Increase your power by having each block validated by another participant.
  • Surplus refers to knowledge that you offer to others
  • Deficit refers to knowledge that you need from others
  • Rank yourself as you fit among the community of your peers
  • Positive and negative must balance at zero
  • Adjustments can be made at any time

Important: Each of the above categories likewise have sub categories for which the same constraint holds.  Below those categories may exist many more for which the constraint likewise holds. 

Absolute Values in each category may be analyzed as well for business intelligence.  The combined knowledge inventory will accumulate substantial value. 

Implications for Merchandizing platform:

The Game of Zero provides a way for the participants to increase their “stake” in the system.  By accumulation of Absolute Value, the participant increases their likelihood of gaining a more valuable position / winning a more valuable prize.

The network of participants can safely contact each other based on mutual interests of validating knowledge and information.  One buyer may want to alert other buyers of a good product or service based on their unique identifiers.

There is no incentive to cheat – If I lie about my knowledge inventory, this is the equivalent of spamming myself. 

There is no incentive to troll because any claims that are not validated by one or more participant of relevant profile can be ignored by the system.

Playing the Game of Zero

Most applications require a user to become familiar with a detailed set of rules that are necessary overhead for security (passwords), Identity (KYC/AML), terms of use, rules of engagements, limits and levers, means and methods, etc.  Each requires a mental investment on the player as well as a resource overhead on the application.

Video games are taught with a simple objective and just allowing the user to play at level 1.  Level 1 teaches the player the skills that they will need to be successful at level 2, which likewise prepares the player for level 3 and so forth.

The Knowledge Inventory: The Game of Zero requires that a player complete a detailed profile in order to accumulate “stake” in the community. The profile is anonymous which allows the player to use an avatar or any name that they choose. They can change their name at any time.  They can delete a profile and start again. They can even maintain more than one profile. Each of these freedoms has consequences at higher states of play, but at the beginning the player is encouraged to experiment to find their place in the community.  The system will allow them to do anything that they want except violate the rule of zero. 

The player will quickly realize that the game interacts with them based on the inputs to their profile.  If they create a frivolous profile, they will get frivolous results.  If they provide meaningful inputs, they will get meaningful results.  Once they realize how it works, they may abandon a profile at this early stage and create a new one.  Penalty for this is that they will need to re-start the clock (like starting on square one).  This is not a big penalty at the early stages, but at the later stages this will become a significant deterrent. 

The more stake that a player holds, the greater the payout will be from the system.  Payout may exist in many forms from prizes to targeted economic opportunities such as gigs, validations, contests, and paid product endorsements.  The value of the economic opportunity increases at higher states of play.

Higher States of Play

The Game of Zero forces that player to maintain a net state of ZERO across the entire spectrum of ontology. At higher States of play the players may also need to validate their claims in order to increase their stake.  If they claim to be a +2 Sigma Computer programmer, they will need to find another +2 programmer to validate their claim.  If they balance their expertise with a -3 sigma desire to learn the game of tennis, they will need to validate their claim with a tennis partner.  Other scenarios are possible depending on market forces.

The process of claims and validations builds social cohesion, community engagement, and value of the system.  Failure to complete transactions or validate claims limits the benefit of game play and may eventually upset the balance of ZERO. 

Each claim and validation becomes a permanent record cast in time and cannot be altered without a corresponding counterclaim, or deletion of the profile.  

Network Effects

The next level of growth will include a transformation from a strict e-commerce site to a networked platform. The following features will be added.

  • Branding
  • Encourage communities to interact with each other
  • Precision matching of “teachers” to “students” drives value creation
  • Targeted incentives
  • Formation of affinity groups and buying pools
  • Managed by algorithm

If the system is trained to behave like a network, then a simple valuation component will be reflected by the square of the number of nodes multiplied by the quality of each interaction set equal to the current linear valuations. 

Management will then use this relationship to drive policy that concentrates on two things: Increases the number of participants and increasing the depth and breadth of engagement among the members.

Conclusion

How a Value Network Works

In business and commerce, value networks are an example of an economic ecosystem. Each member relies on one another to foster growth and increase value. Value network members can consist of external members (e.g., customers) or internal members, such as research and development teams.

Value networks enhance innovation, social welfare, the environment, as well as many other areas. Weakness in one node can affect the entire network. For example, if a development team is weak, the production team has a harder time creating the product, which can leave a buyer waiting for their shipment.

History: The Game of Zero was first identified by the author in response to requirements for managing the Summer Intern program at The Boeing Company between the years 1998-2002.  Later around 2005-2008 the system was studies for closing the knowledge gap at Boeing as well.  The research showed great promise and some parts of the work have been applied by the company.   Additional research and development was conducted through various companies and start-ups from 2008 until present.  The Game of Zero was generalized from the Boeing Experiments in private follow-on research and development as described in Curiosumé and The Innovation Bank.  Details of this history are outlined in the whitepaper.

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The Six Tenets of Curiosumé

Over the years we have identified several features of Curiosumé that every VC and “investor” wants to change – but these features are so fundamental to the operation of Curiosumé that to change them would render the application useless. More clinical, the Math falls apart.

On the other hand, this phenomenon serves as a very powerful test of human nature. Violating one or more of the six tenets represents the temptation of control and power over others – people who seek to exploit other people cannot resist this temptation and will shortcut or manipulate one of the following 6 tenets, thus guaranteeing failure. Those whose hearts are truly focused on empowering people can easily resist, and even thrive, in an environment of collaboration and inclusion, thus guaranteeing success.

The Six Tenets of Curiosumé

You are forewarned, each of these six tenets pass directly against the grain of traditional venture capital and investment systems making the work difficult to fund by traditional means:

1. The topmost ontology must belong to the Commons.  We specify Wikipedia, or other public databases for Curiosumé.  There will always be a strong tendency from investors to want to own the private database or to define the ontology because this is the most tangible form of control. In Curiosumé all data must reconcile upward to the single ontology owned by the commons. Investors will have a strong desire to own the ontology and privatize the database – we must resist this.

2. Non-competitive ranking system. Our culture is steeped in tradition of competition; war, sports, even evolution (survival of the fittest), etc – all purport the necessity of competition as a means of arriving at the best solution. It was very difficult to find a suitable rating systems that does not invoke some form of competitive hierarchy. But in reality, Nature exhibits many more examples of collaboration than competition, yet collaboration is not intuitive to the Capitalist psychology. We are not saying that competition is bad, it is just inefficient on a crowded planet. Instead, there should be a perfectly valid market for everyone. There will be a strong tendency for investors to rank people on a hierarchy – we must resist this.  

3. Self-selecting: People must self-identify their participation in a community. That way, they cannot cheat because they would only be cheating themselves. There is a strong tendency to tell people what to do, how to behave, and how to appear to a “market”. We must avoid this. If we can eliminate the incentive to cheat, then we can avoid the crippling friction of a punitive vetting mechanism in our processes. There will be a strong desire by investors to have a means of punishing people who game the game. We must resist this. Instead, we need to develop a system that allows people to game the game to improve the game. This is where creativity and innovation will come from.

4. “Learn-collaborate-teach” scale. It is extremely important that people are ranked ONLY on units of learning, units of collaboration, and units of teaching. The reason is that students and teachers do not compete with each other. Besides, people who is unwilling to teach others in an organization are just as useless as people who are unwilling to learn new things. Nobody knows everything and everyone knows something that can be taught to someone else. Learners represent demand for knowledge, teachers represent supply of knowledge, and collaborators represent factors of production in our new proto-economy. There will always be a temptation to create winners by producing and abandoning “losers”, we must avoid this.

5. Anonymity until the point of transaction (AUPOT): There is no reason anyone needs to know your identity until there is a tangible transaction, then and only then you must show your cards. Lack of privacy is what makes Big Data both invasive and unreliable. People acting anonymously behave differently (for better or worse) than those whose identities are known. The intrinsic unbiased activity data has completely different meaning than biased, impulsed, or controlled behaviors. The utility of such data would inherently be more beneficial to markets and society. There will always be a strong desire from investors to own the one-way communication channel (advertising, propaganda, control, etc) where they may impose controls – we must resist this.

6. Formation of the Asset: An asset can only be described in terms of a Quantity and a Quality of something. 100 gallons of drinking water is a completely different asset than 100 gallons of irrigation water. “100 gallons of water” without specifying the qualities of the water is not an asset. Curiosumé a claim as a “quantity” and a validation as a “quality” as a means of formatting a knowledge asset. This is called a unit asset and represents a node in the network. Investors will often want the asset to be described in terms of money where the components are explicitly risk vs return. We must arrive there a different way.

Conclusion

We are open to any new ideas on how we would build the Curiosumé application. However, the 6 tenets discussed here are non-negotiable features of Curiosumé that must remain intact otherwise the whole project will fail. Each one of the tenets rubs against the grain of current VC models, corporate investment models, even academic commercialization models. Obviously, these 6 tenets have made funding for our programs difficult.

On the other hand, the reasons why nobody has copied us is because they would have the same problems in funding. Breaking this legacy funding mold will be absolutely essential to emergence of a new economic paradigm.  

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