Wow what a week. I though that I heard it all until Mitt Romney said “Corporations Are people”. Actually, I admire Mr. Romney but I do struggle with this interpretation for his sake and those who he represents – and possibly an opportunity lost to rise above the noise.

In a way, Mitt provides us with a looking glass into the fundamental differences between the rich and the poor. The rich see themselves as the proxy for the prosperity of the poor. Meanwhile, the poor see themselves as the proxy for the prosperity of the rich. Neither side admits that they need each other, but I won’t pretend that I can solve this argument any time soon.  However, allow me to suggest that the winner of the debate will be the one that can evolve above the paradox.

The following video discusses how many components of a corporation – and government – are being duplicated in Social Media. The beauty of is that this great social innovation is available to anyone including the rich, the poor, the corporations, and the government. Oh, but wait – if the UK shuts down social media, they will effectively shut themselves out of the paradox, not evolve from it…Ooops. Be careful, Mitt.

So here is a video I made last year which, in a way, validates much of what we see playing out before us in politics, business, and social media.

The Hub and Spoke system is a time honored formation of commercial aviation. People accept hub and spoke as the most rational way to organize people and planes much like they accept the corporation as the best way to organize production of goods and service.

Meanwhile, social media is challenging every assumption that we hold dear to our hearts as new applications role out which steadily increase the ability for people to organize their selves.

The newest applications such as Google + show us that people are the hub and their various forms of social networks are their spokes. A person has a group for their family, one for their friends, their colleagues, their schoolmates, etc.  While G+ fatigue may wear in as people get tired of classifying their casual contacts, the real value of G+ may arise in the intentional Organization of people for social and financial efficiency.

The similarity between the airport and G+ Hub and Spoke is not a casual coincidence.  There is a very real and physical connection between the way people organize themselves in social media and the way they organize themselves in corporate production and the way their organize themselves in air transportation systems.

Suppose we make the analogy that the person in the center is the customer, the circle that they belong to is the market, and the person in the market is a client.  The analogy hold when we try to “preserve college friendships”.  College is the social market and the friend is the mutual client relationship where the currency is a social currency.

The analogy is still very young, but it is truly profound.  This way of thinking will drive a form of social organization that may rival corporations, government, and even international boundaries.  It is also no coincidence that Social Flights has been modeling this analogy for the 2 years since we first started developing our business plan.

Today, Social Flights is working on some important concepts for defining Travel Tribe Leader functions.  The objective is to duplicate the function of a “concrete” hub and spoke system denominated in dollars with a virtual hub and spoke system denominated in social currency.

Network Characteristics of Travel Tribe leaders:

• Each Travel Tribe Leader is responsible for 10-20 city pairs from their own location.
• Two travel tribe leaders for each city pair (one located at each point)
• Travel Tribe Leader creates revenue by matching people and places
• Builds tribal/shared knowledge
• Redundant, opportunistic, and fault tolerant
• Ideally suited for Twitter, Google + and Facebook Distribution Channels

Conclusion:  The organization of people it figuratively (with G+) and literally (with corporations) is the exact same thing.  This will become obvious when people discover the necessity to organize their selves into productive communities in the absence of corporations and government.  But why wait – we can, and we will use social media to form a new system of social organization.

Citation: http://www.slideshare.net/padday/the-real-life-social-network-v2

I am deeply concerned with the Liberal / Conservative flame wars. Countless Facebook discussions start with a casual reference to one position or the other, then quickly devolve into deeply divisive language. I see it in forums, Chats, Comments on blogs, news articles and YouTube Videos.

It’s getting worse – people can no longer agree to disagree.

I do not believe in big government. On the other hand, I do not believe that corporations should be the sole protectors for safeguarding the social charter. Call me an idealist, but I truly believe that given the right incentives, people can govern themselves to a very large degree.

Weapon of Mass Reconstruction

We have at our disposal the most powerful tool ever created for the potential benefit of humanity. Societies since the beginning of our time would have envied us beyond words – as their villages were pillaged, as the plague spread, or as the hurricane hit shore – if they had a system that could unify and organize people as we can do today with social media.

My fear, is that we will use this tool to divide instead of unify. Traditional media and the advertising industry are in deep trouble as people go online to self-select their news and content.

Trust me, I’m your friend

Unfortunately, traditional media (TV, print, and Radio) are under extraordinary pressure not just to maintain ratings, but to increase ratings to subsidize less successful areas of the enterprise. As a result, the content must become more and more sensational in order to keep people watching commercials. If I earned one dollar for every minute of YOUR time that I could waste, would you trust me? Yet people do.

The Terrorist Within

I am terrorized by the notion that Americans will turn against Americans. The problems facing this nation are so complex, so controversial, and so far reaching into the past and the future that it is unlikely that any intelligent person is more qualified than any other intelligent person to hold the highest office. Barrack, Hillary, Sarah, John, would all have the same pressures pushing back on every move leading them down 95% similar paths. None could be better and none could be worse – we’re officially in this together.

So until the super-star with extra-human discernment rides out of the clouds, People should really really be looking for a third way through this. Pure Communism is a Failure, Pure Socialism is a failure, and we are quickly learning that Pure Capitalism also runs out of track.

The Next Great American Civil War will be a battle against ourselves – all of the artifacts of past generations that pull at our subconsciousness; the reactionary fight or flight instinct of our ancestors. We are being called to something new. Let’s get on with business and find out where this road leads – together.

If an IPod is shuffling in the forest, and nobody is around to hear it, does it make a sound?

This is a standard philosophical riddle that raises questions regarding observation and knowledge of reality. Alexander T. Jackson, one of the great minds of the 20th century, may have said that, “View points of this riddle differ based on the perceived definition of the word ‘sound’, often confused with the definition of the word ‘hearing’.”

A $300 Ipod is shuffling in the forest and nobody is around to interact with it, does it have value?

This philosophical riddle also raises questions regarding observations and knowledge of reality.  Viewpoints in this riddle differ based on the perceived definition of the word ‘money’, often confused with the definition of the word ‘value’.

To this question, Wall Street would say “Yes”, but Main Street would say “No”. In fact this brings into question the order of how we assign value in our world.

Suppose we constructed the same riddle for any physical asset such as a bridge, house, airplane, computer, car, university education, insurance policy, Marketing Department, tennis shoe, police officer, trumpet, leaf blower, FaceBook, Twitter, Linked In, fungus cream, guacamole, anything at WalMart, etc…..

Value of human interaction

Before long, we notice that the value of nearly all products and services is wholly derived from the value of human interaction with the object.  So where exactly is the true value of our economy, in the object or in the human interaction?   Wall Street would say “object”, but Main Street would say “human interaction”.

Credit Score

In finance, the credit score was established to assess the human interaction with a financial instrument called debt.  Yet, in the above example it is relatively clear that the vast majority of value created is dependent on human interaction with products and services that may or may not be financed with debt, not the debt itself.  It would seem that a social credit score and a knowledge inventory would be more appropriate way to assess the true value of economic activity. But where do we start establishing such an index?

The Social Value Index

We’ll start with a baseline 80/20 rule first identified by an Italian Economist named Vilfredo Pareto.  In our rendition, 80% of the true economy is created in the form of social value and 20% is created in the form of financial value.  Keep in mind that Dr. Pareto also defined a concept called the “Pareto Efficiency” for social resource allocation. This refers to the end-state of an economic game where no player can become better off without also making at least one other player worse off.

The objective then, is to design Social Value Games that are 80/20 (social vs. financial leverage) compliant and Pareto Efficient then, test the hypothesis and improve it toward optimality.

The Social Value Game

The value game is a social media business method developed by the folks at The Ingenesist Project in a dynamic application of social technology.

Most applications of game theory are controlled from in-house or deployed against a competitive landscape.  The Value Game is deployed external to the corporation and in a cooperative landscape where rewards are given to those who organize people around a “highly leveraged product” in valuable ways.

There are 5 elements to The Value Game

The first is what we call a highly leveraged product such as a conference, experience, convenience, ZipCars, or reunion – we’ll see that almost any product can be leveraged.

The next element is a secondary product vendor such as a hotel, restaurant, transportation, clothing, or equipment supplier – we’ll also see how almost any product can be deployed in the secondary role.

The third element is a consumer who seeks to minimize financial cost and maximize social value.

The fourth element is a 3^rd party entrepreneur who is able to organized people in social networks and leverage primary and secondary assets in unique combinations.

The fifth Element is a true value calculator called the Social Value Index (SVI).   The SVI is the scorekeeper that calculates the actual value of the leveraged product after all of the discounts and social value factors are counted.

The game starts when everyone joins the same social network underwritten by a mobile electronic debit card platform and sets their filters for what information can enter (and to block out spam).  The highly leveraged product in the middle acts like a ball in play whose value is dependent on the interaction of the other elements.  Secondary vendors will deploy incentives into the field.  Third party entrepreneurs will organize people around the incentives and take social profits.  The Social Value Index will keep score.

Example 1: A ZipCar costs about 8 dollars per hour; this business model does not encourage social activity; it encourages fast shopping. Suppose that a person pays for the ZipCar on their debit card.  Local restaurants will be made aware of the purchase and then deploy coupons against the ZipCar to the buyer’s debit card. Next, a 3rd party entrepreneurs may improve the SVI by organizing a ZipCar swap so that the person does not have to leave in the same ZipCar that they arrived in and can spend more time shopping.  Another entrepreneur may organize events for families and friends that increase the passengers in each ZipCar, or by capturing any inventory from the community such as movie tickets or family experiences to deploy against the ZipCar.  After the event, the SVI updates the net cost of the ZipCar from 8 dollars per hour to, say, 1.42 per hour.  This is 80% savings on the ZipCar and 33% savings on a day out with the family over using their own car.

In effect, the leveraged product buys itself in a convertible social currency

Example 2: Suppose that a popular aerobics instructor has 40 students.  The local health food store may authorize her to give away 1000 coupons for 5% discount on store products.  In return, the aerobics instructor gets 5% of total purchased.  The health food store already spends 10% of revenue on advertising. It is in the instructor’s best interest to give the coupons to people who are likely to spend the most at the store.  After all, if 1000 people spend 100 dollars each, she stands to gain 5000 dollars.  The health food store stands to gain loyal customers without advertising. The aerobics instructor may maximize her profits by joining with a health food chef to teach classes in healthy cooking.  Or, she may join with a caterer, wedding planner, or hotel to supply an entire event for which she will receive social and financial value.  She may give them to colleagues who also become authorized to give away coupons – and she negotiates for a percentage of their output as well. She will become knowledgeable about the products at the store and talk about them with her friends.  She may even sell the face value of the coupons for cash since it is likely that a high bidder would also be a large customer for the health food store.  The Social Value Index favors this store, this aerobics instructor, and this social network – higher than competitors.  SVI registers with Search Engines and bargain hunters seek the Aerobics Instructor for deeper information and services.

Millions of applications will arise limited only by the imagination of communities not Wall Street

As we discuss many times in this blog; human knowledge assets include combinations of intellectual capital, social capital, and creative capital. Of course nobody can survive without all of these elements, however, I am continuously amazed at the power of the last and most important element; Creative Capital.

This video is from an extraordinary Seattle Musician named Aaron English. I have known Aaron for several years and follow all of his work. He is always up to something completely interesting. Aaron can say more in 4 minutes that I can say in 100 blog posts.

Artists and musicians have what I call “communication density”. They are the true innovators among us.  They can combine so many different concepts, media forms, and objects to produce something completely new and interesting. Artists create value. I rely heavily on the artists for my day dreams.

Please enjoy this video. Watch it several times. Don’t forget to daydream

Editorialized Economics

Social media used to be so cool – a way to bypass the mediated reality of editorialized content. Real people coming back with real ideas and real opportunities from the crystal clear waters of cooperative community. Then legacy media and their ad-rev departments started to wonder “Hey, where did everyone go?” Marketer started saying, “Hey, these CPM numbers are F***ed – something is cutting into our pie ?!?!?”

Then came the Social Media Gurus

like the tattle-tale kid brother intent on spoiling a perfectly good game of hide and seek, screeching: “There they are, there they are!!!….Can you see ‘em?…see, see, your customers are hiding in the shadows… there, in the shadows….quick!!! Can you see ‘em now?.  By the way, pay my fee, buy my book, and did I mention my latest ‘keynote’ yet?”

Next, the Gurus went mainstream as legacy media analysts!! Legacy media picked up the ball on the run-away ad spend. They glossed poetic on the “effects” but not the “causes” of social media. And, OH Gawd, what a nuisance all those pesky bloggers are to the dignified art and science of professional journalism.

A Monster was Born

Facebook declared that people really want to share their personal details with the world, and a monster was born. So now we are stuck with Corporate Media on steroids.  Your data are scraped so they can find you. Images are reproduced infinitely. Lies and deception grow legs half way around the world before the truth can even be awakened from it’s slumber. Say one thing wrong and it haunts you forever.

Casualty or Causality

Social Media has become another casualty of the broken financial system where people fight for artificial scarcity.  It is no longer a means to empower and enlighten, it is becoming another means to exploit and oppress.   Special recognition goes out to all the so-called social media gurus. I can’t blame them though, everyone has the right to make an honest living.

Call it tattle-tale economics

Gambling with Jobs

The US Senate recently blocked a measure designed to reduce the outsourcing of US jobs that many corporations pursue in the relentless drive to reduce costs.

Modern Globalization is a system

Globalization must be analyzed like a system. Data, Information, knowledge, Innovation, and wisdom are profoundly related in a system. If you take away one of the components, the others become worthless.  If you destroy one component, the entire structure could fail.

Everyone knows that data, information, knowledge, innovation, and wisdom are related.  If I corrupt the data, then the associated information, knowledge, innovation, and wisdom are also corrupted.  Likewise, if I eliminate any of these elements, the system fails.

Focus on Core competency – what core?

The standard argument for outsourcing is that knowledge workers are better allocated in innovation jobs so “we can better focus on our core – and heck, we can all save a little dough in the process”.  But when we outsource our knowledge economy, the innovation economy is choked off.    The knowledge economy is the source of the Innovation Economy.  The Knowledge economy is also the recipient of the information economy which transforms data and information into useful tools, ideas, and products.

Rate Of Change is Innovation

The rate of change of the innovation economy is directly proportional to the INCREASE not the OUTSOURCING of the knowledge economy.  This is the calculus of outsourcing.  If, on the other hand, it is in you best interest to keep a population poor, weak, and unable to organize into powerful collectives, then yes, outsourcing is an effective method.

Future of Banking

When I use the term “Innovation Bank”, people conjure up the image of a cheery place where anticipation reigns as starry eyed depositors arrange their intellectual property in neat cubby boxes, Patents are peddled like newspapers, and flush pocket companies troll the halls looking for a cure for their bottom line reflux disease.

This is not exactly what we have in mind, nor is it too far off either. An innovation Bank is simply a knowledge inventory that contains knowledge assets that exists in the format of a financial instrument between people’s ears and can be deployed for the purposes of increasing productivity. Oh, by the way, knowledge makes more of itself every time it is deployed …. Interesting?

The Assumptions

This is not much different than a financial bank. In fact, in the financial bank, everyone assumes the borrower has the knowledge to execute the business plan and the bank lends the money. Oh, by the way, the money makes more of itself (interest rate) every time it is deployed.

With the innovation bank, everyone assumes the entrepreneur has the money to execute the plan, and the seek to borrow the knowledge. Other than that, they can be considered identical. The key is in the scope, depth, and format in which the knowledge assets live in a community as well as the ability to track and preserve the creation of new knowledge in a community.

A Virtuous Circle

Together with the financial banking, these two system engage in the dance of the virtuous circle of innovation enterprise. Apart, they collapse into the swirling cesspool of eternal debt and infinite interest (pun intended).

image source

Ingenesist.com

Music by Phil Felicia

Mathematics Dysfunction Disorder

I am continuously astonished at the reactions I get from people every time I make a reference to mathematics, especially Calculus. Most people politely glaze their eyes over and stare at an inanimate object somewhere behind my head. Others launch into a diatribe of how the linear thinkers destroyed the world in the first place. Others will simply say, “I have [insert Deficit Dysfunction Disorder here]“

Puzzled by Limits?  Perplexed by derivatives?

The truth of the matter is that everyone already knows Calculus, they solve differential equations all day long – they just don’t know that they already know what I’m talking about.  If you take away all the strange terms, squiggly lines, and alphabet soup notation,….

Calculus is astonishingly simple

• The Banker does not care about money, he cares about the rate of change of money.
• The Stock Market does not care about risk, it cares about the rate of change of risk
• The Politician does not care about votes, they care about the rate of change in votes
• The Meteorologist does not care about weather, she cares about the rate of change in weather
• The Pilot does not care about lift, they care about the rate of change of lift
• The Gymnast does not care about motion, she cares about the rate of change of motion
• The Artist does not care about color, he cares about the rate of change of color
• The Doctor does not care about your health, she cares about the rate of change in your health
• The Baker does not care about dough, they care about the rate of change of dough
• The Farmer does not care about crops, he cares about the rate of change of crops
• The Scientists does not care about data, they care about the rate of change of data
• Google does not care about information, it cares about the rate of change of information
• Entrepreneurs do not care about knowledge, they care about the rate of change of knowledge
• Markets do not care about innovation, they care about the rate of change of innovation
• Our children do not care about our wisdom, they care about our rate of change of wisdom

When people can learn how to understand what they are really doing in instead of what they think they are doing, then and only then, will we be able to see, and subsequently, build the next economic paradigm.  That is why I use mathematics and that is when Social Media Becomes a Science

The Capitalist does not care about value, they care about the rate of change of value

Land, labor, and capital are no longer effective proxies for human productivity, creativity and intellect – end of story.  We need to stop talking about social media as if Monetization is some kind of mystery.

The road to monetization is not paved upon on the roadmap of the industrial revolution. Something new needs to happen, we’ve got to move on:

In case anyone is wondering if Social media can drive Social Priorities  against Wall Street Priorities, they need not look any further than the cover of the New York Times. Here is a story from the August 31st edition about banks that step away from no-brainer money making business venture because of the social risks to their reputations and therefore, their bottom line.

It is obvious that new sources of energy will be hugely lucrative in the future – except when blowing up pristine Appalachian mountain tops or releasing vast CO2 emissions cracking oil from Canadian sands – both perfectly legal enterprises.

In the past, the struggle between those in favor and those opposed to, say, a coal extraction project played out largely in private and was heavily biased toward those with the deepest pockets. In the past, the developers had an advantage of vast money reserves to wage legal battles, political wrangling, and public relations campaigns against the lowly community action members. Now, this fountain of money may dry up in the future if banks step away, politicians become wary, and the public becomes increasingly informed of the true value of all alternatives.

“We’re taking a much closer look at a much broader variety of issues, not all of which are captured under state and local laws,” said Stephanie Rico, a spokeswoman for the environmental affairs group at Wells Fargo.

These dynamics are converging on something called a “True Value” Calculation. The True Value Calculation is the expanded ROI of a business venture which includes the positive and negative impacts on a much wider body of stakeholders in the sum total of viability. In the very near future, we may find that the True Value Calculation will become the rational basis of our democracy as social media aspires to the role of social vetting mechanism and politicians become increasingly irrelevant to anyone but each other.

]]> http://www.ingenesist.com/general-info/the-true-value-calculation.html/feed 0 http://www.ingenesist.com/general-info/intellectual-property-in-the-cloud.html http://www.ingenesist.com/general-info/intellectual-property-in-the-cloud.html#comments Tue, 31 Aug 2010 13:20:31 +0000 Dan Robles http://www.ingenesist.com/?p=3876

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?

Social capitalism is the new game in town.

Or maybe the last thing that Wall Street wants is for Engineers, Architects, designers, and creative people to get “royalties” on their work. Wall Street is quite happy collecting the royalties of the creative people in America – those people who actually produce something real and tangible.  Social media is a social contract and Intellectual Property is our tangible currency. Hello.

Innovation is currently defined as “A new idea that has a favorable economic outcome”.  The problem is that nobody can solve one equation with two unknowns, i.e., what’s a new idea? and what’s the economic outcome?  By this definition, you can only identify innovation after it has occurred.  So, it’s not very useful – in fact, it is a tragic definition and it must be scrapped immediately.

The trick is to identify the new ideas and direct them to the appropriate economic outcome, not the other way around as many companies and agencies try to do.  Most good ideas can’t find a place to be profitable in a silo, so they are scrapped. This is not the fault of talent or the idea, but invariably both are lost.

The existing definition of innovation is insufficient for use as a way to identify innovation in the present. There is no way to build an innovation economy upon a flawed definition and unpredictable value of innovative activity. This new interpretation will allow innovation to properly behave like a financial instrument.

The term IPO conjures images of empire-making where a hot young company with a great product offers pieces of its future-self for sale to the public as a means of raising money without incurring debt.  The money is then used to create the next titan whose new jolt of growth is shared with all who participated.

Today, every annual report to shareholders touts the great team of people whose social, creative, and intellectual capital make it all happen, the worthy and stoic investors whose vision drives sound decisions, and the legions of happy customers who make it all worthwhile.

Essentially, an IPO is people buying into the productivity of other people.

Yet, the IPO is a strict and complex legal and regulatory maneuver that establishes property rights on these small pieces of future productivity – represented by “stock” in the company.

There are underwriters (usually a bank), battalions of lawyers, the securities and exchanges commission (SEC), brokers, insurers, re-insurers, institutional investors, private investors, and retail investors.  There is a full infrastructure supporting the facts of incorporation, disclosure, accounting, and proper management of internal “inside” information.  And, of course, there is a media /PR campaign.  All are integrated to keep the game fair, yet viable.

In the Age of Social Media

I could be wrong but it seems that such vast infrastructure appears a bit awkward if the end result is simply for people to buy into the productivity of other people.  This happens everyday in Social Media.  At some point, we really need to ask; why can’t an individual or a group of individuals raise money without incurring debt like corporations can?

In Social Media, people own and deploy their relationships,  communities, motivation, their knowledge, creativity, intellect, mentorship, leadership, teamwork, their network, and even their ability to form corporations – people own their time.  Social currency is backed by the scarcity of time and the availability of surplus knowledge.

All of the structural components of the financial system are appearing in an analogous form in social media; social vetting, social gaming, aggregation, influence, knowledge inventories, communities of knowledge assets, local social, global social, tag search, deep search, semantic search, stream of consciousness search, geolocation, mobile computing, multi-media, and many more innovations are being created and deployed everyday which literally serve the functions of banks, lawyers and legislation in an invisible economy.

The Ingenesist Project tries to string this all together with just enough specificity so that an alternate financial system will jump start itself and become both visible and available to everyone.

We’ll hold an IPO for Humanity

All of the infrastructure and the potential for people to produce things would remain intact regardless of what happens to the currency.  Think about what would happen if all the dollar based money system evaporated. The only safe haven for the storage and exchange of value will be in people and their communities.

The only thing missing is a system that can articulate social capital, creative capital, and intellectual capital instead of land labor and financial capital.  This system can be built today.  Please Vote for our presentation at SXSW 2011.

In an interview with the Wall Street Journal, Google CEO Eric Schmidt warns of the future consequences of social media and networks, and the vast amount of personal data that users put out there on the Web.

The article goes on to describe how Google is looking for what is next – that is, a world where the Google Icon no longer dominates the center of our lives.  He warns future societies about creating a “future” by documenting the past.  A future president, CEO, or just a job hunter can be haunted forever by the words and images that are becoming indelible in social media today.  Mr. Schmidt insists that information is social currency.

Actually, I do not believe this to be true.  I believe that is more likely than not a severe disruption is on the horizon which will deeply impact social media, Google, and Facebook, etc.  This disruption will alter the course of the future that Google predicts.

All it would take is for humans to step up one more rung on the evolution ladder.

Think of it like this:  a dollar is used to store and exchange value yet it is completely anonymous – you don’t know very much about it’s past or future – you do not need to know much about the exchange device in order to carry out the transaction.

Google is an information company, not a knowledge company. The next economic paradigm will be based on the creation, storage , and exchange of knowledge – not necessarily information.  Knowledge exists only between the ears and once it is made tangible, I will not need to know where in the past that knowledge was excecuted – college keg parties included.

Neither Google or Facebook have indicated that they realize how value can be created, stored, and exchanged while maintaining anonymity if the public knowledge inventory were properly coded. Likewise, billions of people who use Social Media are dismally unaware that nobody else needs to posess any of their personal information to execute a knowledge transaction – seriously, noone.  In fact, not only is relative anonymity a possibility, it is an imperative to market efficiency in Social Capitalism.

The “next Google” will, in fact, filter out irrelevant “information” as a means of creating time. Time is the real currency. For more on this please see http://ingenesist.com/introduction.

Google needs to figure out how to get the most worthy knowledge surplus connected to the most worthy knowledge deficit in the shortest amount of time.  Information brokering alone can’t do this, so it’s Armageddon for whom?

***

Please Vote for The Ingenesist Project to present at SXSW 2011

The Ingenesist Project specifies an Innovation Economy built on a platform of social media as the next economic paradigm.  60 minute solo presentation in the advanced technical track.  Your help is deeply appreciated. All comments welcome.  Material based on video series here

The Ingenesist Project has submitted the following presentation to the South By Southwest Conference in Austin Texas on March 2011. We sincerely encourage our readers to vote for this presentation. It promises to be hugely compelling, deeply controversial, and boldly disruptive. This is for a 60 minute solo presentation to the Advanced Technical Track – the competition is impressive. Voting ends Friday August 27, 2010

Please select the following link to vote

Thank you very much for your support

The Ingenesist Project

Description:

Today, we have one of the most extraordinary opportunities in human history playing out before our eyes. Social Capitalism is no longer merely a band-aid for an amoral Market Capitalism, it is a new form of Capitalism in it’s own right.

In the age of social media, many entrepreneurs no longer allocate land, labor, and financial capital as a primary means of production. Rather, they deploy social capital, creative capital, and intellectual capital to the production of a vast amount of “value” that is stored and exchanged in communities. The objective of The Ingenesist Project is to make this value tangible outside the constructs of government and corporate interaction.

This presentation identifies the five essential components of Market Capitalism and demonstrates similar elements emerging in social media. It then specifies how these elements can be integrated to perform the essential analogous functions of financial institutions. Next, we specify three relatively simple social media applications that may create a new class of business plans enabling millions of social entrepreneurs worldwide. Finally, a new financial instrument is described which can be capitalized and securitized to form the basis of a fungible social currency to hedge the dollar.

The net result could create a condition where Wall Street priorities are subservient to social priorities rather than social priorities being subservient to Wall Street priorities.

Questions Answered

What can replace market capitalism when it finally runs out of steam?
What exactly are people producing when they engage in Social Media and why does it create value?
What characteristics must a social currency have in order to be fully convertible or even a replacement for the dollar?
What is a knowledge inventory, how should it be formed, and why should every community have one?
What would be a powerful strategic plan for the Internet in the absence of one today?

[Level Advanced Category Entrepreneurism / Monetization Tags monetization, Social Capitalism, Social Currency Type Solo Event Interactive 2011]

The presentation will mirror some content found in the following video series

Photo credit:

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

]]> http://www.ingenesist.com/general-info/social-capitalism-and-the-innovation-bond.html/feed 1 http://www.ingenesist.com/general-info/securitization-of-social-currency.html http://www.ingenesist.com/general-info/securitization-of-social-currency.html#comments Tue, 17 Aug 2010 14:27:11 +0000 Dan Robles http://www.ingenesist.com/?p=3781

Throughout the articles and videos on this blog, I try to make a direct and rigorous analogy between Market Capitalism and Social Capitalism because there are two characteristics that no Social Currency can approach, yet which define the very nature of Capitalism: capitalization and securitization.

Capitalization

refers to the ability to consider the present value of predicted future earnings as if it were, in fact, tangible. This is the factual basis of the U.S. Dollar. In finance, this is called debt. If done correctly, debt is an extremely effective tool for economic development responsible for huge productivity gains in the last century.

Securitization

refers to a structured financial process that collects all those debt payments into a big pool of money and then chops that pool of money into smaller pieces called securities, which are then sold to investors. Risk is said to be diversified away because it is unlikely that all debtors would default at the same time – so if a few of them fail, the investment in the securities remains relatively safe.

This is very important because in the video series on Social Capitalism, we have described a structure that allows us to capitalize and securitize knowledge assets in a social currency representing real productivity.

For example. The knowledge inventory tells us the probability that a collection of knowledge assets can execute a business plan. Applying WIKiD tools, the rate of change of knowledge is a proxy for innovation. If we can predict the fact and value of innovation with The Value Game, we can estimate the risk adjusted value of the corresponding future productivity gains.

Now, the cash flows of many communities of knowledge assets can be aggregated into a diversified pool of value and chopped up into securities. Since the securities represent future productivity, they are readily convertible to Dollars, Yen, or Euros and sold to investors.

This new security, called the innovation bond, will become the basis for a new social currency.

Please Vote for The Ingenesist Project to present at SXSW 2011

The Ingenesist Project specifies an Innovation Economy built on a platform of social media as the next economic paradigm.  60 minute solo presentation in the advanced technical track.  Your help is deeply appreciated. All comments welcome.  Material based on video series here

Exoquant.com

Currency is a device used for the storage and exchange of Value.  Two characteristics of modern money are the abilities to Capitalize and Securitize the currency.  In fact, Wall Street touts a specialized professional precisely for that purpose – they are called “Quants”

This video introduces a very similar form of mathematics that Wall Street uses on tangible assets, except applied to intangibles. This is where the term Exoquant is derived – the externality quantity.

The Value Game introduces a new class of business plans that will define Social Capitalism as a distinction from Market Capitalism rather than simply an extension of Market Capitalism (as most definitions currently hold).

This video begins with something called The Airplane Game – a project currently underway among a group of dedicated partners. Some of this material is found in other videos on our blog but the listener is encouraged review the ideas since this example forms the backbone of business methods which we will return to in later chapters.

This Video stands alone but is actually the 3rd in a series specifying Modern Social Capitalism. See Part 1: Introduction, and Part 2: Predictions.

All comments welcome.  Material based on video series here

In order to create anything useful, there must be an inventory of parts, a bill of materials, or an accounting system with assets on one column and liabilities (deficiencies) in the other column.

The purpose of this video is to demonstrate how a knowledge inventory should be structured so that useful things can be built.

• The knowledge inventory must be machine enabled
• The knowledge inventory must be vetted among peers on a bell curve
• Yes, I know Dewey is archaic, however, a cascading decimal system facilitates code
• The objective is to be able to predict the likelihood that a collection of knowledge assets can execute a business objective and thereby “Capitalized and Securitized”

The knowledge inventory is the most important part of Social Capitalism. It is also the piece that will most challenge people to think outside the resume system regarding about how we organize ourselves in on-line and local communities.

(Developers, entrepreneurs, and angel Investors: please contact us for the Zertify.com business plan summary and specifications)

The Adaptive Cycle: Holling, C. S. 1986. Resilience of ecosystems;

Social capitalism is an old idea taking on an new form in the age of social media where social capital, creative capital, and intellectual capital are deployed outside the construct of the prevailing corporations or governments.

Throughout human history, societies have reorganized themselves in response to tyranny, innovation, environment, new wisdom, etc.   I believe this to be the root of what Social Capitalism is, and therefore, how it should be defined.

In The Shadows:

The dominant definition of  “Social Capitalism” from Wikipedia reflects a social cause cast against the backdrop of market capitalism.  This definition acknowledges that economies work better when everyone participates; specifically, the so-called tier 1 and tier 2 people.  Tier 1 individuals have steady financial incomes that allow them to function without private or government support. Tier 2 individuals cannot meet the prevailing standard of living and rely on private or government support. Therefore the prevailing definition of Social Capitalism often refers to efforts to bolster tier 2 persons as a means of reinforcing the economy for everyone.

Conflict:

There is an inherent conflict where tier 1 is held responsible to support tier 2 as a means of protecting their tier 1 status. Traditionally tier 2 included poor families dependent on food stamps; children who depend on public education; elderly people who are no longer able to work, and low-income criminals who require police intervention, etc.

Ideally, getting more people from tier 2 into tier 1 is the desirable objective.  Indeed political division is marked by the theories and practices on how exactly that objective would best be accomplished.

A worst case:

What happens when tier 2 is simply forgotten; they are simply allowed to fail in the mainstream economy?  What if the government becomes too weak to bolster their economic prospects?  What happens when a critical mass of tier 1 people involuntarily enter the tier 2 environment bringing along their substantial knowledge inventory.  They are otherwise very productive people that had been laid-off, outsourced, underemployed, or otherwise marginalized.

The Special Case:

What happens when Tier 2 deploy new technologies that responding to their priorities, not necessarily Wall Street priorities.  What happens when tier 2 people trade a social “currency” among themselves? What happens when tier 2 swells to a size and scope that they are able to bear broad political and economic influence.  Many great human struggles emerged from under the hand of a Tier 1 constraint using their own manner to store and exchange value  (currency) represented by their own knowledge inventory and productivity.  Why would that not happen internally in American Society?

Structural Capitalism:

Social Capitalism is where factors of production in an economy are purely human and technological and less structural:. Specifically, social capital, creative capital, and intellectual capital deployed outside the construct of the prevailing corporations or governments.  Maybe it should be called “structural capitalism” because that is what is actually changing. We are at an extraordinary time in history where an extraordinary structural reorganization is taking place.

That’s Social Capitalism as it’s always been.

***

Please Vote for The Ingenesist Project to present at SXSW 2011

The Ingenesist Project specifies an Innovation Economy built on a platform of social media as the next economic paradigm.  60 minute solo presentation in the advanced technical track.  Your help is deeply appreciated. All comments welcome.  Material based on video series here

EAVB_ZVNALFGLMC

The Knowledge inventory will become the most important element of Social Capitalism.  Today, knowledge is largely sequestered behind the walls of corporation in the form of titles, skill codes, resumes, job descriptions, certifications, and college degrees.  In order to predict the future, we point to the things that we have done in the past.

2nd Place is 1st Loser

10% of the country is unemployed and less than 10% are fully actualized in their profession.  Competitive forces drive the hiring manager.  The consequences of all business decisions eventually lead to win-or-lose market scenarios.  People compete with each other for promotions, the boss’s time, the corner office, or just staying off the unemployment line.  That is the only future anyone can truly predict based on the past.  It’s easier to predict the loser than the winner – so that’s what happens.

Social media is very different.

People are organizing themselves in a new form outside the construct of the corporation.  Linkedin aggregates intellectual capital, Facebook aggregates social capital, and You Tube aggregates creative capital.  Millions of blogs, Twitter, and a generation of search engines reassemble all these parts in ways that create social value.  People are not competing with each other, instead, they live on a bell curve.  They are seeking cooperation and collaboration. People use “like” buttons, tweet counts, and analytic data to “value” the quantity and quality of another person’s knowledge.  There are fewer losers, hence more winners,  because there are a greater number of  markets – not just one corporation.  Everyone is a corporation.

No Governance, no anarchy, no problem

Since social media is outside the construct of a corporation, there is no governance. There are lots of people trying to control only to experience diminishing returns.  Microsoft, Apple, Google, and Facebook must tread extremely carefully on the landscape of public opinion precisely because of their dominance.  People use Facebook to attack Facebook, PowerPoint to attack Microsoft, YouTube to attack Google, and Twitter to attack everyone.  Retribution would be suicide.

The Last Mile of Social Media

Now, geo-location services are filling in the Last Mile of Social Media where communities will form to produce things that are tangible and real.  As a result, there is a sharp increase of interest in a form of currency that can represent this social value.  Some of this is because the dollar is losing its ability to represent people’s productivity.  So they engage a different economic system.

Social Productivity

The next great leap in Social Media will happen when people reorganize themselves in an external knowledge inventory, outside of corporations, and segmented in high granularity of knowledge assets in close proximity to each other.  Entrepreneurs can then assemble people in unique, efficient, and productive ways.   People will then build things for profit using a new currency – a new social currency.

It should be fairly obvious that there are some extreme financial anomalies on the Global Horizon.  That legendary, but long-in-the-tooth social system affectionately known as Market Capitalism, is up against the ropes as the debt monster gobbles up everything in it’s path faster than any austerity measures can ever keep pace.  Take note that debt can reach infinity but austerity measures can only reach zero … you can do the math on a postage stamp.  If there ever was a need for a secret weapon, it is now.

The following 4-minute story-board video is part 3 to the series called “Will Social Capitalism Replace Market Capitalism?“.  The video introduces an important futures methodology and algorithm called WIKiD Tools for the management of Social Capitalism.   The next few videos will define WIKiD tools more fully while introducing a segment called “The Knowledge Inventory”.   Next, the SC>MC series will lay out scenarios for the capitalization and securitization of knowledge assets. Finally, we’ll revisit the Airplane Game to wrap it all up.   In other words, within the next few weeks, I should have published a fairly explicit set of functional specification for the next economic paradigm answering the question “What comes after Market Capitalism?”

Hold on to your hats and thank you for joining us on this wild ride.

Independence is a state of mind. Americans have always chosen independence – and they will continue to do so. It is often convenient to let ourselves trust elected leaders and the esteemed business titans to do what is in our best interest. Don’t be fooled, this is “trust”, not dependence.

It is likewise unwise to underestimate the independence movement – independence from corrupt currency, independence from fossil fuel, independence from corporate greed, independence from divisive politics, independence from endless war. Just when everyone thinks that Americans are up against the ropes, they come up with an idea so radical, so creative, and so astonishingly consciousness-altering, the rest of the world just shakes their heads in collective disbelief.

That is where we are today. Something extraordinary is about to happen in the way Americans organize themselves. Nothing is sacred, no one is immune. The next economic paradigm will alter the course of civilization.

All stages of human development were derived from the prior stage of human development by integrating the tools of that prior stage. For example, the agrarians integrated the tools of the hunter-gather such as using the chopping rock to till a field for planting – and so forth. Likewise, the industrial revolution integrated the tools of the scientific revolution; mathematics, chemistry, and engineering. Earlier this century, the computer age integrated the tools of the industrial revolution, etc.

The next economic paradigm will be derived from the Knowledge economy by integrating the tools of the knowledge economy; these are The Internet, Social Media, mobile communications technology, etc…

Americans will chose Independence every time.

This video describes a set of predictions for 2020 based on an entirely new form of capitalism whose velocity and voracity will take the world completely by surprise. Nothing is sacred and nobody is immune, not Facebook, not Google, not Wall Street, not even Governance itself….

Part 1

Part 2:

The top ten reasons for business failure are due to a lack of knowledge, not a lack of money. In fact, the lack of money is itself a failure of knowledge.

Top 10 reasons why businesses fail

1. Lack of an adequate, viable business plan
.

2. Insufficient sales to sustain business

3. Poor marketing plan: unappealing product, poor customer identification, incorrect pricing and lackluster promotion

4. Inadequate capital, misuse of capital and poor cost control

5. Poor management skills: lack of delegation, leadership and/or control

6. Lack of experience and knowledge

7. Lack of managerial focus/commitment

8. Poor customer service

9. Inadequate human resource management

10. Failure to properly use professional advice: i.e. accounting, legal, financial, etc.

No excuses:

Lack of a viable business plan is an act of negligence where research, scenarios, and assumptions have not been tested. Market ignorance is not an excuse nor is the failure to know one’s customer. Death by poor marketing plan is knowledge deficiency related to product appeal, customer identification, pricing structure, and lackluster promotion. Obviously, one needs to know how to manage a company in order to be focused, let alone correctly estimate capital needs. Lack of customer service knowledge is deadly in the age of social media. Inadequate HR is an oxymoron – if it’s inadequate, it’s not a resource – human or otherwise. Finally, failure to listen to knowledgeable people is ego driven irrationality.

The financial system is not the only problem;

The innovation system (or lack of) is a crucial element. Information, knowledge and innovation, by any definition, are profoundly and inseparably connected. A failure in one kills the other two. So, just because an entrepreneur does not have the knowledge, does not mean the ‘knowledge’ fails to exist – it simply means that entrepreneur failed to find it.

So where is the knowledge?

Unfortunately, there is no public knowledge inventory – people do not know what each other knows. With social media raging all around us, there still is no way that anyone can assemble the knowledge needed to execute a business plan with a known probability of success given the information available. As such, there is no way to finance public innovation.

The emergence of Social Media technology presents an extraordinary opportunity to organize a knowledge inventory outside the construct of a corporation and marry it to the financial system, much like a corporation.

Tangibility of Knowledge

Knowledge tangibility must be the most important “innovation” in the pipeline today if we expect to meet the crushing challenges that await us. Just because we cannot predict innovation does not mean it cannot be predicted – it just means that we do not know how… yet.

In an earlier article (Cluster Funk) I argued that Industrial clusters can lead to stagnation, vulnerability to external shocks, and the erosion of social capital. Since I’m not one to complain without also providing an alternative, this article argues that the future will favor technology clusters rather than industrial clusters.

Make it up as you go along

Technology clusters serve what we call the tangential innovation market – or diversity innovation dynamics. Don’t worry if you have not heard of these things, I’m making this up as I go along.

For example; composite materials technology is very useful in many applications like aircraft, medical devices, transportation, recreation, and even musical instruments. The airplane company has no intention of building cellos and the automobile company has no intention of building snow boards.

Why compete when you can collude?

As non-competing industries, they can readily share technology and people. The system is naturally diversified and inoculated against stagnation, shocks and silos; if one industry encounters hardship, people and capacity can shift easily to another industry preserving knowledge and expanding social networking benefit while the damaged industry heals or dies off. Corporations may not like this idea, but social networks should.

The Ingenesist Project goes a step further by modeling the business structure of tangential innovation markets as an integrated financial system. Suppose and Originator Company has a promising new composite technology idea but is unable to meet the ROI requirements of their stockholders? Today, such innovation would be shelved. In an innovation economy, tangential markets are factored into the business case.

New applications of social media will identify other industries that would be most worthy borrowers of your technology, if developed. The Innovation Bank can estimate the return on investment that can be expected through the tangential market as if it were another customer. The additional revenue projection would allow the originator to meet the ROI requirement prior to committing development funds.

Intellectual Property can be managed with contracts enforced through social network vetting. The originator can hold an option to see further development conducted by tangential users effectively multiplying their R&D reach and further adding to the expected return.

Then something magical will happen. At some point, the value of the tangential innovation market would exceed the value of the origination market. The originator will begin to specialize in pure innovation as a primary product and airplane applications as the secondary product. As all industries in the technology cluster begin sharing technology among each other, R&D costs and risks are effectively spread across industries. As risk is diversified away, the cost of venture capital approaches single digit rates.

Then, another magical thing will happen. As the mixing of people and ideas accelerates, the definition of corporate boundaries will become more fluid. Ownership will exist in the form of contracts among entrepreneurs now defined by social networks, options, and derivatives in a diverse innovation enterprise.

While the boom bust cycle of Industrial Clusters has brought us a great distance in economic development, technology clusters in an Innovation Economy supported by social networks may turn out to be vastly more efficient at economic growth without the perils of Cluster Funk.

I recently attended another one of those economic development summits where a bunch of people with long titles gets a chance to speak on a panel touting the mysterious benefits of a mysterious innovation clusters that create mysterious wealth that can only be realized if their mysterious department is funded.

Nearly every speaker concluded with the following paraphrase: “if only government would fund this or that, everything will be fine”, or, “if only corporations would fund this or that, then we’ll all be better off”

Uhmmm…sorry to break the news, it ain’t gunna happen.

Innovation clusters are all the rage in regional economic development circles. Actually, they are “industrial clusters” because several companies in similar industries collocate in the same geographical area. The industrial cluster then attracts supporting industry and often causes the migration of educated and motivated people to the prospect of jobs. I suspect the ‘innovation’ moniker comes from the notion that new ideas will somehow result from similarity of ideals and purpose.

Group Think Tanks

There are, however, a few drawbacks to industry clusters; they are vulnerable to stagnation, silos, and external shocks. As companies become organized and technologies mature, patents and trade secrets take hold. As they ‘go public’, SEC regulation effectively places a gag order on everyone and sharing slows while stagnation sets in.

Soon after, dozens of nimble companies consolidate into a single giant to achieve economies of scale. Finally, silos form under the weight of multiple layers of management while jobs are mechanized or outsourced.

Then, something somewhere happens to shock the cluster; the end of the cold war leveled the So Cal aerospace cluster. 9/11 busted the Seattle Aerospace cluster. The dot.com bomb stunted Seattle, Silicon Valley, and Route 128. Hurricanes and environmental disasters hit the petroleum cluster, stem cell and genetic engineering legislation stalled biotechnology, and corruption continues to shock financial institutions. At the end of the cycle, companies divest, people defect and a new planet starts to form someplace else.

Remember “scrubbing bubbles”?

While occasional cleansing, in a Schumpeterian sense, is good for industries, the extreme volatility takes a horrendous toll on that invisible turbine of the economic engine – social fabric. Families, friendships, professional networks are strained or collapse and those who dedicate their life to a career path – the pure innovator themselves – can be left marginalized by obsolescence.

The term “Innovation Clusters” makes for a good soundbite for politicians because it fits on the “Jobs R Us” banner they can stand in front of (thumbs up) for the next election cycle.   The term keeps funds flowing to organizations to publish studies that conclude that more studies are needed. Maybe these summits ought to be renamed to Cluster Funks because that is largely what they actually promote.