The Ingenesist Project

The Next Economic Paradigm

Tag: competition

An Analog To Digital Converter For Knowledge Assets

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On January 21, 2015

In General Information

Curiosumé is an analog to digital converter for knowledge assets.

The single most destructive characteristic of the Market Capitalism is the dependence on resources extracted from the Earth to fuel constant economic growth. Natural resources are finite while constant growth model is infinite.  There are several ways to manage this disparity; the first is to expire Capitalism, the second is to base that dependence on an infinite resource. Given the shortcomings of most viable alternatives to Capitalism, the latter is likely more plausible than the former.

Many perils to society that manifest today have their beginnings in the thesis by Adam Smith called “The Wealth of Nations”. In this document Mr. Smith outlines the conditions of Capitalism where a merchant class would arise to efficiently allocate land, labor, and capital in various combinations in order to produce all of the useful things that society needs. The working class would hold the system in balance; too much growth would result in a shortage of labor that would constrain capital through higher wages (supply and demand). Government would be hardly necessary in a self-balancing system. Ironically, A great deal of innovation has arisen from the prospect of eliminating labor, which allowed growth to continue beyond the natural constraint.

Karl Marx identified the inevitable situation of constant struggle between the working class and the merchant class. One group strived for greater wages while the other strived to lower wages. From this struggle arose a spectrum of adjustments ranging from labor unions and calculated government regulations (Socialism) all the way to full State allocation of public resources (Communism). Herein lies the dawn of geopolitics and competing ideology.

It is fairly easy to see from this short history where hierarchy, competition, politics, exploitation, environmental crisis, and monetary corruption are intimately related. Today, these elements are enshrined in our culture in B-schools, sports, warfare, education, 2-party representation, etc. The result is that people are forced to compete with each other for jobs, money, food, water, air, education, civil liberties, etc.

But it does not have to be this way. A relatively simple modification to the existing paradigm can realign the economic incentives, and therefore social priorities, from consumption to preservation of our planet without necessarily triggering a collapse and subsequent reboot.

Consider the proverbial “basket of goods” – an economic standard used in a variety of analyses including Relative Price Index, Forex, Gross Domestic Product, etc.  The basket of goods consists of unit quantities of tangibles such as food, housing, energy, transportation, etc.  Now consider the human knowledge required to produce that same basket of goods. One can easily imagine economic standards articulated as either the tangible basket of goods or the intangible basket of goods. Both have the same outcome.

Yet, knowledge is an infinite resource that can underwrite so many more dimensions of human existence than a select basket of goods.  The problem is that there is no accounting system for intangibles as there is for tangibles. There is a reason for this – it is called control. Therefore, to create an accounting system for knowledge assets is to take control of productivity and the currency that represents it.  That is the evolution we ought to focus on.

This is a much simpler challenge than trying to solve every problem that our civilization faces individually. This is a much easier problem to solve than trying to change the minds of entrenched ideologies. This is a much easier problem than changing all the laws and institutions that exist to make the old game as fair as it can ever possibly be.  In fact, the solutions for our most complex problems as a civilization are stunningly simple to create.

Did I mention that Curiosumé is an analog to digital converter for knowledge assets?

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Shutting OFF The Lights On Big Data

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On May 2, 2014

In General Information

Big Data, Bigger Data, Not Neutrality, Mega-Mergers, Election Deform – BIG (fill in the blank)  spells BIG trouble for LITTLE (rest of us).  We don’t stand a chance against the tsunami of surveillance that is barreling our way.  Big Data is becoming it’s own feedback loop and, like shoving a microphone into a stack of tweeters, the noise is deafening.

Nature tells us many things about how an organism responds to externalities.  For example, when a stand of trees encounters an insect infestation, they work in symbiosis with fungi and micro-organisms to amazingly communicate signals across distance and across species to develop compounds to arrest the attack.  Nature collaborates in magnificent ways with often astonishing results – survival of the collaborators.

The entire human organism is in this position today, we cannot attack our own do-loop without also attacking ourselves.  We must adapt a new one.   We must address the perils ahead by organizing ourselves in a radically different manner.  When threatened by inundation, we must also become fluid, mix with the tide, and change its composition from within.

The following presentation was delivered at Seattle University in April 2014.  This presentation demonstrates why – and most importantly –  how we need to re-visualize society, especially our own place in it.  We need to reorganize ourselves as a species to face these powerful new forces that ultimately threaten to smother the knowledge, creativity, and wisdom from our one and only planet.

Our objective with this video is to communicate to all other New Value Movement applications that there is a new form of organization that we can all adapt in order to integrate ourselves in collaboration outside of BIG Data.

Only 20 minutes – be prepared for a mind bender!

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The God App

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On December 3, 2012

In General Information

David Chacko’s newest mystery novel, The God App, is a story about a detective tracking down the killer of the professor who invented a computer program that anticipates major moves in the financial markets. Whoever holds The God App is far above the law as the people who rule the world come calling for their guaranteed returns. It would seem that the only problem with The God App is for those who don’t have one…sound familiar?

***

If everyone had The God App then no one would have a God App. Today we are at a point where the only way to beat the disease is to lose the patient. As long we are competing with each other, we’ll never figure out how to predict the future, let alone fix it.

First, we seriously need to reorganize ourselves:

Instead of ranking, rating, and organizing each other as winners and losers of things, we need to organize ourselves as students and teachers of things.  This would allow us to exchange value with each other in a pre-dollar proto-economy without necessarily competing with each other.  Teachers would represent supply and students represent demand in a collaboration market.  Here is what the teacher/student scale may look like:

Second, we need to create an inventory

In order to build anything useful or meaningful, we need to have an large inventory of parts that can be easily combined, assembled, exchanged, and inter related.

Today, Wikipedia has grown to become the most comprehensive collection of definitive information about the world around us.  Everyone should rewrite their résumé as a set of Wikipedia URLs that most closely represent their talents, interests, experiences, skills, and abilities.  People will locate their selves on a knowledge graph.

A Wikipedia Cluster Ball –courtesy of Chris Harrison (click to enlarge)

The dimensional résumé:

When we combine Wikipedia Tag with the teacher/student scale, it forms a 2-dimensional array.  This new form of résumé/CV allows communities to store and exchange value among each other.  The CV array may look something like this (etc):

The Personal API

In this 2-dimensional form, everyone would own and control a string of code that represents their willingness and ability to build and collaborate economically in their community.

[tag1](-3), [tag2](+2), [tag3](1), [tag4](-2), [tag5](3),….,etc.  

This string can be processed computationally more like an API than a résumé. Most importantly,  anonymity can be preserved until the point when a transaction will actually take place.

Additionally, people can represent themselves by partial strings to create separate personas. Individual APIs can be combined among many people, and their personas, to create productive teams, communities, and corporations.

Adding dimensions to your API: Attributes such as location, schedule, context, and equipment can be attached in real time or travel dynamically wherever the persona is traveling.

The API Economy

With anonymous source data; everyone can conduct surveys of communities that would likely resemble the proverbial “Bell Curve” or, a normal distribution.  This is important because it would allow everyone the same ability to predict the likelihood that a collection of knowledge assets can execute a particular business plan.  People could see exactly what they need to do next in order to achieve a reliable probability of success in an economy.

Sounds Like Big Brother?

If this scares you, then consider this:  The God App is already here. Everything you do is captured electronically in a very similar form in order to create a predictive profile of you; what you will buy, who you will associate with, who you will vote for, etc.

Political campaigns, advertising agencies, Facebook, Google, Linkedin, corporations, government, Wall Street, and even organized crime (not to be redundant) use big data to gerrymander their way into your productivity potential.  The difference is that 99% are excluded from the predictive process, shackled behind the curtain, detached from their hopes, dreams, and intensions…mindlessly posting résumés, guessing, reacting, etc.

And the Good Lord said unto thee….

Hey dumb ass, wake up.  You can cut them all off at the nub with a simple app that a bunch of hackers could probably code-up during detention hall. Get this sucker viral and build the better FB already. The only way THEY can cut you down would be to cut themselves down.

Now THAT’s a God App.

*** 

(The implications of this app are vast – everything changes without changing anything. Follow-on articles will discuss these various nuances.  Any builders out there?)

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The Institution Hack

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On August 23, 2012

In General Information

In the first post of this series, we identified the 5 components of a financial system and suggested that Zertify, Gamidox, and Exoquant would serve to simulate their functions in a parallel economy before being adopted completely.

In this post we will identify a hack to the vetting institutions and players that are supposed to keep the financial game fair but are in fact complicit with it’s unfairness; these include Libor Scandals, Banks, Insurance, The legal system, etc.  Any institution that sets the rules of play, Gamidox will change the rules.

At first Gamidox resembles a classic MBA analysis and strategy tool called Michael Porters 5 Competitive Forces.  In Porter’s analysis a corporation competes within its own business environment against:

  • Competitive rivalry within an industry
  • Bargaining power of suppliers
  • Threat of new entrants
  • Threat of substitute products
  • Bargaining power of customers

The Zertify Hack swaps out the competitive nature and installs a more efficient collaborative nature.  Revisiting Porters 5 Forces for collaboration, we can say the following would be true of the parallel economic system:

  • Collaboration within an industry
  • Collaboration with suppliers
  • Collaboration with new entrants
  • Innovation of improved products
  • Collaboration with customers

This is already happening.

Social Media is driving many social innovations that act as “institutions” would in the legacy economy.  For example:

  • Vendors use Customer Relationship Management (CRM) systems in nearly every industry.
  • Designers use Supplier Relationship Management (SRM) systems to collaborate Globally.
  • Social Media has spawned the field of Vendor Relationship Management (VRM) where the market tells the producer what to make and how to behave.

Community Relationship Management

But when we combine CRM + SRM + VRM we get Community Relationship Management (CoRM).  In essence CoRM is a Value Game.  Where customers, vendors, and suppliers all acting in the best interest of their constituents are in fact acting in their own best interest.  Cheating gets you thrown out of the game.  The combined analytics provide extensive data to the next hack called Exoquant.

Benign.

Gamidox is an organization that educates, creates, and deploys this new class of business methods where  Communities are encouraged to act in their own best interest when collaborating with other communities.  Jobs are created, things are produced, value is exchanged, and assets are accounted.  Capitalism remains in high gear and the hack will not trigger an antigen.

Playing The Value Game

The Value Game is played wherever 3 or more communities interact with each other to preserve a shared asset rather than consume it.  A Value Game can be built around any sharable asset such as a public corporation, an airplane, a high impact citizen, a condominium building, public infrastructure such as schools, bridges, and health care, etc.

However, A Value Game fails for asset and communities that offer literally no socially redeeming values (that is the point of social redemption, BTW)

The New Value Movement

The Value Game literally manufactures New Value.  As communities interact with each other around a shared asset, they teach and learn from each other – populating the Zertify Hack.  Several layers of vetting and conflict can be eliminated from an economy which will make all many forms of production and associated employment, run faster,  smoother, and more efficiently.

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Where Competition Has Met It’s Match

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On June 4, 2012

In General Information

(update; as of November 2012, The Monitor Group headed by Michael E. Porter, the subject of this article, declared bankruptcy ending an era of C-Suite omnipotence strategy thinking.  This article compares competitive strategy to collaborative strategy)

***

The B-School staple “Porter’s 5 Forces” has been the mainstay of corporate competitive analysis since it’s creation in 1979 by World regarded Harvard Business School Professor, Michael E. Porter. Porter developed a model of industry analysis in his seminal book,  Competitive Strategy: Techniques for Analyzing Industries and Competitors. 

In short, a competitive company’s position in a market is threatened by five main forces acting on the corporate asset:

  • new competition,
  • substitute products or services,
  • bargaining power of customers,
  • bargaining power of suppliers,
  • intensity of competitive rivalries.

Any changes in these 5 forces would be cause for the company to re-evaluate their place in the market … thus leading to healthy consulting practices for strategists the world over.

The Rate of Change

In the 1990’s critics began to argue that Porter’s 5 Forces thesis assumes that the forces are static and non-related.  At the time, the world was becoming more dynamic and more interrelated. For example:

  • Buyers, competitors, and suppliers can interact, and even collude.
  • Value cannot be created in the long run by constantly introducing barriers to entry
  • Participants in a market have the ability to plan and respond to competitive behavior.

As a result, they added another Force called “complementors” while introducing rudimentary game theory to explain the role of strategic alliances to the analysis.

Constant Change

Now in the year 2012, we routinely assume that all players can instantaneously access the same real-time dynamic market information from the cloud.  We readily accept that all players will collaborate massively with whomever they want from anywhere in the World.  As a result, we must assume that all five forces will change constantly and rapidly in real time.

Now imagine how 1990’s game theory would manage conditions where the company AND their competitors must continuously re-evaluate their position in a market under the circumstances of continuous change.  In effect, nobody has the ability to compete with each other, they are competing with the game, therefore, they are cooperating to keep the game in play.

Is Collaboration Underrated?

If any player tries to introduce a barrier to entry, THEY risk get knocked out while the game continues without them. In fact, value is created by applications that remove barriers … and brokers are punished. All of these factors cause the game to self energize and improve as players preserve the asset rather than consume it.

The Value Game

It should not be surprising therefore that Porter’s 5 forces now resemble what we call the Value Game that we have described here (and here, and here).  In the ultimate manifestation, however, The Value Game will play automatically through multiagent algorithmic game applications where tangible and intangible assets would be accounted equally in a Value Game. Individual would own, manage, and deploy their secret sauce of knowledge assets through their personal API that interfaces with the game that is most relevant to their highest abilities.

Where competition has met it’s match

Remember that little regarded fact of Capitalism: Markets are efficient where there is perfect information.  This means that if everyone involved in a transaction has the exact same information as everyone else, the true supply can meet the true demand.  Nobody ever said that this must be accomplished through competition especially if collaboration can do it better.

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How Collaboration Distorts Markets

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On May 7, 2012

In General Information

Adam Smith From the un-encyclopedia

Long before the word “economics” and “capitalism” were even invented, a Scottish social philosopher and political economist named Adam Smith describes how wages are determined by competition between workers and competition between employers – not necessarily competition between workers and employers.

 An Inquiry into the Nature and Causes of the Wealth of Nations

Published on March 9th 1776, The Wealth of Nations, in part,  describes the fundamental dynamics of labor markets at the dawn of the industrial revolution.  In essence, when workers compete with each other for a limited number of jobs, wages fall.  When employers compete with each other for a limited number of workers, wages increase.

He also described what happens when workers decide not to compete with each other; and instead form unions.   Unions effectively distort the market toward increased wages.  Likewise, Adam Smith describes what happens when employers decide not to compete with other employers (tacitly or implicitly) for workers.  This activity also distorts the market, except, towards decreased wages.

Why are we fighting again?

Adam Smith does not mention specifically that these mutual distortions manifests in workers and employers competing with each other in lieu of competing with themselves.  Since the 1780’s, vast resources have been committed to preserving the fight without really questioning why the fight needs to exist in the first place.

A fish has no word for water

One of the ways that corporations form tacit collusion is with arcade job descriptions and skill codes.  When a company or an industry develops its own language, this makes it very difficult for outsiders to enter and insiders to leave.   Yet, this is precisely what needs to happen in order for the diffusion of innovation to flow across the entire economic spectrum.

For example;

A medical instrument manufacturer and an aerospace company and a sporting equipment company would have very different ways of describing the environment that they operate in.  However, an engineer designing a carbon fiber composite aircraft structure would be equally adept at designing a composite athletic prosthetics.  Yet today, engineers from multiple industries are rarely interchanged.  In fact, interchange has been largely suppressed.

Innovation Economics

If workers were able to cross industries they would benefit from increasing employment options and the ability to shift rapidly with economic cycles.  In Adam Smith’s analysis, this would drive wages up.  On the other hand, employers would also have a greater pool of qualified workers to hire, which in Mr. Smith’s analysis would drive wages down. Both would benefit from  increased exchange of  knowledge, access to innovation, transfer of wisdom, and diversification of risk.

If workers and employers could produce the exact same labor relations outcome by collaborating among themselves, there would be no need for the massive infrastructure of social division and political rhetoric that we have invested in preserving the fight.

Public Knowledge Asset Inventory

The Internet has made collaboration and interchange vastly more efficient than competing yet our economic system remains in the 1780’s.  We are watching a public knowledge asset inventory forming outside the construct of corporations.  We are watching corporations begin to index their skill codes to the public knowledge inventory rather than their internal ontologies.

We now need to recognize the importance in which we formulate this public asset.  If we do it right, astonishing value will be released.  If we do not, the invisible hand of capitalism will remain, well, invisible. As such, even a distorted image would be an improvement.

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When The Customer, Supplier, And Competitor Are The Same

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On June 27, 2011

In General Information

NPR ran a story today about how drug companies are not the only ones making money inventing new medicines for the market. A man in Massachusetts has brought three drugs to market almost on his own.

His process is the same as the big drug makers, but he farms out each aspect of the process to independent labs and specialists. When the drug starts to succeed in trials, he sells it to one of the big companies.

Who competes with whom?

This is an example of how human infrastructure can replace physical infrastructure.  The standard process for creating a new drug is to build a large building and fill it with smart people and expensive equipment and surround it with parking lots.  The cost can easily exceed 60 million just to bring a drug to trials – the man in Massachusetts can do it of less than 6 million.

Mitigation of risk, waste, and social burden

Not only are market victories less expensive, but so are market failures.  Hundreds of thousands of hours are saved in commute times and millions of miles stay off the freeways. “Independent Lab Specialists” are in fact, independent and don’t need to migrate from company to company chasing the next project.

As the article states, every step in the process for approving a drug is the same – without the unnecessary physical infrastructure. Sure, virtual work has been around a long time, the difference is when the corporate structure itself shifts to a series of small integrated corporations.

If virtualization can revolutionize the medical industry – it can revolutionize all industries.

Social Flights is attempting to revolutionize the Aviation industry in a similar way.  Large Hub Airports represent physical infrastructure through which people and airplanes are sorted and matched.  The majority of US commercial traffic passes through Hub Airports. Yet, the majority of passengers are forced to drive a substantial distance to reach a hub departure.  Then they fly to a place that they have no intention of going only to transfer to another plane that also is not going where they intend to go. Finally, they drive a substantial distance to get where they really want to go.

The congestion and physical footprint supporting large airports is substantial. The burden on both the local and distant communities served by the hub airport is severe.  Thousands of people and vast resources are deployed to support the infrastructure, not necessarily the value proposition to the passengers or the communities.

The Airlines need to understand that their customer is the community, their supplier is the community, and their competitor is the community.  If they lose track of any one of these pillars, the system will become ripe for disruption.

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Should Educators Command an Equity Position in Students?

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On February 19, 2010

In General Information

The idea that a mentor may take an equity position in a protege is not new – it happens in families and extended families as elders are fully aware that the children will provide for the family in the future. The connection is not to hard to grasp that it’s in everyone’s best interest to help the kids – all of the kids. This is the social contract.

Somehow that connection gets lost when everyone is competing for the same set of limited jobs and everyone is responding to the pressures of insurmountable debt to banking institutions.

As Social currencies begin to replace the decaying monetary currency, a new set of social instruments will arise. The scope and range of new social contracts is unlimited and should be expected to increase substantially. These social contracts will become tangible in a communities and may he used in a system of trade that stores and transfers knowledge efficiently in a community.

If a father can teach a son how to become successful in the family business, why can’t a community of fathers teach a community of sons to be successful in a community of businesses? This may need to happen whether we like it or not.

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The Vicarious Search Engine

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On July 7, 2009

In General Information

The search engine wars continue as both Google and Bing develop more exotic ways of arriving at the wrong answer.  Both commit the same error as all declining industries in social media space; assuming that they can predict what people want without engaging them in a conversation.

The first development is the predictive search notably pioneered by Amazon.com for predicting future purchases based on past purchases.  While predictive search is an improvement, the next step is the “vicarious” search, that is, when the search engine sees the world through your eyes – or someone Else’s – for your benefit.

The Web is Flat

The Ingenesist Project specifies a standard knowledge inventory that may be represented as a packet of code.  If someone wanted to see the web through the eyes of another person, they could buy a packet of their knowledge inventory.  Likewise, a web article would be tagged with the representative knowledge inventory code of the author.  Each comment or re post to a blog article would contain the knowledge inventory of its aggregated vetters.

The search can be done in reverse as well.  If I find an idea on the web and want to know who can execute it locally, I can simulate the knowledge inventory in one or more local people.  This is not trivial.  It literally allows an entrepreneur to manage knowledge assets that they did not know exists and predict content that does not yet exist.

Been there, done that?

Obviously there are privacy, security, and ethics issues related to others seeing the world through your eyes.  But what if every American was told 20 years ago that their identifier number for an insolvent social security program would be attached to their personal, medical, financial, and civil records then spun through Wall Street algorithms, sold worldwide to advertisers, politicians, banks, insurance companies, demographers, and ultimately hacked?  The cities would have burned.

So why can’t social mediators monetize?

The difference today is that if packaged correctly, we can own and control our knowledge inventory.  We can allow or decline access and we can revoke access – it happens all day long on Face Book, Linkedin, Twitter, and My Space.   On-line communities represent collections of knowledge assets.  The 400 Billion dollar per year advertising budget is on the table – up for grabs.  The 100 Billion dollar “head hunting” budget is up for grabs. The multi-billion dollar election budgets are all up for grabs. What are we thinking?

The likelihood of Innovation

The innovation economy will depend on business intelligence related to society’s knowledge inventory to match most worthy knowledge surplus to the most worthy knowledge deficit.   Entrepreneurs must know supply and demand for knowledge assets as well as where to find them at what cost.  Entrepreneurs need to predict competition, disruption, risks, and volatility in knowledge assets.  They need to conduct scenario tests before expending money.  They need to predict the likelihood of innovation and all of the options that they have in the future related to those innovations.

The Securitization of Knowledge Assets

Entrepreneurs need to securitize knowledge assets in order to finance innovation on the scale that will be required to offset our massive debt. This is how the innovation economy must play out.  We cannot depend on corporations or governments to do this for us.  People must control, regulate, anonymize, and manage  their own knowledge inventory.   If only they could see their world through the entrepreneur’s eyes – perhaps they need a vicarious search engine more than anyone.

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The Competition is Competition Itself

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On June 7, 2009

In General Information

In quantum physics, the Heisenberg uncertainty principle states that certain pairs of physical properties, like position and momentum, cannot both be known. That is, the more precisely one property is known, the less precisely the other can be known.

A practical analogy is the modern corporation.  It is difficult for a corporation to truly innovate because people behave as a function of the corporation’s interaction with them.  Heisenberg’s uncertainty principle suggests that the more we know about competition, the less we may know about cooperation.

Is competition is good for innovation?

A corporation is a closed loop that feeds on internalization.  External influence is traditionally shunned because of the great promise of the competitive economic system.  We compete with other companies, with our own legal system, with Unions, and with each other.  We hold and protect trade secrets; spend millions on patents that never get used.  We make our “intangible Human Assets” sign “tangible” contracts of secrecy and non-competition.

How do we define cooperation?

We often think of cooperation as teamwork. However, we define cooperation as the alternative to working separately in competition.  The definition of cooperation is derived from competition; the assumption that there is an opponent.  There needs to be a war against something in order to accomplish something together.  If you are not with us, you are against us.

Who exactly is the opponent?

Competition is a deeply ingrained part of our culture.  The business world is filled with sports analogies like; “knock them dead”, “carry the ball”, “we need a home run”, “great save!”  We see that national sports franchises command the highest pay and best ratings.  Reality TV is all about kicking people off islands, backstabbing one’s fellow apprentice.  We have even turned the pursuit of love and happiness into a competition.  The object is to decimate the competition. We define ourselves with slogans like: “may the best man win”; “the survival of the fittest”; “winner takes all”.  Destruction sells.

Beating a dead horse:

So what happens when we compete with each other?  What are the consequences when we decimate each other?  What happens when one departments competes with another department in the same company?  What happens when one person competes with another for a salary and bonuses?  What happens when society competes with Wall Street for their 401K?  What happens when the competition is already lost – do we continue competing or do we then cooperate?

The unwinnable war

After a while, societies and communities becomes a closed loop much like the corporations that they interface with.  They have no idea who the friend is or who the enemy is.  When people are in a game that they cannot win, they feel alone. Loneliness is the war that cannot be fought.

Social Media Cooperation; A closed loop system:

Social Media is emerging as an astonishing force in cooperation by uniting communities and people of diverse and complementary interests, affinities, and actions.  Social media works in a new dimension:  It is a “cultural dimensions” where the opponent is opposition itself.

Social media teaches cooperation. The more we know about cooperation, the less we know about competition.

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The Next Great American “Hail Mary” Pass

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On December 2, 2008

In General Information

The Game

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

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

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

The Competition

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

The Field

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

The Team

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

The Play

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

The Ball

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

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Social Enterprise; Rating Systems

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On October 31, 2008

In General Information

There is an ongoing discussion about the rating system for articles posted to a business oriented social network site that I belong to.  While am not part of the discussion, my one and only post to that site had been rated very low despite the fact that I am recognized internationally in the subject matter of that particular article.  I stopped posting articles to rated sites because the rating systems are flawed at the core of logic – Frankly, it’s too risky.  As the creativity, originality, or controversy of the post increases, the disincentives to sharing it also increases.  I don’t want my customers googling me to see this rating without also being able to google my reviewer.  No sour grapes – I’d wear a D+ from Stephen Hawking as a badge of honor.

The objective of any business/social network in today’s world should be to make human knowledge more tangible outside the construct of the corporation, such that it emulates a financial instrument – at the end of the day, it’s about the money.  Otherwise Social Networking amounts to active recreation – like guitar hero, or tubing; fun but somewhat trivial.

ALL financial instruments, without exception, are described in terms of a quantity and a quality.  ALL quantity and quality measures for financial instruments are statistical in nature – that is, they fall on some kind of “bell curve”.  This is true for EVERYTHING from a stock valuation to credit score to marketing demographics to health/home/life/car/business insurance, baseball players, GPA,  etc. – the bell curve is ubiquitous.  Whoever is not minimally familiar with the simplest basic concepts of a Normal  Distribution, et al, is at a severe and unfortunate disadvantage in the innovation economy. This is how the world of money is organized, this is what money is, this is what Wall Street does – for better or worse, like it or not….it is what is.

One obvious failure of most Social network rating systems is the linear 1-5 “stars”.  If there were 6 stars then at least we could have a leg up on applying the most valuable mathematical tools available from the world of wealth and value creation (hence, Six Sigma).  Second – the bell curve is not linear and the reviewer needs to be aware of this. 6 stars would mean that a post falls (in some measure) between 97%-100% of all similar level posts ever read by the reviewer. 5 stars falls in the 85%-97% range; 4 stars, 50%-85%; 3 stars, 35%-50%; 2 stars, 3%-15%; 1 star 0-3%.

If Calculus isn’t your thing, consider this – the bell curve rating system makes the reviewer really think about who they are in the process, the responsibility they hold in the rating of others, and the implications of their ratings – too high, or too low.  It would be good to know how many articles the reviewer has read and rated, the average of their ratings, as well as their own rating on articles published (is this staring to sound like EBay? – it should, at 25B market cap, they’re not silly people).  Social accountability does wonders for market efficiency and wealth creation.

Social Networks are ideally suited for correctly rating their own knowledge inventories so that when their members go out in the new world trying to make a living, it is known to all that they have been vetted by a respected community.  This increases the value of the member and it increases the value of the community in the market. Communities that empower and release great talent to a market actually empower themselves; Harvard, GE, Frank Zappa.  This has happened at the local level since the stone ages.

What about our competitive instincts? There can only be one winner and the rest are losers, aren’t all good Capitalists supposed to decimate thy neighbor? Always remember, it is all about the perfect combination of average assets, not necessarily the single excessive asset that makes product most valuable in a market.  The market for Toyotas is far greater than the market for Ferraris, yet each are competitive in their respective market.  The studies of ‘beauty’ discovered a collection of perfectly average features – in the eye of the beholder, consistent with balance and harmony.  So we’ll need to drop the win-lose culture on this one and worry about competing with the real threats that lie before us.

Sure, most people will complain about such a system because it is too complicated, too math-ish, not the easy tweet (OMG CUL8R!). But this is the reality of how money is organized – and disorganized (did I mention Wall Street yet?). There is no exception, there is no rational alternative – the world does not care if people agree with the way things are or if they understand the math.

Fortunately, once people learn to roll over this metaphysical speed bump, the rest is real easy as a vast world of possibility for generating extreme wealth in social networks will unfold before our eyes!!  Knowledge tangibility is the Holy Grail of modern finance but Social Networks are at risk of squandering this unique and historical opportunity to paint this empty canvas in their own image.  Act now, please – this chance may never happen again.

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The Knowledge Inventory; Part 3

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On September 17, 2008

In General Information

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

The Bell Curve

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

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

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

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

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

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

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

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