Tag: deficit

The Innovation Banker

On September 22, 2010

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 fly like cash register receipts and companies troll the halls looking for a cure for their bottom line blues.

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 and can be deployed for the purposes of increasing productivity. In the process, it makes 10X more of itself every time it is deployed. It mints its own money.

The Innovation Banker

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 10X over (fractional reserve system) 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. An innovation banker is a knowledge banker

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).

Ingenesist.com

Music by Phil Felicia

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Create 9 Million Jobs with Innovation Bonds

By Admin

On September 10, 2010

In General Information

Another approach for spending a Trillion dollars (backed by debt) would be for the government to issue innovation bonds (backed by innovation) to fund new innovation enterprise. Surely the World still greatly admires and respects American Ingenuity (social capital, intellectual capital, and creative capital) especially in the age of social media and would likely buy such a financial instrument, if not to copy, improve, and outsource on it later.

The final frontier; your backyard

The Last Mile of social media is a vastly unexploited resource with an astonishing wealth creation potential. The Ingenesist Project (TIP) specifies a structure for an innovation economy through the application of 3 simple web applications deployed to social media that will ignite “The Last Mile”.

Already, people use social media to harvest great ideas from around the world. The Ingenesist Project will enable global ideas to be applied in local economies throughout our communities.

Running Numbers:

The sweet spot for Last Mile social media is (2-6) people living within a (1-6) square mile area. Assume an average entrepreneur density is about (1) person per square mile. The United States is a little more than (3) million square miles. If only (3) of the thousands upon thousands of potential applications of Last Mile social media were implemented across the country, then (9) million jobs would be created.

Dan’s List; Leave a Tip

Here is a list of (10) hypothetical business ideas that a buddy and I dreamed up over lunch using TIP methodology for inducing an Innovation Economy. Each of these ideas has a working revenue model.

1. Zertify: This company is a last mile/vetting social media application where neighbors “Zertify their Zillow Zestimates”.
2. Start Up Neighborhood (SUN): is a last mile social media application where neighbors get together to innovate and create new businesses.
3. ScatterWatt: is a last mile social media application for decentralizing power generation aggregating local clean power generation systems (rooftop wind, solar, greenery).
4. ComPrac: is a last mile/vetting application of social media that forms and organizes communities of practice for the purpose of mentorship and cooperation in innovation.
5. CombinePac: is a last mile/vetting application of social media that combines communities of practice strategically for the purpose of tangential innovation
6. TopUse: is a last mile social media/vetting application that makes best use of already disturbed lands saving undisturbed lands from exploitation.
7. CodeVitae: is last mile/vetting service that translates CVs and job descriptions into universal decimal classification system for computerized analysis, normalization, and improved allocation.
8. Proximizer: A last mile social media application that reallocates knowledge assets for best proximity to home space for carbon credits.
9. CarbonCops: is last mile social media application to register, certify, and implement carbon savings ideas.
10. VetBucks: is a last mile/vetting site for the verifying expenditure of public funds.

Improving Information for Fun and Profit:

The degree to which information is improved in a market is the degree to which the innovation adds value. As such, monetization becomes a relatively simple matter. Furthermore, the options that are created will have a multiplier effect in the communities as neighbors learn what knowledge assets are available with which to cooperate in their communities and where their knowledge assets can be deployed productively. New ideas generate more new ideas as the markets will seek to fill in the blank spots and support more structure for innovation economy.

An Endowment for their Grandchildren:

While the leadership elders are to be respected for their wisdom and accomplishments, they have very little comprehension of the economic growth potential of social media. It is understandable that they may overlook this opportunity. The capitalization of social media lays in the hands of the young people who know exactly what to do if given the opportunity. Why not give them a shot at getting the books in order? Call it their inheritance.

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The 1:1000 Rule; A Social Currency Imperative

By Admin

On April 22, 2010

In General Information

What’s the difference between money and value?

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

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

The 1000:1 rule

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

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

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

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

That’s the difference between money and value.

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

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

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

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

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

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Social Currency And The Innovation Bank

By Admin

On February 13, 2010

In General Information

The real estate market is trashed, money markets are unstable, commodities are in the tank, the banking system is corrupted to the core, inflation is looming around every corner, and the politicians are engorging themselves in a game of Cerebral Gridlock.

Literally, there is no safe place to put your money. Instead, people are investing their productivity in social media – social media is simply a storage device for knowledge assets. Soon it will become a stock exchange for knowledge assets. Investors should not take this lightly – the best place to store your money is in the real productivity of real people.

People are trading knowledge assets in social media. This exchange is denominated by a conversational currency. If we consider the structure of conversations and compare that to both the structure of social networks AND the structure of our financial system, we see a huge opportunity to develop an alternate financial system that can capitalize and securitize knowledge assets in social media.

Ingenesist.com

Music by Phil Felicia

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Building a Better Entrepreneur; Google 10^100

By Admin

On September 27, 2009

In General Information

Google 10^100 award voting is Launched. There are two sectors that we believe would have the greatest impact on the greatest amount of people; building a better banking system and funding social entrepreneurs. You can’t have one without the other – if Google funds these two sectors in concert, the outcome would be incredible.

Build A Better Bank

In the old banking system we assume that we have the knowledge to execute a business plan and we go to the bank to borrow the money. In the new banking system, we will assume we have the money and we go off in search of the knowledge. Social Media is an excellent “public accounting system” for knowledge assets.

Our current banking system has gotten it backwards.

Technological change must always precede economic growth. The supranational currency may be backed by productivity and not debt. Social media provides an excellent platform upon which to design such a banking system. People trade “social currency” at a tremendous rate. This is evidenced by the amount of destructive innovation is occurring in many legacy sectors due to social media.

Better Banking Tools for everyone

“Partner with banks and technology companies to increase the reach of financial services across the world. Users submitted numerous ideas that seek to improve the quality of people’s lives by offering new, more convenient and more sophisticated banking services. Specific suggestions include inexpensive village-based banking kiosks for developing countries; an SMS solution geared toward mobile networks; and ideas for implementing banking services into school curriculums”.

Suggestions that inspired this idea

1.   Enable prepaid cell phone bank accounts for millions of people working in the informal economy
2.   Create a community-level electronic banking system for rural areas
3.   Build IT-enabled kiosks which provide access to financial services
4.   Create a single world bank or supra-national currency, uniform rules and transparent public accounting

Fund Social Entrepreneurs

Venture Capital is ridiculously expensive. Corporate innovation serves shareholders value over social priorities. Some say that the financial risk of funding innovation is too high. The top ten reasons why start-ups fail are due to knowledge deficits, not money deficits. A new banking system that trades knowledge as currency would solve this problem.

The key is to match most worthy knowledge surplus to most worthy knowledge deficit. Google is perfectly able to build a search app for knowledge assets if there were an inventory of knowledge assets. With the most worthy match, Risk can be reduced and new financial instruments can be developed such as the innovation bond, innovation insurance, tangential innovation markets, and destructive innovation transition contingency options, etc.

Help social entrepreneurs drive change

Create a fund to support social entrepreneurship. This idea was inspired by a number of user proposals focused on “social entrepreneurs” — individuals and organizations who use entrepreneurial techniques to build ventures focused on attacking social problems and fomenting change. Specific relevant ideas include establishing schools that teach entrepreneurial skills in rural areas; supporting entrepreneurs in underdeveloped communities; and creating an entity to provide capital and training to help entrepreneurs build viable businesses and catalyze sustained community change.

Suggestions that inspired this idea

1.   Provide targeted capital and business training to help young entrepreneurs build viable businesses and catalyze sustained community change
2.   Create a non-profit, venture capital-like revolving fund to invest in high-impact local entrepreneurs
3.   Send young American entrepreneurs to underdeveloped communities to help create small businesses that would economically benefit those communities
4.   Create schools in rural areas to teach local people how to become entrepreneurs
5.   Create a private equity fund to help immigrants in developed countries finance business development in their countries of origin

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The Invisible Currency Among Us

By Admin

On June 17, 2009

In General Information

Liquid Swords - by Megan Olson

Invisible Currency

On my birthday, I received many greetings on Facebook from friends and family. So, let’s say for example that Hallmark sold 10 less cards (@$3.95 ea), the telephone company sold 10 less long distance phone calls phone calls (@$.60 minute), FedEx delivered no additional packages, oil companies sold no gas, and my friends did not deploy, say, 20 hours (@$25/hr) of human productivity buying stuff, licking stamps, or delivering mail in my honor. Total productivity savings can be valued over $500.00; or roughly $50.00 per message.

Conversational Capital

One billion messages are sent on Facebook every day. Each message sent and received constitutes a conversation. Each of these conversations has a value that can be expressed in terms of productivity saved and assigned a dollar value. Suppose that each Facebook message has a value of only $1.00 per person engaged in a conversation. That comes out to 730 Billion dollars per year of human productivity saved – enough to fund TARP.

Twitter is worth a cool 100 Million tweets per day. Let’s assign a net productivity gain of $1.00 per tweet sent (not received). If you think that tweets are not productive, follow the Iran Crisis; a revolution fought with liquid swords. So let’s assign Twitter $36 Billion per year in increased human productivity.

Next, according to Google analytics, about 100 real people spend enough time on my little blog every day to read at least one article. Suppose each blog article increases human productivity by $1.00 each. Technorati tracks well over 100M blogs. That is 10 billion dollars per day – or a whopping 3.6 Trillion dollars per year. Let’s discount that by 50% to only $1.8T in fairness to the skeptics.

The grand total is 2.5 Trillion Dollars worth of conversational currency – 2 times the 2009 national deficit and 5% of America’s entire debt obligation – and growing. Where is all this productivity going?

What’s happening is what’s not happening.

People are NOT sitting through hours of TV commercials anymore. People editorialize their own news and do NOT watch what is designed to corrupt them. People are NOT letting their ideas die unheard. People are NOT letting politics run them down and have now elected health care, the environment, and the end of warfare to the Presidency of this and other nations. People have become far more focused and more productive through the rediscovery of family, friends, Art, Music and social priorities over debt enslavement. Next, social media is coming to the neighborhoods.

Millions of people practice “social media” in their spare time. This is invisible productivity that effectively magnifies the productivity of others with an astonishing multiplier effect. Craigslist, CarFax, Zillow, Epinion, Amazon, and Expedia are all eliminating arbitrage opportunity and sending brokers scurrying for a real education. Product reviews are killing the scams and delivering the right product to the right market.

The Anti-buck

Maybe the Dollar is not so overvalued after all. Maybe the dollar deficit is counter balanced by this new invisible currency. Suppose the more inflation that occurs, the more this invisible currency will affect the overall economy. Suppose people are hedging dollar currency with conversational currency. Suppose social priorities are replacing Wall Street Priorities. Suppose we are approaching a new equilibrium rather than an impending free fall – except for those who try to control it.

Special Thanks to Megan Olson

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The Currency of Transformation

By Admin

On May 19, 2009

In General Information

The words “conversation” and “convertibility” are really quite similar.

Information, knowledge and innovation are distinct phases of human intellect which are profoundly related. The vehicle for transformation across these phases is the “conversation”. As the medium of exchange, the conversation acts as a currency. The speed at which these exchanges take place defines the value of a market – a good party is where everyone is engaged. A good time is of the essence.

Changes in the value of the market defines the potential for value creation through conversation – a great party pulls more people into engagement and becomes a social movement; i.e., a marketing success.

Currency (money) and Current (time) and Current (force) are similar too!

Conversations exist as a state of shared information tied to a common and progressing theme. The internet enables the propagation of conversations from two persons to millions of people. The propagation of conversations is dependent on interest rates of the audience. The rate of propagation accelerates with the transformation of information into knowledge by others in it’s path. People are driven to entrepreneurial action when the alignment of information matches the environment that they observe.

Conversation is Currency

Currencies come in many different forms and the best ones are convertible – or can be transformed – into other currencies. Our objective is to convert social currency, creative currency, and intellectual currency into a universal currency such as, but not necessarily, money.

Anything of value such as an option to exercise an action at a later date, or an equity position in the actions of others, or a mentorship opportunity with a great teacher are all convertible currencies. Of course, this is nothing new; we pay money to buy a book, take a class, invest in start-ups, and teach our children.

An End to a Means:

What is new is that social media allows us to convert the other currencies before, after, and in between the conversion to money. The option to convert to money is simply an option like any other option, not necessarily a means to an end.

Obviously we could pay money to buy a book, use that book to teach our children and hope our children can start up a new company, etc. However, suppose we could pay money to buy a book, improve the book by adding information shared by others, teach hundreds of other people how to apply the ideas to their start-up, take an “knowledge equity” position in those hundreds of start ups, have access to the data that they produce, and write a book that improves the likelihood of successful start-ups.

The Interesting Thing About Interest Rates

The next economic paradigm will introduce thousands of convertible currencies in the form of infinite conversations. Those currencies will be converted in infinite combinations for infinite applications each adding value to the conversation. Relational data aggregation will match most worthy currencies and social vetting will manage the production process. The corporate silo will no longer form; therefore the exploitation of the creativity class will end. Interest is not measured in terms of risk, but rather in terms of productivity where deficit spending is impossible. This is the currency of transformation.

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The New Economic Paradigm; Part 6: The Business Plan

By Admin

On April 10, 2009

In General Information

The objective of this series is to contain what we know about social networks within the construct of the financial system. The intention is for knowledge to behave, and thereby trade like a financial instrument. In prior articles, we discovered the currency, the inventory, the institutions, and the entrepreneurs of the next economic paradigm. This module will construct the business plan:

A business plan is the blue print for the construction of enterprise.

Like the construction of any tangible asset, an inventory of parts is assembled in strategic proportions. The ability to accomplish this gives the enterprise a strategic and competitive advantage in a market.

Business failures are knowledge failures

Most enterprises will emphasize design, or service, or performance or price in their proprietary secret sauce of market success. The question becomes, what quantities and qualities of strategic components allow the new enterprise to create a positive economic outcome.

Most business failure are due to knowledge deficits such as the inexperienced management team, a poor assessment of market conditions, under estimating the amount of money needed, under estimating a competitor, loss of a key employee, or the poor understanding of the technology, etc. These are knowledge problems not financial problems.

Prediction is the quality of knowledge:

To solve the knowledge problems is to decrease the risk of innovating and increase the predictability of innovations. To decrease the risk will decrease the cost, and increase the availability, of venture capital. To increase the predictability would increase entrepreneurial activity.

The Unit Business Plan:

The business plan of the innovation economy is very simple; it starts with the single transaction between two people. The lender provides information and the borrower combines the information with their existing knowledge to create more knowledge. This single transaction has a value of 1 unit of currency and we call it a unit business transaction:

The Parallel Circuit:

Now we will assemble these single transactions in many combinations. When we combine two unit transactions in a parallel circuit. This represents a brain storming session between two people.

The Percentile Search Engine matches the person with the most worthy knowledge supply to a person with the most worthy knowledge demand. The transaction is a simple conversation and the outcome is a prototype process, system, method, or iteration.

The Series Circuit:

The next transaction type is modeled as two unit business transactions occurring in a series circuit. This represents a product development cycle.

Each cycle of these transactions is an improvement to the business objective. Each time the transaction occurs there is a net increase of new knowledge and therefore an increase in value. New options are created. The conversation stops when the product is ready for the market, cancellation, or next physical iteration.

The transaction is recorded as an event between two known persons of known knowledge inventories. The transaction is stored in the intellect of the participants and becomes their property in the form of a knowledge asset represented by the things they create with their knowledge.

The Social Network:

Now if we combine the parallel transaction with the series transaction we have what now looks like a network. In practice, we know that strong networks of people freely exchanging ideas make organizations better, smarter, and more efficient. Networks are where knowledge and community wisdom is stored. A network is fault tolerant, if one person leaves, the network survives. For a relatively small input into a network, we can produce a large output of new knowledge – we have a learning organization.

However, in society, these interactions are largely accidental; people meet at Church, Starbucks, and Social Events or by word of mouth. Other times, these interactions are concentrated inside a single community of very similar people such as a technical conference, group meeting, or lunch buddies and are often not well diversified. More recently, interaction is self selecting through social media devices such as Twitter, Linkedin, Craigslist, Biznik, and Meetup, etc.

What if the social interactions could be made less random and more intentional?

Suppose interactions be designed with a specific purpose by the entrepreneur as a means toward producing a unique outcome. The Innovation Bank will combine people of complementary knowledge assets in a calculated manner in order to arrive at specific business approaches and applications.

What if Innovation could be made less random and more intentional?

The Multiplier Effect:

A special case business plan is called the Multiplier Effect. In effect, building a network of applications from a network of knowledge assets.

Suppose that a company owns composite material technology for use on aircraft. Since the company specializes in airplanes, they have no intention of pursuing other applications such as recreational equipment, energy production, or health care products.

The Innovation Bank:

Suppose that the company could deposit this asset in a bank and collect interest. The Search Engine can scan the business landscape to find persons or organizations with a worthy knowledge deficit in the area of your technology. The originator holds the option to see what those other companies invent and hold the right to use their new ideas in an aircraft application.

Contracts manage those options. Those contracts are social contracts and they can be traded. They are a form of currency – or stored value.

In the event of a cyclic downturn, instead of “laying off” knowledge assets, people can work in tangential industries where they will continue developing – literally putting “Knowledge in the Bank” – to be called back to their original company when market conditions improve. A mobile knowledge asset increases in value and continually becomes smarter and more productive over time. This is not socialism, this is not capitalism, this is Ingenesism – from the root word: Ingenuity.

Market Efficiencies:

With an innovation Bank, a company can reduce their Research and Development costs and create additional revenue in a tangential innovation market. Millions of people are being layed off work from corporations – billions upon billions of dollars of innovation potential is being squandered. With reduced cost and risk of innovation, The new American corporations will specialize in inventing, networking, and applying new ideas as their primary revenue source.

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Social Media Frequent Flyer Miles

By Admin

On December 22, 2008

In General Information

The Internet is a lot like a commercial airplane – it is very useful in transporting us to distant lands but the real work must happen on the ground. The organization of society at both ends of an Internet destination must be developed if real wealth is to be created. Social Media needs to develop this component at this critical juncture of human history when vast amounts of social capital, creative capital, and intellectual capital are being sent to the shores of despair upon Unemployment Air Line.

Computer enabled society:

The great opportunity of our generation in the fair, sustainable, and equitable creation of wealth through innovation in a computer-enabled, open-sourced, and democratic society that can organize its own knowledge in the form of a financial instrument. The great danger, of course, is if we miss our flight and engender a computer simulated society where it is easier to interact with online community than our own neighbors. It’s like getting on an airplane for the fine view, good food, and interesting conversation. Social capital is by far the most powerful force of change and social media must now touch the ground in a meaningful, systemic, repeatable, and scalable manner.

The analogy continues:

The earliest days of aviation were a novelty at best. Some commercial enterprise emerged in the form of barnstorming, carrying the mail, light cargo, aerial photography, and warfare. Likewise, the evolution of the internet brought us on-line gaming, e-mail, e-commerce, assorted photography, and hacking, etc. It was not until the invention of municipal airports that the airplane became a true time machine by increasing human productivity and allowing us to see history that would otherwise be unavailable traveling by sea. The true value of both commercial aviation and social media over “sail mail” is precisely through the increase in human productivity to transfer information to the ground.

Three Web Applications:

First, social media needs to develop a knowledge inventory system by geographic areas. Second, Social Media needs a search engine at a local level that combines knowledge assets to form “strategic” social networks that can execute a specific business plan at reduced risk; cooking the “secret sauce”. Third; an Innovation Bank must “pull” knowledge surplus and “pull” knowledge deficits together from diverse communities. These three applications will provide everyone with the tools needed to create wealth in their communities.

Social Media has the potential to become the airport of the Internet Transportation System. Nothing meaningful can happen until the rubber meets the tarmac. So, let’s start building runways.

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Business Plans of the Innovation Economy

By Admin

On December 3, 2008

In General Information

There is no shortage of money in the world but there is plenty of risk. Most business failures are due to knowledge deficits such as the inexperienced management team, a poor assessment of market conditions, underestimating the amount of money needed, underestimating a competitor, loss of a key employee, poor understanding of the technology, etc. These are knowledge problems not financial problems, yet they can sink the most promising companies.

To solve the knowledge problems is to decrease the risk of innovating. To decrease the risk of innovating will decrease the cost of venture capital. Decreased cost of money to innovate will induce innovation economics.

With a computer enabled knowledge inventory in the correct format and a Percentile Search Engine that returns probabilities on strategic combination of assets, the business plan of the innovation economy becomes very simple; The Innovation Bank does one thing very well over and over again – it matches correct knowledge surplus with the correct knowledge deficit at any point in time for any strategic reason. This process is then repeated over and over in infinite different combination.

The first business structure is made up from two single knowledge transactions arranged in parallel – like a parallel circuit. This arrangement represents a brainstorming session between two or more people.

The Percentile Search Engine matches the person with the knowledge supply to a person with the knowledge demand. The transaction can be as simple as a conversation, sketch on a napkin, or white board flow chart. Each time the cycle goes around the new ideas of one person ignites a new ideas in the other person. Each time the transaction occurs, there is a net increase of new knowledge. The conclusion is usually some tangible action, system, or method. The conversation stops when no new knowledge can be created in either person – or when people just get tired (rate of change approaches zero).

The entrepreneur is very interested in the outcome of these conversations and uses the Percentile Search Engine to select, regulate, modify, adjust, analyze, and record the transactions. The Percentile Search Engine is used again to select diverse participants for the parallel business structure with the intention of producing a specific outcome.

The second business structure is made up from two single knowledge transactions arranged in series – like a series circuit. This arrangement represents the product development cycle.

Again, the Percentile Search Engine matches the person with the knowledge supply to a person with the knowledge demand. The transaction is a simple conversation and the outcome is a prototype process, system, or method. Each step in the series is an improvement to the method. Each time the transaction occurs, there is a net increase of new knowledge. The conclusion is the development of the system, business plan, or method. The conversation stops when the product is ready for another iteration or the market. The Percentile Search Engine is used again to select diverse participants to continue the series business structure with the intention of producing a specific outcome.

The entrepreneur is very interested in the outcome of these iterations and uses the Percentile Search Engine to select, regulate, modify, adjust, analyze, and record the transactions.

Now if we mix the parallel and series circuits, we form what looks like a neural network of parallel and series networks. Now, we are squarely in the regime of “designer” Social Networks. Participants are paid in micro-royalties instead of wages. By definition, a relatively small input produces a very large output – if it can be captured. This will be the source of wealth creation from the new corporations of the Innovation Economy.

We determined in an earlier chapter that information, knowledge and innovation are related as mathematical derivatives. The accounting system will identify innovation by measuring the rate of change of knowledge transfer within a social network. Any number of current methods, systems, or innovation consultants can deal with this. Similarly, in order to identify high rates of change of knowledge in a social network, the accounting system will measure high rates of change of information. This too is quite simple using common systems, methods, consultants and tools. No new infrastructure is required with the exception of the knowledge inventory, percentile search engine, and innovation bank.

The entrepreneur can now do what they do best; identify assets operating at low productivity and reallocate them to areas of high productivity by running them through an innovation system. Remember, most businesses fail due to knowledge deficits. To reduce or eliminate these risks will make the fact or innovation predictable and therefore negotiable.

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Tangible Knowledge; Options and Contingencies

By Admin

On November 19, 2008

In General Information

In order for knowledge to become a tangible asset, we need to come to grips with the fact that human knowledge is fluid and mobile, whereas a condo or a piece of machinery is static. A machine can’t walk away if it does not like their management.

With knowledge assets, the typical “Return on Investment” (ROI) model breaks down. When assets have a mind of their own, there is no reliable way to calculate ROI without somehow corralling the asset inside some form of closed contract, a corporation, political system, social class, or by introducing barriers to exit, etc. In the modern financial system, human assets are held tangible by debt obligations – today many people go to work in servitude of debt, not in creation of new ideas.

An option* is the right, without the liability of obligation, to exercise a decision in the future. Human interaction accommodates this valuation model quite readily; it’s called free-will. Therefore the option valuation model is an adequate method to assess knowledge assets as a means of making them tangible.

The value of a financial option can be calculated if one knows the following 5 variables: The asset price, the strike price, the date of maturity, the risk free interest rate, and the volatility – or, the odds on the bet. By contrast, the ROI model requires us to know basically the same things; the cost today, the strike price (future sale price), the date of maturity, the risk free interest rate, and the probability of success – or variance of the expectation. The equation is just a little different.

Individually, human behavior often appears chaotic and irrational, but in aggregate, we know that human behavior is really quite predictable. If you put similar people together, you get similar ideas. If you put extremely different people together, you get extremely unpredictable ideas. If you put strategic combinations of people together, you should be able to predict the variance of the ideas. This is all the information we need to place a value on our bet. If human behavior is predictable, it is tangible.

Suppose we enter into a ROI venture and it fails miserably; the market was wrong or the product was wrong, or the people were wrong, etc. Even though the investment failed, the knowledge accumulated from the attempt can be exercised in many other projects in the future. While the Patent may turn out to be worthless, the knowledge gained by the team can be used over and over again. Each person gains a statistical data point in their experience set with which to assess comparable situations in the future. This is an option and this option has value. If the team were disbanded without somehow capturing the inventory of new knowledge assets, a very valuable set of options becomes squandered.

Some companies such as Google, try not to kill an idea, they morph the idea into something else. Free-range knowledge tangibility must achieve those same objectives. Today we see people building networks on Linkedin – this activity resembles the collection of options on future opportunities. People post on social media to see and be seen by other knowledge assets as a means of collecting more options for their careers or actions. People would not be doing it if there was no intrinsic value. The next big leap will happen when knowledge tangibility is married to the financial system through the direct valuation and capitalization of options. Did I mention there is an equation for that?

The Ingenesist Project specifies a method and system for knowledge inventory that would produce a variance for knowledge assets. The Percentile Search Engine would pull knowledge assets in combination that diversify variance into a highly predictable surplus assets and deficit assets. The Innovation Bank would match most worthy surplus to most worthy deficit. As such, the Innovation Economy itself is now a most worthy option for supporting a feeble financial system.

The ROI model is the mother of all squandered knowledge assets – the very same assets that are really purchased on a project, successful or not, are often willfully abandoned. All of the parameters of an option valuation model can now be met with social media and The Ingenesist Project integration methods. Free-range knowledge assets can then be directly financed toward business objectives. The idea of an innovation economy based on knowledge tangibility is well within our grasp technologically, culturally, and systematically.

Social media has an astonishing opportunity to integrate social, creative, and intellectual knowledge assets to trade that single most important part of the puzzle, tangible knowledge assets. I suspect that this outcome will depend on whether these new tools are treated to an ROI valuation model or on an options valuation model.

* Italic used for clarity

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The Innovation Bank

By Admin

On September 18, 2008

In General Information

So now, what are the entrepreneurs going to do with this percentile search engine?

Entrepreneurs wander the earth looking for valuable things that are being used at a low level of productivity and they move those assets to a higher level of productivity and then pocket the difference, called profit.

Think pet rock, condo conversions, sand, corn, etc.,…it goes on forever.

The entrepreneur needs to have a clear view of what the asset is, the lower level of productivity, and the higher level of productivity of the asset. These three elements are the focus of all business plans. Then they set things in motion and give life to the market system.

When we look at financial banks we see the classic entrepreneurial activity. In the simplest form, banks do little more than find people who have a surplus of money and they match them with people who have a deficit of money. Bankers have a clear view of the asset, the lower level of productivity and the higher level of productivity for the asset.

They pay a lower interest to the depositor than they do to the borrower and pocket the difference. In addition, they enjoy a multiplier effect that allows them to lend the same money many times effectively creating money from a promise to pay, or debt.

It is in the best interest of the bank to find rich people who will not need their money for a while, and poor people that have the best likelihood of paying the money back in time. This is to minimize the risk that the depositor will pull out their deposits and the risk that the borrower will not pay back the loan. The problem is that some assumptions need to be made, some of which may no longer be valid:

The bank assumes that the borrower has the knowledge required to execute the business plan that they are financing. Unfortunately, the credit score does not predict knowledge on future ventures. For this reason, new ventures are not easy to finance.

The financial bank makes the assumption that the entrepreneur has the knowledge to execute a business plan that they seek money to fund.

On the other hand, the Innovation Bank makes the assumption that the entrepreneur has the money available to execute the business and is searching for the knowledge to do so. This service will be required in the innovation economy since no single person can live long enough to possess as much knowledge as is required to manage the complexity of problems that face the World. We will need to mind meld.

The Innovation Bank simply matches most worthy knowledge surplus with most worthy knowledge deficit and a market is born.

The challenge for the innovation Bank is to match the most correct knowledge surplus to the most correct knowledge deficit. This is accomplished with the computer enabled knowledge inventory. A search can be conducted of the supply and demand for knowledge assets. The Percentile Search Engine will calculate the probability that the specific business objective will be successful.

The business plan for the entrepreneur is very simple but the implications are vast.

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The Percentile Search Engine

By Admin

On September 17, 2008

In General Information

The Percentile Search Engine is a way of using a computer to make predictions about all types of combinations of knowledge Assets.

Conceptually, the percentile search engine is where all of the equations that we use to analyze financial assets are now applied to knowledge assets. The main characteristic is that the Percentile Search Engine returns probabilities – that is, what’s the probability of success for any number of scenarios.

For example; an entrepreneur may want to know if her team has enough knowledge to execute a business plan. Maybe the team has too much knowledge and they should try something more valuable. Maybe the team does not have enough knowledge and they should find someone else, take training, or try something simpler. The Percentile Search Engine can look into the community and identify the supply and demand of a knowledge asset. If it is unavailable or too expensive, the Percentile Search Engine will even tell them what training they need to increase their probability of success.

The entrepreneur may also want to determine what competitors have a dangerously high probability of competing with her new business. The Search Engine will allow competitors to scan each other’s knowledge inventory to determine how long it would take for their secret sauce copied. They can take then choose to take evasive action, compete, or cooperate. If a key person retires, the entrepreneur would simulate the knowledge that is lost and reassign people strategically. All of these scenarios can be examines prior to spending money. They can be made during the project cycle, or after the project is completed. Lessons learned can be used to adjust the algorithm perfecting it over time.

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

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

Literally thousands of new business plans will emerge from this important new paradigm. Knowledge will become tangible outside of the organizational construct of the corporation. Knowledge combinations will become the new corporate structure. The rate of change of knowledge with respect to time is the key metric and fundamental building block of the innovation economy.

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The Next Economic Paradigm

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Business Plans of the Innovation Economy

The Innovation Bank

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