Countless examples abound where the forces of INTANGIBLE assets align is ways that allows them to detach from their shackles and float like a gyroscope. Invisible internal forces allow new social entities to organize, travel, produce, and consume seemingly without structure or anchors. Yet they influence the most tangible of assets in their path.

Next Economic Paradigm

The next step is to harness this social energy toward sustainable productivity.  Then, and only, then can we arrive at the new economic paradigm (albeit one that may be largely unrecognizable from what we know of today).

The United States has a skills crisis

Millions of smart, motivated, and skilled people are out of work. Meanwhile companies complain that they cannot find the skills that they need to fill open positions.  Predictably, the arguments rage polarized; companies are unwilling to train, the education system is unwilling to teach, etc.  But I don’t think that is the problem.

A Function of Time

The lag time in the traditional competitive cycle remained the same; measured in months for a marketing campaign, or years with a product development cycle, or even decades as with an aircraft program.  Government is also slow to act with election cycles, public debate, and assorted diversions. Likewise, education system curricula can take 3 to 5 years to go through the release process.

Like car crashes, bubbles pop when the system is too slow to respond.

Meanwhile machine enabled social technology is developing so fast that companies do not have time to respond in competitive manner.  Everything becomes a bubble as companies find themselves playing in a game that can crush them at any moment by any number of forces; financial, economic, political, regulatory, public relations, wiki leaks, Facebook, YouTube, Smart Phones, etc.  Even strategic partnerships can unnecessarily and irrevocably tie an institution to the possible misfortunes of associates, with no prior predictability or analysis – until it is too late.

The Tangibility Of Tangibles

The corporate structure that is supposed to be the MOST TANGIBLE assets that an institution can hold is what effectively nails them to the floor.  The bottom line is exactly that, the bottom of the value barrel.  Companies that cannot see past the bottom line, can only see the bottom – and that is where they are staffing today.

The Value Game

Although developed independently, The Value Game (described herehere, and here) resembles a form of Michael E Porter’s 5 forces of corporate competition – except moving at hyper-speed to generate internal forces like a gyroscope.  Players have neither the time nor the incentive to compete with each other, rather, they compete with a game that produces both tangible and intangible assets in a common accounting system creating new value at an astonishing speed.

Of course, the corporation will not disappear any more than industrial revolution eliminated the agrarians. However, you can bet that the differences will be equally profound.


The following 7 minute talk was presented at the Innotribe Sessions at SIBOS 2011 conference in Toronto Canada.

Here I identify a serious omission in our form of economics which may  inhibit the ability for currency to represent the things that people do and make. I also introduce how a new class of financial instruments could re-connect currency with productivity thereby reintroducing vast amounts of value into the tradable asset (currency) pool.

What if the solution to the great complexity of economic collapse is actually fairly simple – and we don’t find it?  What if the new economy is going to happen whether we want it to or not – and we are not prepared?  What if the tipping point to the New Economy is already past – and we are not in the game?

The only ones to blame would be ourselves for not building the obvious.


To some entrepreneurs, the problems with the aviation industries signal many insurmountable obstacles.  At  Social Flights these challenges portend an extraordinary opportunity for a new business method to bring efficiency, order, social value while eliminating artificial barriers.

Social Flights value proposition is very strong for travel ranging from 200-1000 miles between smaller airports. Social Flights can deploy quickly in response to specialized market needs, environmental condition, opportunities, or events. Social flights adapts the mission of the aircraft to meet the opportunities presented to the market.

Conversely, commercial aviation struggles dearly in this segment because they try to get the market to meet the pre-ordained mission of the aircraft. The entire air transportation system would be best served if commercial aviation concentrated on the long haul/high volume “migration” service.  There is no reason why private aviation cannot perform the job that gridlocks commercial aviation.  This would make both industries more efficient.

Commercial Aviation’s Race to Nowhere

The Deregulation Act of 1978 in the Commercial Aviation system led to the development of the Hub and Spoke system whereas commercial carriers would fly people from small locations into a one or more large “Hub” cities where they would transfer on to the next destination – usually another hub, or on to the final destination.

Deregulation undermined point-to-point service regardless of market demand, ignoring social objectives of the passengers, having no regard for the final destination of the passengers, and blowing off the “time-value” of their passengers.  Recently, the ever expanding security layer has reached the point of personal privacy invasion.  With the age of the Internet, sites such as Travelocity and Expedia diluted the “service class” market segmentation of the airlines in favor of the “price class” segmentation of airlines.  These forces caused the commercial airline experience to become a deceptive, deeply invasive, and physically strenuous experience.

Private Aviation’s starvation diet

Meanwhile, the private aviation sector has fallen under the thumb of listing agents who tie up the industry behind the gilded walls of Charter Brokerage Houses.  FAA regulation hampers the ability to attract passengers on a per-seat basis, which gives private operators a hugely limited marketing position.  Brokers took over to mark-up the price of chartered flights far beyond the reaches of a mainstream market.

For these reasons, the private aviation sector has had difficulty organizing itself into a self-sustaining cooperative, until now.  In Fact, the smaller the airplane and the more widely distributed the airports, the simpler and more efficient the whole social system can become.

Social Flights changes the Game by Changing the Mission.


Good ideas travel easily and far along trade routes.  Ideas like irrigation, Apples, grapes and wine spread along the Silk Road. The paper and writing spread new ideas leading to increased literacy, the scrapping of old philosophy and the creation of new social orders. The printing press then led the way for today’s mighty publishing Industry.  But don’t forget a simple fact, travel is the substrate of the next economic paradigm.

Ideas: A Chain with many Weak Links

Seth Godin wrote a wonderful article about the publishing industry called The Domino Effect.  He observes that:

1. The middlemen (bookstores) have too much power to limit shelf space.

2.Authors are separated from their readers and don’t have the data to contact them directly.

3. Pricing is based static, slow, and largely irrelevant of content or any form of supply and demand which is of little benefit to the reader or the author.

4. Ideas from books travel much farther and faster than the book itself which does not translate into book sales.

Mr. Godin’s point is that given how important books are, the Chain has many weak links between the author and the audience. Publishing is due for an extraordinary disruption and Seth is going to change it with The Domino Project.  But how many other industries suffer from the same weak-chain syndrome?

Travel: A Plane with many Weak Links

Well, if Books and Travel spreads ideas along the Silk Road, then they must have a lot of other things in common.  If we apply Seth’s observations to the commercial airlines:

1. We see that Airports and airlines have tremendous power to limit gates, times, and availability of routes.

2.  Airlines have no idea why they are carrying all those people around.

3. Pricing is static, segmented, slow, and has very little to do with the actual supply and demand for travel.

4. Travelers are transporting ideas which move faster and more broadly than the aircraft itself and which does not translate into more airline tickets sold.

Where ideas spread; value is created

What is so powerful about ideas?  Most innovation gurus discount raw “ideas” as the useless drivel of idle minds. “Show me the money, not the ideas”, they bark.  If ideas are not innovation, then what are they?  If Ideas are not valuable, then what are they?

The Travel Economy

Travel technologies and applications are being sold for incredible sums of money.  Every airline merger is big news and every geolocation application is huge business.  Travel data is a lightening rod for everything from pricing to privacy.  Social Media applications are getting that migration routes are an excellent marker for “value flow” and therefore, cash flow.  Airline Travel is still the most favored mode political disruption because the links in the economic chain are so weak.  Travel is serious business.

The “New Value” Integration:

Every industry with weak links between production and end use are candidates for disruption in the great integration. Any idea that can strengthen the link in the chain between origin and the destination of an idea is a product of the great integration.  The Social Value creation process and astonishing opportunity will happen at the weak links between origin and destination of any product or service.

***

(Editors note: The above post is #2 in a series [1][2][3][4][5] introducing The Value Game to a new class of business methods.  The first real world application is Social Flights; a collaborative production / consumption game being deployed to the market.  If this works, the new business method class will be generalized throughout the economy to catalyze the convertibility of social currency.  Please join us at The Future of Money and Technology Summit in San Francisco on february 28th 2011 where we will unveil the work to the technology community)


I have been approached by many brilliant social entrepreneurs in recent weeks.  They each have several things in common. Each has an incredibly creative idea and a strong passion linked to a deep seated observation that social currency has value.  As nebulous as that may sound, it is very real, specific, and clear in the minds of those who I’ll call, The New Entrepreneur.

Nothing Economic can happen until two or more people get together to build something.  Likewise, when two or more people get together to build something, economic things happen. The objective of this post is to demonstrate the 3 underlying actions of a new class of business plans that will become dominant in the next economic paradigm.

Our recipe is simple:

Step one: convert financial currency into social currency

Step two: Create value denominated in social currency

Step three: Convert new social currency back into financial currency – if needed

This simple recipe forms the basis of the business plans for several start-ups including Social Flights and The Social Value Network as well as numerous other projects that we consult to in the US, Greece, Brazil, Australia, China, and Mexico.

So here is how it works

The Old Business Model:  Suppose you buy a truck and you use it to haul stuff for your own personal and business interests. After 5 years, you can sell the truck for about 1/2 what you paid for it.

The New Business Model: Suppose that you buy a truck to hauls stuff for your own personal or business interests.  Suppose that you also let The Boy Scout troop leader borrow it to pick up christmas trees for sale.  Suppose you let the Kiwanis use it to pick up supplies for their annual salmon bake.  Suppose you let the YWCA haul donated furniture to their satellite facility.  Suppose you help your neighbor use it for a home improvement project.  After 5 years, you sell the truck for about 1/2 of what you paid for it.

The difference is that now your community is engaged with your personal interests.  You have converted financial capital into social capital and created new value denominated in social currency.  One notable example includes Neighborgoods, but there will undoubtedly be thousands of variations of this leveraging every conceivable physical asset.

Now, how do you transform this back social capital into financial capital?   Well, that’s what the emerging science of Social Capitalism is all about.  Social Profit is like a fungible option with a face value.  If structured correctly, an option can have a face value equal to the difference between discount and full price. That face value can be traded like money.  When you are engaged in a community, people know who you are, they trust you and they share with you.  People are trading options – the right without the obligation to exercise a financial position in the future.

Options have real value as an asset if you have them or as a liability if you don’t


by animeartist67

Nothing grabs people’s attention these days like a discussion about the future of money.  Yet few subjects diverge as wildly. The stakes are high since personal and political fortunes are cast against the ideals of what money is, what it has been, and what it will become.  The temptation to cast the future of money in one’s own image is a tale as old as time and likely the source of most social conflict.

The Future of Time

There are two futures of money being foretold today. One is predicated on the demise of Capitalism and persistent denial that scarcity is a real economic element, despite the obvious scarcity of time in one’s life, for instance. The other future seeks to correct the flaw in Market Capitalism so that one’s scarce time may become more equitably allocated and less easily exploited by others.  Social values such as freedom, liberty, family, community, trust, health and welfare are derived from how one is allowed to prioritizes their own time, not how one is able to prioritizes the time of others.

The United States of Mind

The reason why this distinction is important is that no great economic paradigm of human civilization ever came about as a result of wholesale collapse of the prior economic paradigm. Rather, each new state of human social organization was derived from the prior state through an integration of tools created in that prior state.

It is now time to take account of these tools and figure out how to integrate them correctly.  This is the only way to foresee where we need to go and how we can get there.  The only way to defeat gravity is to understand gravity. The work will be difficult, it will be scientific, it will be intellectually challenging, and it will be inclusive of all living systems – including those that we seek to change. The trick to the future of money business will be to cure the disease without killing the patient.

Unfortunately, we may not have much time


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

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

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

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

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

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

Value of human interaction

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

Credit Score

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

The Social Value Index

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

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


The Social Value Game

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

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

There are 5 elements to The Value Game

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

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

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

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

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

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

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

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

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

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


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

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

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

Please enjoy this video – American Day Dreams. Watch it several times. Don’t forget to daydream


Editorialized Economics

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

Then came the Social Media Gurus

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

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

A Monster was Born

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

Casualty or Causality

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

Call it tattle-tale economics