There are two sides to the Social Value Equation – the creation of social value and the destruction of social value. There are countless examples where innovation destroys the value of prior technologies. There are also many instances where “progress”, perhaps in the form of a freeway or public structure, divides a community where strong social bonds once acted.

In the presentations that I give, I often cite the value of a bridge over a waterway. The bridge may cost 50 million dollars to build and maintain, but it increases human productivity by 50 billion in the life span of the bridge. We often cite a factor of 1:1000 for the valuation of the dollar to social currency.

Contrary to that, Jane Jacobs (renowned urban theorist and community activist) may argue, the bridge (and roadway) may divide a community or neighborhood. Where the community may once have been scaled for foot traffic, the new boundary may require a car to circumvent. The new road may divert old commercial traffic in many ways that are bad for a community. In such a case, the social capital destroyed by the bridge is in fact the dominant financial outcome.

So here I am, I just destroyed my own best analogy to demonstrate a point. Without vetting the complete transaction in the form of social currency, net “progress” of any kind is as easy to leverage backwards as well as forward at a rate of 1000:1.

Communities that seek to stop a disruptive development program will often organize to protest urban development decisions. Unfortunately, they are usually up against a calculation of economic impact that is dominated by dollar denominated currency. Without a “Social Currency” of their own, quantified and convertible to dollars, communities are doomed. Law suits will play out in the same manner where damages are non-quantifiable, and therefore non-existent.

Jane Jacobs also writes that a community that can place a value on their social currency – although I do not think she explicitly called it that – and can act to preserve value or increase value by their actions. Many communities from Greenwich Village to Boston have thrived under a social currency diverting projects away from sensitive communities. The Big Dig went underground in Boston much like the The viaduct replacement project will do the same Seattle. Granted, the Seattle project mainly preserves water and mountain views for million dollar condos, this concept, in fact, would be more critical to poorer communities than wealthy ones.

Obviously there is no way to impede progress. All innovations destroy prior value in the creation of greater value. The danger is when Wall Street priorities can dominate Social Priorities. Capitalism, for all the greatness it creates, is amoral. Capitalism is committed to dollar currency, and devoid of social obligation except to the degree that obligation is profitable – that is where social currency converts to capital currency.

Through the magic of the fractional reserve system, Banks create money backed by debt vs. deposits at a factor of 1:1000. Therefore, the convertibility of social currency with a capital currency at a similar factor of 1000:1 is essentially the only effective way to convert Social Priorities into Wall Street Priorities.


brainI come across an increasing amount of posts and discussions related to alternate currencies, social currencies, and knowledge as a tangible asset, etc.  It is as if people are grappling with something that they don’t quite understand or can’t quite grasp – but, soon will.  Really, don’t lose heart – they are definitely on to something.

Sandy Jones Kaminski of Bella Domain provideds a well developed argument against letting people pick your brain by proposing the “no brain picking list”.   While somewhat tongue-in-cheek, the article portrays a common frustration felt by specially qualified people who get too many requests for “brain picking” and not enough turkey sandwiches to justify the time-value of the exchange.

[People who ask to pick your brain are either asking you to work for free or they are trying to bypass the very hard work required to build a social network by asking for your referrals]. While not quite a reason to end brain-picking, it certainly indicates a hugely inefficient market.

Taking some clues from the banking industry

A bank seeks to match most worthy money surplus  (rich people who will not pull their deposits abruptly) with most worthy money deficit (employed people with good credit history).  In order to accomplish this, the financial system has 5 essential components: a currency, an accounting system, a vetting mechanism, entrepreneurs, and business plans.

Now suppose we transpose the rules of finance on the rules of brain picking.

Currency

A currency is defined as a vessle that stores and allows for the exchange of value.  So it’s natural to expect that relationships, networks, “contacts”, “followers” and all the other accoutrements of social mediation are means by which we store value.  We invest time in developing our own knowledge assets and we invest those assets in our relationships.

Accounting System

The balance sheet needs to, well, balance.  The first assumption I make is that every single living breathing person on Earth holds value. It’s only a matter of whether they have a surplus in knowledge assets in that which I have a deficit and vice-versa. Since my deficits far exceed my surplus in the vast majority of human knowledge, I am always looking for a fat juicy brain to pick as well.

Vetting Mechanism

If the game isn’t fair, nobody will play.  Social media provides the most critical element of brain-picking economics.  Any time someone asks to pick my brain, I’ll do a Google search or conduct a social media profile on them. What I find will quickly determine what the initial contact will involve a courtesy email or a 3 hour golf game.

Business Plan:

Buy low sell high.  That’s the mantra of capitalism, but it remains “unspoken” in social media.  If a person is very successful at picking brains, there is an inherent quality in that which may be useful to me. I will study them. If other important people have allowed this person to pick their brain, why not me? If I’m getting a lot of pickers from a certain demographic, maybe that represents a business opportunity, seminar market, or speaking engagement.

An entrepreneur is as an entrepreneur does

Entrepreneurs do nothing more than identify assets and elevate them from a low level of productivity to a higher level of productivity.  I ask my brain picker who they have also discussed the matter with. I also ask them places and dates of those interactions.  I ask them about people in their social network, rumors, concerns, projections.  I ask them their goals an objectives in talking with me – exactly as I would do for any client….

…well before you know it, I’m picking their brain.


pLASMA bALLToday we see Social Media duplicating many of the functions of earlier society by storing community wisdom, applying social vetting, and deploying social currencies.

It takes a Community

Here is an article is about a a person who learned through social media profiling that her fiance was active in hobbies that conflicted with her moral constitution – before the wedding instead of after.  In the old days, the community would also profile each individual based on the social record of their behavior.

Social Capitalism

Here is a video article that discusses how social media is  duplicating many functions of the corporation outside the construct of the corporation. Factors of production increasingly enter the org chart as a social media application.  We now question whether the corporation itself is the sole vehicle of wealth creation.

Social Currency

We see social media duplicating many of the functions of the financial system where currency, credit scores, banks, land, labor, and capital are being replaced by social currency, social vetting, social capital, creative capital, and social entrepreneurs.

Macro vs. Micro

We see divisions of scale from the long-winded one-sided content of the static web presence to the micro blogging applications that more closely resemble a conversation.  Time factors are accelerated to the point where real-time is not fast enough.

Local vs. Global

We see an emerging segmentation between Local Social and Global Social. At first global leverage was the awarded the small entrepreneur with something to offer to the world.  Now ‘Local Social’ enjoys substantial leverage over global corporations by reorganizing the way people prioritize and experience each other and their community.

Everyone is a node

Taking an analogy from the physics of electricity, the term “potential” means the difference in energy between two nodes.  The greater the difference, the bigger the spark and the greater the impact.   The local energy at each node influences the direction and size of sparks between nodes.  As people accumulate ‘Social Current’, their position relative to those around them changes. Likewise, their potential also changes relative to the ‘Social Current’ of others. Everyone has some potential relative to every other node.

Integration has arrived

Much like the knowledge economy integrated, but did not replace, the agrarian economy, Social Media will not replace the corporation, the financial system, dissertation, conversations, localization or globalization.  Rather, everyone becomes a corporation, everyone prints their own social currency, everyone publishes their intentions, everyone has local and global leverage.  That’s what Integration is all about.

A ‘culture of one’ is moot.

It is not surprising then that our culture itself is now being defined in terms of social media with effective aggregation of  social norms, storage of social wisdom, and medium of exchange for community ideals.  The true test of “culture status” is when engagement is no longer an optional.  Without engagement, there is no culture.



foursquareThe Next Economic Paradigm is arriving and the first entries include Foursquare.  Few people understand the significance of this new class of social media applications. Foursquare contains many (but not yet all) of the components of the Innovation Economy that we have been discussing for several years at Ingenesist.com, Conversationalcurreny.com, and Relationship-economy.com.

Here is what Foursquare does have:

Geolocation: Sure, social media has been great sport for chatting with your buddies across the world, but nothing really happens until the rubber meets the road.  people need to be in the same location in order to “build something” together.  We call this The Last Mile of Social Media

Mayor of Popcorn: As silly as this may sound, badging it is a highly sophisticated feature that we have called the “knowledge Inventory“.  In order to build anything, there must be an inventory of parts. “Knowledge” is not the exception as the crude and archaic resume system would have people believe.

Knowledge is an asset and it will perform as an asset if it is characterized in the form of a quantity and a quality.  “Mayor of Popcorn”, believe it or not, is in the correct form.

Vetting Mechanism: Vendors are an equal part of the social network and will soon provide their coupons, specials, and other economic incentives on Foursquare because advertising any other way is dead meat.  Vendors will live in a system that is in their best interest to practice high integrity rather than low integrity while favoring mom and pop operations that live in the community.  We call this “Social Vetting” as it lives beyond law and government – let the market be the judge.

Here is what they do not have (yet): Currency

The attraction of foursquare is the promise of fun and fancy crowd play.  The incentive is to be seen as connected, mobile, and plugged-in.  As such, people will be implicitly attracted to you like bees to a flower. In actuality, this game takes Social Media right to the edge of becoming a new financial system that can compete with, and challenge, the almighty dollar. No kidding.

Remember that currency is a social agreement.  History shows that people will trade seashells, tulip bulbs, paper notes, and little copper disks as a device to store and exchange value. All value is expressed in terms of human incentives of some kind.  Well here we have it.  Now let the entrepreneurs play.

That is a huge, huge, huge matter.

The dollar represents productivity….well, so does Foursquare.  What will entrepreneurs do in this environment?  How will entrepreneurs organize communities around “things-o-do” – or even – “things-that-must-be done”?

Here is the hint.  The idea that innovation is the exclusive domain of corporations, academia, or government is now as obsolete as Twitter.  Innovation is now related to knowledge as knowledge is related to information.  Anything that increases the rate of change of knowledge in a community can now be defined as innovation in Foursquare.

Debt and innovation represent the exact same thing.

Innovation is a promise of future productivity. Debt is also a promise of future productivity.   It is only a matter of time that all of the activity in this new generation of social media applications will resolve to, and aggregate around, a new form of currency that will compete with the dollar itself.  Mark these words.


Home-depot-4Corporations may be getting social “online” but how are they doing offline?  Anti-social behavior on the ground is the genesis of our not-so-coveted Social Caterpillar Award.

The Social Caterpillar Award goes to companies that have what it takes to become great social leaders and transformational community assets but who somehow fall short due to some management cocoon.

Blockbuster Goes Bust

Last week, I wrote about Blockbuster signing their own obituary.  Today on the news, I hear they are filing for bankruptcy and blaming everyone but themselves – hmmm, maybe there is a correlation?  As such, Blockbuster was the first recipient of the Ingenesist Project Social Caterpillar Award. Who’s next?

Home Depot: Living under a rock?

It would seem that Home Depot gets it with 30,000 Facebook Fans, 20,000 twitter followers, and 4000 Youtube members as well as some pretty slick instructional videos.  The slogan “I Bleed Orange” is quite the graphic branding opportunity – I sort of wonder what exactly does such blood-letting involve.

But a company with almost 2200 stores, 210,000 employees and 100 Billion dollars in annual sales – this social media presence is hardly a blip.  Even the employees don’t show up.

The Last Mile of Social Media

I went to Home Depot recently buy something for a project.  I parked in the most reasonable spot and walked to the nearest of at least 5 sets of doors spaced across the entire building.   The first door stated in fairly crude language “This is and Exit, Use Entrance North of here”.  OK, so I did not bring my compass, and I proceed to the next door.  The same sign appeared.  So I went to the next – it was blocked for forklift activity.  So I returned to the prior door and found that the door on the other side of a partition was actually an entrance with a tiny sign partially covered with something orange… etc.  I think you can see where I’m trying to go with this.

Entering the store was no better.

I was corralled around a set of barriers past the full length of shopping carts and dumped on the side of the store that I did not want to go to.   I asked a manager why they insisted on tormenting customers like rats in a maze and the response was to control shoplifting.  I wondered how much plywood I could fit in my pocket.  I certainly did not feel welcomed.

In other words, the customer is subsidizing the failures of the enterprise to control shoplifting – if that is the real problem.  Like the age old tactic of government, blanket legislation makes all people suffer for the shortcomings of a few because management is too lazy to devise a method for actually solving problems.

So they plod along.

No competition from China, no Internet based Plywood stores, no power tool kiosks at the mall, all the small shops are driven out of business, and the economics of planned obsolescence driving product quality.  Is this a recipe for obsolescence?  Does this invite an innovation disruption?  Will a competitor arise who can float like a butterfly and sting like a bee?

And Now, The Social caterpillar Award Goes Tooooo…..

In Honor of Home Depot lack of imagination in solving their own problems with social media at the expense of their community, we proudly issue our Social Caterpillar award to Home Depot.


UncertaintyCartoonJay Deragon posted a series of articles recently on his Relationship Economy blog which I found especially exciting. As usual, Jay is bringing forward some very important ideas related to social media components and outcomes, but what really sets this new mindset apart is the fact that Jay is asking the same questions that have been plaguing scientists for 100 years.

In Jay’s posting “The Social Moment is Gone” He describes how organizational decisions are driven by metrics that no longer exist.

In another post: ”Measuring Social Moments”, Jay suggests that if things are in a dynamic state then measuring, a moment becomes irrelevant to what is happening the next moment.

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

Scientists figured out that in order to study a sub-atomic particle, they had to stop it from moving. As soon as they did that, the nature of the particle changed. Scientists could only study their interaction with the particle, not the particle itself.

Jay is saying something similar: “How can you measure social media if it is responding as a function of your interaction with it? All you are doing is looking at yourself in a mirror – so stop it”. He‘s right.

Status Quanta

Keep in mind that this comes in a time when the chorus of social media gurus are still trumpeting the C-Suite Concerto called “ROI or Die”. Maybe someone should remind them that the value of the Corporation that they so fungibly defend is in fact an approximation based on things that cannot be measured. Let me explain:

It is not surprising, therefore, that Wall Street hires Quantum physicists (affectionately known as Quants) to manage money and investments in markets and to “Innovate” new financial instruments.

The Calculus of Social Media…on Wall Street?

Heisenberg’s uncertainty principle lead to the development of a new branch of probabilistic mathematics for approximating both the position and the momentum of subatomic particles. In fact, the science of Quantum physics is entirely contained in probabilities that events will or have occurred and not necessarily based on direct observation – and so are the Wall Street Valuations.

Wall Street uses the same calculus to estimate the probabilities that financial particles will have a specific location and momentum without having to actually witness them. The result is a host of exotic financial instruments that make, bet, hedge, and securitize such approximations for the benefit of stockholders…..

Getting Back to Jay

Markets are conversations. People make products, invent things, design stuff, hold stock, buy, sell and trade everything. Those Quantum Physicists on Wall Street are estimating the position and momentum of people.

All Jay is saying is that now you can do it too.


'Innovation and Growth, Chasing a New Frontier' book launch(2)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


A Community of Knowledge AssetsOur culture organizes itself around winners and losers. Corporations reflect this competitive nature to the core of their Capitalist doctrine. Sports analogies abound across the enterprise straight through to the HR department always on the lookout for the most amount of superstar for the least amount of money.

Social media has every industry trying to understand the concept of community. Among the most difficult ideas to grasp is that knowledge assets in a community live on a bell curve, not in winner and loser columns. Everyone is an expert at something and nobody is an expert at everything. Someone who is not performing adequately is simply a misallocated asset, not flotsam subject to jettison at the next layoff or outsource “opportunity”.

A Community of Knowledge Assets

Like most assets, there is a perfectly legitimate market for everyone in a community – nobody need be excluded, marginalized or laid off. Social Media is turning the tables on the hierarchy and old winners who don’t play by the new rules quickly become the new losers. Maybe we ought to run our economy like a community instead of losing so badly at trying to be a winner.

A Community of Knowledge Assets


unhq

Where the vetting mechanism fails, the system fails. This has happened in countless instances from the current financial crisis to nearly every product, market, environmental calamity, or political failure in recorded history – the referees who were supposed to keep their eye on the ball, did not. Likewise, where a vetting mechanism is effective, the system is efficient.

EBay does little more than defend the vetting mechanism (feedback system) and entrepreneurs do the rest. The credit score allows companies and people to capitalize and securitize assets. The US legal system keeps the game of commerce as fair as practical. Police officers and school boards keep our society safe and smart. We often overlook the importance of vetting in our communities.

Today, we find severe problems in finance and government and people are investing their knowledge assets in social media as the place to “store and exchange” their present and future productivity – instead of debt. As such, social vetting is taking many different forms to validate, qualify, and quantify those assets.

While the progression may not be noticeable, there will be a tipping point where the medium has built enough trust that it can support a currency. This new currency needs to be only a little bit more “trustworthy” than the currency it will replace. This is the point where knowledge becomes tangible.