How big is this opportunity?

Roughly 10% of the US gross Domestic Product can be attributed directly to the process of evaluating or examining transactions.  This represents a 1.4 Trillion Dollar of value in a system that may be better organized, captured, and preserved through social networks and the conversations that they produce.

Social vetting on a scale that would allow social networks to monetize would require that communities organize their knowledge assets specifically for deployment to a market.  All that an entrepreneur needs to do is fill this need.

What happens if they don’t?

The true cost of vetting may be calculated by what happens in the absence of oversight, transparency, and disclosure. When the vetting process fails, so too does the industry.  The continuing financial crisis of 2008 was fueled by a failure to regulate mortgage backed securities.  The financial Crisis of 2002 arose from a failed accounting (CPA) profession.

The losses due to the absence of vetting mechanism exceeds by many times the cost of having a system in place.  The financial crises of 2002 and 2008 have together wiped out nearly 20 Trillion dollars of value and incurred high volatility to financial systems due to failed vetting mechanisms.   The people who held the knowledge about the impending doom had no effective medium to share.

Who vets KNOWLEDGE assets?

The flow of money lives and dies by the vetting mechanism.  CarFax, Experian, Ebay, Google owe their existence to the ability to vet information – However, they do not vet knowledge.  The ability to deliver the right knowledge asset to the right place, at the right time for the right price is tantamount to being able to “manufacturing innovation”, that is, to print money.  Inversely, the ability to foresee the result of specific knowledge assets deployed to specific business conditions is the Holy Grail of entrepreneurs.

Social networks can carry out this very important function of the Innovation economy; organize, locate, and develop knowledge assets in a form which can emulate a financial instrument.

How are things changing?

Emerging ideas such as conversational currency, relationship economics, innovation economics,. nd new ways to value intangibles are appearing in research blogs across the web.  Disruptions to Global finance, environmental policy, and the emergence of global currencies are setting the stage for a huge transformation in how society organizes itself.  Traditional industries such as print media, advertising, and banking are failing. Nothing is sacred except change.

Where are these communities, and what do they want?

Many communities exist today in a variety of forms and functions such as communities of practice, fellowships, service organizations, professional societies, trades groups, affinity groups, etc.  Increasingly they are moving to Social Media such as Facebook groups, Linkedin groups, Affinity groups, aggregation groups, and political action groups.  Communities are using social media technology to engage the knowledge domain contained within them.

As such, they will soon have ability to foresee the result of specific knowledge assets deployed to specific business conditions.  This is the Holy Grail of modern civilization.


Gross domestic product (GDP) is a basic measure of an economy’s economic performance.  GDP is the market value of all final goods and services made within the borders of a nation in a year measured in Dollars.  Globally, GDP is equal to the total monetary income generated by production of goods and services in a country.

Gross Domestic Product does not take into account many important variables accelerated by Social Media and growing exponentially in economic influence.

GDP counts only industrial output, but…

Industrial output is becoming increasingly dependent on social networks and social innovation.  GDP does not take into account such non-market transactions such as open source development, crowd sourced innovation, conversational currency, social capital, creative capital, or intellectual capital exchanged between people in diverse social networks

GDP reflects Wall Street Priorities, but…

Wall Street Priorities are increasingly challenged by social priorities. GDP does not account for sustainable business practices, heroism, mentorship, activism, volunteerism, social networking, uncompensated innovation, and community involvement.  GDP does not account for quality improvements and social multipliers such as aggregation of social media, increasingly powerful computers, acceleration of conversations, online etiquette, multi-media, and social editorial services.

All of the above exclusions are valuable, because…

These exclusions add value, they store value, they create value, they distribute value, and they exchange value.  If we called it a financial instrument that is highly convertible, extremely liquid, and easily transported it would describe a currency by any definition of the word.  For the purpose of this discussion, call this currency the “Rallod” – or Dollar spelled backwards.  The Rallod is the currency of the new American economic and production paradigm.

The Invisible Currency

For Example; Twitter is doing in Iran what America has been trying to do in Iraq for 8 years.  Face book, LinkedIn, and the entirety of social media space is producing many times the effectiveness of the $200 Billion U.S. advertising industry in terms of driving people to specific action. Social vetting platforms such as blogs, commentaries, groups, and content aggregation have increased the efficiency of markets by vastly reducing arbitrage opportunities while also identifying scams and corruption.  Human productivity is being converted to Rallods and there is no politician, executive, or white collar criminal anywhere in the world who is not deeply concerned about this invisible currency.

The Best is Yet to Come:

The “Last Mile of Social Media” is analogous to the last mile of broadband Internet – the marginal cost of reaching every person in every household and tightening social networks to extremely high resolution, is diminishing rapidly.   The Last Mile will bring communities together to vet local politicians, corporations, products, and policies.  The Last Mile will formulate a knowledge inventory combines with close proximity of knowledge assets and a percentile search engine to predict outcomes.  The Last Mile of Social Media will duplicate every function that exists in a corporation except it will be built upon the social media operating system; aggregated, amalgamated, sustainable, and reflecting social priorities.

So what happens to GDP?

GDP by current measure will reflect only the value of the “dollar”, not necessarily the value of the human productivity.  Perhaps it already does.


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.


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 enterprise.  Surely the World still greatly admires and respects American Ingenuity (social capital, intellectual capital, and creative capital) and would likely buy such a financial instrument instead of more of our debt.

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 innovator density is about (1) person per square mile.  The United States is a little more than (3) million square miles.  If only (1) of the thousands upon thousands of potential applications of Last Mile social media were implemented across the country, then (3) 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.


So who exactly is paying for this? The next economic stimulus package will not come from the halls of Washington or the boardrooms of Wall Street, but from the streets of America.  The objective of The Ingenesist Project is to induce a crowd sourced innovation economy by integrating Social Media with three web applications. It’s all about to become extremely exciting.

Social Media Grows Legs

There only remains three tiny applications yet to be developed and deployed to social media that will allow human knowledge to become tangible outside the construct of a corporation, and therefore, independent of Wall Street.  Social media technology is very close to duplicating nearly every function of the corporation outside of the traditional corporate structure.  America’s most valuable asset is not money, it is social capital, creative capital, and intellectual capital, and it’s about to stand up, brush itself off, and walk away from the mess left by the excesses of greed and power.

The Evolution of a Species:

1. Social Media will be used to develop a knowledge inventory in a computer code based on, say, the Dewey Decimal System.  Suddenly, human knowledge will become organized like a library and searchable by computer in very high resolution.

2. Boolean logic will be applied to the knowledge inventory and the resume will be replaced by a high resolution computer readable descriptive code.

3. Communities of practice will normalize (bell curve) their knowledge domain. At this point, knowledge will appear in the same form as a financial instrument and can then be treated as a tangible asset.

4. A percentile search engine will calculate the probability that a various collections of knowledge assets can execute collections of innovation business plan scenarios.

5. An Innovation Bank will match most worthy knowledge deficit to most worthy knowledge surplus and keep a record of the “secret sauce” of success feeding back to the search engine.

Wall Street Calculus:

Using the same equations as Wall Street, the Innovation Bank will predict the probability that a venture will be successful given a set of knowledge assets.  The Innovation Bank can then predict the future cash flows associated with the venture. Now, thousands of ventures and their predicted cash flows can be combined, diversified, and diced up into innovation bonds having superior returns over any other investment.  Investors will flood the Innovation System with cash.  This cash will be used to fund more innovation investment and the cycle will continue.  Everyone takes an equity position and innovation reflects social priorities rather than Wall Street priorities.  This changes everything.

This can happen today with existing infrastructure.  The only thing needed is a social movement; that’s what Americans are best at.  Where does this leave Wall Street, failing businesses, and all their debt?  The funny thing about knowledge assets is that they can walk if necessary.


In the early 1990’s, the NAFTA Mutual Recognition Document (MRD) for engineering professionals was the first modern attempt to treat knowledge like a financial instrument. Unfortunately it failed because of a tiny little flaw that I call ‘social clipping’.

Most trade agreements that followed were modeled after NAFTA and, as such, inherited the clipping flaw.  The flaw is that ‘products’, but not the knowledge assets that created them, are mobile in a global economy.

The MRD handed the knowledge economy to Mexico on a silver platter; but they turned it down.  The government did not want to give their engineers “wings” because they were afraid that they would fly away.  Instead, Mexico chose to sell their extraordinary young engineering talent off cheap to meet quotas promised to Asian, European, and American companies to relocate huge manufacturing plants to the country. Today, Mexico competes with China in a race to the bottom of a manufacturing economy and almost no indigenous design industries.

Two-way street:

Back then, the protesters raged about an influx of cheap foreign engineers to the US.  But many US engineers saw that Mexico needed everything that engineers make – roads, bridges, infrastructure, etc. The needs were endless and the objective was clear; to increase human productivity in Mexico was to create real and sustainable wealth.  Maybe then, the citizens would not need to fly away.

These infrastructure projects could have been funded because the Professional Engineering License behaves like a financial instrument mitigating project risks (so that nothing “disappears”). Only then banks would lend and insurers would insure.  The transfer of knowledge and accountability to Mexico would have been extraordinary; the relationships, profound; their development progress, astonishing.

The Disappearing Economy

But the MRD died by clipping.  Mexican Engineers would have been required to take the same engineering examinations as US engineer.  The government refused citing concern that they could not pass. So, in 1994-1997, this author directed a large comparative education project sending over 250 engineers to the US professional engineering examination (EIT).  The Mexican Pass rate was extraordinary – they were easily comparable to the US pass rate in most subjects and flat-out superior in mathematics.  There was nothing wrong with Mexican engineers, or the culture; there was something wrong with the financial system that keeps them invisible.

Knowledge is Power

As the story goes, Mexico has a family oriented culture where hierarchy is often based on seniority; a common examination may favor recent graduates.  It would be inappropriate for a young engineer to have authority over a more senior engineer.  Dig a little deeper and the real problem was power. In Mexico, power is concentrated among very few people.  It would have been unacceptable for transparency to exist.

We are facing a similar situation in America today.  Power has been steadily consolidating over the years.  A huge and fast stimulus package will enter a financial system with a shortage of vetting institutions. There is a strong pull toward ‘business as usual’ – creating J-O-B-S; not necessarily more entrepreneurs, engineers, or mentors, and certainly not empowering whistle blowers.  In the knowledge economy, Americans salaries are pegged to off-shore outsourcing. This is a game that we can no longer win playing by the rules.

Social clipping

As we have seen with less developed nations; when people are held below a certain economic level, they fail to organize for innovation, social change, entrepreneurship, and value creation because they are too busy trying to pay off debt and feed their families.  Social capital, creative capital, and intellectual capital are muted; that’s when the magic of innovation disappears. That’s social clipping.

America must move on to the next level of economic growth.  The Innovation economy is a game we can win playing by new rules. Government must trust the people, empower social media, and not clip our wings with an outdated economic model.


The Known Universe
The Known Universe

Computer enabled society has been called an “alternate universe“.  If Social Media intends to make serious money, perhaps it should act like one as well.  In finance, Risk is also often called an alternate universe.

Beneath the surface of this little 4 letter word resides a complex network of financial instruments that do far more to channel and direct the flow of money than any commercial trend, marketing campaign, or hot new web app.

Risk is actually a very simple thing to understand.  All you need to do is answer all three of the following simple questions:

1. Can I identify the peril?
2. What is the probability that the peril will get me?
3. If it does get me, what are the consequences?

The Insurance industry is absolutely gigantic – too important to fail – yet it produces nothing that can be held in the palm of one’s hand.  Insurance lives and breathes in an alternate universe of information.  Any place where these three questions cannot be fully and completely managed, you will find an insurance product.  Where there is no insurance product, there is no capitalism.

Here is how it works:  suppose there are 10 identical cabins in the woods.  Each cabin is worth exactly 1000 dollars.  There is a 100 percent probability that 1 of cabins will burn down every year, but nobody knows which.   Therefore, each cabin owner needs to have 1000 dollars sitting in a savings account in case their cabin burns that year.  Together, 10,000 dollars sits in a bank not being invested in productive enterprise.  Along comes an insurance company to reorganize the assets by offering to replace any cabin if all 10 cabins agree to pay 100 dollar per year premium (plus an admin fee). Now each of the cabin owners can pay 100 dollars per year and release 9000 dollars to the economy as productive capital.

Insurance opens the floodgates of wealth creation; bankers lend, investors invest, and entrepreneurs innovate where risks are reduced to zero; all bets are hedged.  But there is a trick; the peril must be identified (fire), the probability must be known (10%), and the consequences must be quantified ($1000).  This only works if the assets are pooled in identical lots that have the same probability of loss and suffer the same fate.  This is valuable information and it’s worth a whole lot of money.

Social Media is poised to open the floodgates of wealth creation in a similar way – by connecting local communities, neighborhoods, peers, and colleagues with computer enabled society.  Today, it is often easier, cheaper, and safer to make friends online than in person, but nothing tangible can really happen until the rubber meets the road;  people need to congregate.   The Ingenesist Project suggests that the 3 dimensions of human capital, creative capital, and intellectual capital can be identified, normalized, quantified and pooled into risk sharing cooperatives through social media as a means of eliminating innovation risk.

The trick is for society to organize itself in a slightly different way – this is where Social Media needs to position itself with the next generation of applications.  If so, the business model for social media will become hugely important to an innovation economy – too important to fail.


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

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

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

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

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

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

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

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

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


INGENESIST PROJECT: Submission to the 10^100 Innovation Contest; www.project10tothe100.com

Single sentence:
The Ingenesist Project is an open source economic development program to induce the Innovation Economy utilizing Social Networks.

Tell us more (300 words)
The current financial system has reached the limits of its effectiveness. Interest on debt has exceeded the system’s ability to pay it off. But debt is simply a promissory note on future productivity – any caveman can tell us that the only way to increase productivity today is to innovate yesterday, not tomorrow.

In modern times, this means that the only way to sustainably create more money tomorrow is to innovate today. This is the flaw on Wall Street that Innovation Economics will correct.

Ingenesist has specified three simple web applications when applied to Social Networks, will allow Knowledge to become tangible outside of the organizational construct of a corporation, government, or academia. To develop these applications would unleash substantial innovation and wealth in society.

*The Knowledge Inventory
*The Percentile Search engine
*The Innovation Bank

Knowledge is an excellent tangible asset upon which to peg a currency – better than Gold, Silver, or Debt.

The factors of production for an Innovation Economy are Social Capital, Creative Capital, and Intellectual Capital. The knowledge Inventory classifies knowledge assets in social networks. The Percentile Search Engine assembles unique knowledge asset combinations and returns their probability of executing a given business objective. The Innovation Bank matches most worthy knowledge surplus to most worthy knowledge deficit. Finally, entrepreneurs elevate knowledge assets from lower states to higher states of productivity thereby creating wealth in communities.

By analogy; in the early 1800’s Eli Whitney performed a demonstration for members of Congress by disassembling 10 working muskets, scrambling the pieces and reassembled 10 working muskets. It may seem trivial to us today, but that simple feat astonished the world; it led to the industrial revolution, and unlocked a vast amount of innovation and wealth creation. Innovation Economics is the modern day equivalent.
What Problem does it solve (150 words)?

Technological change must always precede economy growth. We are going about the process of globalization as if economic growth can precede technological change. This simple reversal is the cause for much of what is unsustainable in the world today. Innovation Economics corrects this flaw.

To make knowledge assets tangible is the Holy Grail of financial accounting. The Ingenesist Project asserts that knowledge assets are not intangible, they are simply invisible – this is a much easier problem to solve. Innovation economics solves this problem.

True valuation of knowledge assets allows for direct capitalization of people and their social, creative, and intellectual capital. Networks of knowledge assets form a new type of corporation that is fault tolerant, self regulating, risk diversified, and responsive to social priorities. Wall Street becomes the steward instead of the master. The whole game changes.

If it becomes a reality, what happens (150 words)?
If Innovation Economics becomes a reality, Social Networks will become the driving force of economic growth because human knowledge (as social capital, creative capital, and intellectual capital) can be capitalized directly. Creative knowledge workers would benefit most initially.

Eventually, publically traded Innovation Bonds backed by productivity gains will replace venture capital at vastly reduced risk and cost thereby unleashing an extraordinary amount of primary and tangential innovation creating a virtuous circle.

Areas of low productivity, such as poor communities and under-privileged populations will become targets for highest returns on innovation applications. Millions of new-to-the-world businesses will emerge and nearly all existing businesses will become more efficient where human knowledge is tangible and free to assemble itself in infinite, diverse, and strategic combinations.

If done correctly, eventually most people on Earth would benefit by freedom from the shackles of debt economics.

What are the initial steps to make it happen (150 words)?

Phase 1: The initial steps are: publish our research to a wider audience, prosecute our patent application (USPTO: 20070226361), release it to public property, and begin receiving public input.

Phase 2: Publish several animated videos which describe step-by-step the role that Social Networks must play to induce the Innovation Economy. Collect more input.

Phase 3: Create an open source development platform where ideas can be collected from the global community on how to develop the three web applications specified herein.

Phase 4: Develop and release common architecture web applications for The Knowledge Inventory, The Percentile Search Engine, and The Innovation Bank.

Phase 5: Exist indefinitely as an NGO to keep the game fair and build out emerging opportunities as needed.

What is the optimal Outcome and how is it measured (150 words)?
The intended outcome is for the innovation economy to arise from the knowledge economy as the next level of economic development. The optimal result would be an improved wider distribution of wealth and the transfer of corporate prioritization to communities regarding what gets innovated and what does not. Or likewise, which existing markets dynamics are disrupted and which are not. The optimal outcome would be the emergence of sustainable enterprise over forest-to-dump consumerism.

Metrics are inherent to the algorithm of the Percentile Search Engine as follows: innovation is proportional to the rate of change of knowledge with respect to time and knowledge is proportional to the rate of change of information with respect to time. Differential Calculus is the mathematical tool used to monitor all performance indicators of this system. In fact, all of the analytical methods of finance similarly apply to knowledge assets, by design.