99% of Americans don’t have a game that they can win playing by the rules imposed on them by the other 1%.  But in order to keep this game in play, that 1% utterly depends on the remaining 89% who still have jobs to show up for work and do as they are told. The spectre of the 9% fallen is an incentive, of sorts, to those still walking.

These are the 89 percenters…

…who already occupy Wall Street with their knowledge of systems and processes to implement procedures and methods that support the connections and networks of the remaining 1%.  Without these people in place, the system will fail faster than S&P can calculate a credit score, literally.

The 89% know what each other know

The logistics manager knows whom to call when the packages are late.  The account manager knows all of the customers by name.  The service team knows exactly how to get the computer systems back online.  The loan officer knows where the money is.  But only the 1% know where the knowledge is…and where it isn’t…

Knowledge is money

As RIM recently learned, if the computers go down, all the money in the world will not bring them back.  Most companies have an off-line life span of only a few days or hours before irreparable damage occurs.  Only the right knowledge in the right place at the right time can save the firm.   This is a huge monetary vulnerability.

The Public Knowledge Inventory

I found a great picture of the Occupy Wall Street Library from here.  The great irony is that OWS felt the need to build a Library that represents the ideas that they have between their ears.  What they really need is a “Library” for the knowledge that actually lives, breaths, and acts in the minds of the 99%.  Only then can they deploy the force that they need to move enterprises.

Divide and conquer

As long as Americans are fighting with each other, there is little chance that they will organize their knowledge assets and deploy their knowledge assets in a manner that serves social priorities instead of Wall Street priorities.  This is the big shift that the World is waiting for.  As long as people fear losing their jobs, they will comply with the 1%

What scares them the most?

The greatest fear of any company is to have their key employees poached by a competitor.  Companies have gone out of their way to implement non-poaching agreements between known competitors and NDAs against unknown competitors.  Companies hide key players behind a mountain of bureaucracy, misinformation, and obscure titles and job descriptions in order to hide them from the open market; yet they willingly poach other firms when they can.

The cry of the 99% is income equality.

Let me suggest that OWS consider knowledge equality as a superior alternative.  So instead of the OWS book library, they should form a public knowledge Library.  A public knowledge inventory would make knowledge transparent to all people and all companies equally.

Then Let the Poaching begin

If the 89% were not scared heartless about getting another job, then they would be far more willing to join the movement.  In fact, the MVPs would be the most powerful voice of the movement – the top innovators and visionaries toiling their life away for a company willing to raid their pension fund or drop insurance coverage at the drop of a hat.  Nobody is going to tell them to take a bath – they are the water.

Millions of people are looking for Jobs.  Meanwhile, employers complain of a chronic “skills mismatch” that prevents them from hiring people or initiating new innovations.

When an engineer is laid off from an airplane manufacturer, a company like Starbucks has no idea what that person knows even though aircraft and milk steamers have a great deal in common from the perspective of the Engineer (both are pressure vessels subject to extreme environmental conditions).

The same is true for a marine engineer, and HVAC engineer, or an electrostatic coating machinery engineer.  Each of these disciplines has far more in common than they have differences.  However, if you compare the descriptions for any of these jobs, they sound like they all happen on different planets.

God forbid you are not an expert on MS Excel, which only takes a few hours for almost anyone to learn – yet not tagging that radio button can negate 20 years of experience that only 1% of people have the desire, discipline, and intellect to achieve.

The same holds true for many talents and professions. There are serious problems with the way that we discern the supply and demand for knowledge assets.

What is needed is an intermediate knowledge inventory in the commons that everyone can index to.  So when an engineer tags “pressure vessels” the term registers into the resident ontology of all observers.

Why is this better?

Of course companies are trying to eliminate variance and risk by hiring a person who has been trained by someone else – preferable a direct competitor.  On the other hand, the mantra of modern business is to innovate.  Innovation does not happen by duplicating yesterday’s ideas. Mixing diverse combinations of knowledge assets, and not all common knowledge assets, accelerates the process of Innovation.  Think of all the music that is yet to be created for lack of musicians to play the different instruments.

An intermediate knowledge inventory solves both problems by allowing companies to introduce diverse knowledge assets without introducing irrelevant knowledge assets.  It also gives people far more mobility to pursue specialties that they are most talented and interested in.  As such, the allocation of knowledge assets would improve to match supply of knowledge with the demand for knowledge in an innovation economy.

There is not a shortage or work, only a shortage of knowledge about knowledge.  

Teachers are “threatened” with layoffs. In some cases, the profession is openly mocked. Meanwhile, corporations are staring blankly at the knowledge gap in their industries.  The older generation is retiring, moving on, and taking their knowledge with them.  Teacher’s unions are busted and disappearing. Apprenticeships are a thing of the past.  Everyone is asking “where are the jobs – there is plenty of work to do”

Education is obviously a financial instrument.  Think about that for a minute – it is an investment like any other investment. Wall Street has an arbitrage instrument for every market anomaly – why not education?

What would happen if teachers were given an equity position in their students?  Isn’t this what families do to prepare their kids to take over the family business?  Isn’t this what happens in corporations where executives pick proteges?  Isn’t this what happens in politics where knowledge is traded among a closed group?

A school like Harvard University or MIT certainly hold and equity position in their students. What if every community viewed every child as an asset instead of a liability?

If we follow the Wall Street accounting model, the supply and demand for knowledge assets are cast against the factors of production; land, labor, and capital.  The typical corporate human resource department looks to the community for labor units within commuting distance to a factory, and who are willing to rent their time in exchange a minimum amount of money.

But Land is Obsolete

Technology has made the idea of “land” as a factor of production almost obsolete.  Knowledge assets travel over the Internet and can be deployed and organized in many ways across long distances without a factory.  Indeed there are server farms and automation houses where things are made if needed – but these are hardly factors of production as they once were.

What exactly is a Labor unit again?

Machines have replaced much of what we once called “labor”.  I am sitting at Starbucks where a smiling robot is the only thing missing from the age of automated lattes.  The social, creative, and intellectual capital required to create, design, maintain, and serve the technology is what ushers us into the knowledge economy and the associated innovation economy.

Capital is arbitrary

Everyone knows that money is created out of thin air when someone allocates their future productivity to the bankers balance sheet in exchange for a place to sleep.  When this game loses its entertainment value, “capital” as a factor of production will also become obsolete.

The Supply and Demand for Knowledge Assets:

Knowledge assets are deployed by teachers and replicated by student.  Teachers represent the supply of knowledge and students represent the demand for knowledge.  In between these two extremes are collaborations – that is, varying combinations of teaching and learning that ultimately results in a productive outcome such as a latte, automobile, or computer program.

If we sample a population of knowledge assets across some geographic area (Land) we would expect to find something that looks like a bell curve.

If the bell curve has a different shape, this tells us what things can be made and what things cannot (Labor).

So when people allocate their own productivity, they are in effect assigning their productivity to a community balance sheet (Capital).  They are saying “this is what we are willing to make because we have the freedom, liberty, and we intion to pursue our happiness”.

Hardly a Wall Street model.

The result is that the social, creative, and intellectual assets of people must now replace Land, Labor, and Capital as factors of production in the new value economy.  Trying to produce anything less would be inefficient in a Capitalist system – perhaps some may have noticed as much lately.

]]> http://www.ingenesist.com/general-info/supply-and-demand-for-knowledge-assets.html/feed 5 http://www.ingenesist.com/general-info/reverse-economics-and-true-value-social-games.html http://www.ingenesist.com/general-info/reverse-economics-and-true-value-social-games.html#comments Thu, 11 Nov 2010 20:19:35 +0000 Dan Robles http://www.ingenesist.com/?p=4347

Illustration from Wired (reversed) - Aegir Hallmundur; Benjamin Franklin: Corbis

Debit Cards and Credit cards routinely handle conversions from Dollars to Pesos to Euros and Yen.  The calculation is simple because there are known conversion rates between them.  In Fact, the credit card or debit card is buying the other currency much in the same way that they buy the pair of Levies, IPad, or bag of Tulip Bulbs being purchased.

Trading coupons for coupons

In other words, a debit card or credit card should also be able to use IPads, Levies, or Tulip Bulbs to buy money.  Of course, they would not use an actual IPad any more than a bank uses an actual Dollar – they trade a 100% coupon of a dollar for a 100% coupon of an IPad.  By adjusting the exchange rate between IPads and Dollars,  a 50% coupon for an IPad equals 300 Dollars and it is easy to see we are in very familiar Groupon territory.

The Dollar as a black market Currency

The debit card (or any form of mobile payment system) can, in fact, be used to trade what in earlier technological eras would be called a Black Market currency.  For example, After the Mexican currency crash of 1994-1995, I personally witnessed people empty WalMart to the bare shelves literally overnight, only to find those items circulating as currency the next day – in exchange for Dollars; the black market currency of the less developed World.

Drive the economy in reverse in order to drive the economy forward

With a high velocity and frictionless payment processing system, the economy should be able to operate in “reverse” just as easily – if not better than – it operates in so-called “forward”.  Here is why:

Suppose that Big Box retailer issues a coupon for 50% off all of it’s products for one Christmas Season because they want to beat out every merchant in the country.  The contingency coupon gets applied to all the credit/debit cards of all people that have ever shopped at the Big Box.  Since the local merchants are driven to failure and they’ll need to liquidate anyway, their response is to also honor the Big Box coupons.  This will initiate a spiral and all retailers will begin to accept each other’s coupons.  Soon, the brands such as Nike, Coca-cola, and Canon will be pulled into honoring retailer discounts.   The “coupon” will become the currency instead of the dollars.  The exchange rate between products will be determined by local arbitrage.

Lose the friction, improve efficiency

First, it would become very difficult to tax these transactions.  It would also be very difficult to inflate or deflate a dollar currency against these transactions. Arbitrage opportunities will be based on the true social value of a product in a community.  The dollar denominated conversion factor will become increasingly arbitrary.  The the new currency will be a social currency because people will now favor whatever products have the highest Social Value in their community relative to the knowledge assets of the community.  Advertising friction will disappear.  Assume Market Friction was 50%…..what changes?

In the end game, social priorities will drive Wall Street priorities

Social Currency is real currency.  The technology exists today to make it a frictionless exchange.  The economy may actually run better in so-called “reverse”.  The only thing missing is a True Value Social Game

References:

Sepp Hasslberger The Future of Money

The March issue of Wired Magazine carries an article titled: The Future of Money: It’s Flexible, Frictionless and (Almost) Free.,

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 Gridlock.

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 in social currency. If we mimic the structure of the Financial System with the emerging structure of Social Value Systems, 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

Gambling with Jobs

The US Senate recently blocked a measure designed to reduce the outsourcing of US jobs that many corporations pursue in the relentless drive to reduce costs.

Modern Globalization is a system

Globalization must be analyzed like a system. Data, Information, knowledge, Innovation, and wisdom are profoundly related in a system. If you take away one of the components, the others become worthless.  If you destroy one component, the entire structure could fail.

Everyone knows that data, information, knowledge, innovation, and wisdom are related.  If I corrupt the data, then the associated information, knowledge, innovation, and wisdom are also corrupted.  Likewise, if I eliminate any of these elements, the system fails.

Focus on Core competency – what core?

The standard argument for outsourcing is that knowledge workers are better allocated in innovation jobs so “we can better focus on our core – and heck, we can all save a little dough in the process”.  But when we outsource our knowledge economy, the innovation economy is choked off.    The knowledge economy is the source of the Innovation Economy.  The Knowledge economy is also the recipient of the information economy which transforms data and information into useful tools, ideas, and products.

Rate Of Change is Innovation

The rate of change of the innovation economy is directly proportional to the INCREASE not the OUTSOURCING of the knowledge economy.  This is the calculus of outsourcing.  If, on the other hand, it is in you best interest to keep a population poor, weak, and unable to organize into powerful collectives, then yes, outsourcing is an effective method.

Our 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.  Nature and our environment continues to demonstrate to humanity that there is far more cooperation going on than competition. There is tragedy looming at both ends of our political spectrum and some people are realizing that we are all in this together.

Twitter shows us that everyone is an expert at something and nobody is an expert at everything.  Corporations must understand that someone not performing adequately cannot be treated as flotsam subject to jettison at the next layoff or outsourcing opportunity.  They soon see that their customers disappear as well – because they are the same.  Communities, people, social networks, and their integrated knowledge assets are the mis-allocated asset being squandered by losing management teams, not land, labor or capital.

Like most valuable 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.  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 decimate our competition; each other.

The term “Vetting” comes from the sport of horse racing where the animal is “vetted” by a veterinarian to determine if the animal is in suitable condition to race.  Today, there are many vetting mechanisms acting in society and communities.  Think of it as the referee that keeps the game fair.  This is important because if the game is not fair, people will stop playing.

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.

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 deploying money or debt. As such, social vetting is taking many different forms to validate, qualify, and quantify knowledge assets in communities.

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.

The term IPO conjures images of empire-making where a hot young company with a great product offers pieces of its future-self for sale to the public as a means of raising money without incurring debt.  The money is then used to create the next titan whose new jolt of growth is shared with all who participated.

Today, every annual report to shareholders touts the great team of people whose social, creative, and intellectual capital make it all happen, the worthy and stoic investors whose vision drives sound decisions, and the legions of happy customers who make it all worthwhile.

Essentially, an IPO is people buying into the productivity of other people.

Yet, the IPO is a strict and complex legal and regulatory maneuver that establishes property rights on these small pieces of future productivity – represented by “stock” in the company.

There are underwriters (usually a bank), battalions of lawyers, the securities and exchanges commission (SEC), brokers, insurers, re-insurers, institutional investors, private investors, and retail investors.  There is a full infrastructure supporting the facts of incorporation, disclosure, accounting, and proper management of internal “inside” information.  And, of course, there is a media /PR campaign.  All are integrated to keep the game fair, yet viable.

In the Age of Social Media

I could be wrong but it seems that such vast infrastructure appears a bit awkward if the end result is simply for people to buy into the productivity of other people.  This happens everyday in Social Media.  At some point, we really need to ask; why can’t an individual or a group of individuals raise money without incurring debt like corporations can?

In Social Media, people own and deploy their relationships,  communities, motivation, their knowledge, creativity, intellect, mentorship, leadership, teamwork, their network, and even their ability to form corporations – people own their time.  Social currency is backed by the scarcity of time and the availability of surplus knowledge.

All of the structural components of the financial system are appearing in an analogous form in social media; social vetting, social gaming, aggregation, influence, knowledge inventories, communities of knowledge assets, local social, global social, tag search, deep search, semantic search, stream of consciousness search, geolocation, mobile computing, multi-media, and many more innovations are being created and deployed everyday which literally serve the functions of banks, lawyers and legislation in an invisible economy.

The Ingenesist Project tries to string this all together with just enough specificity so that an alternate financial system will jump start itself and become both visible and available to everyone.

We’ll hold an IPO for Humanity

All of the infrastructure and the potential for people to produce things would remain intact regardless of what happens to the currency.  Think about what would happen if all the dollar based money system evaporated. The only safe haven for the storage and exchange of value will be in people and their communities.

The only thing missing is a system that can articulate social capital, creative capital, and intellectual capital instead of land labor and financial capital.  This system can be built today.  Please Vote for our presentation at SXSW 2011.

Throughout the articles and videos on this blog, I try to make a direct and rigorous analogy between Market Capitalism and Social Capitalism because there are two characteristics that no Social Currency can approach, yet which define the very nature of Capitalism: capitalization and securitization.

Capitalization

refers to the ability to consider the present value of predicted future earnings as if it were, in fact, tangible. This is the factual basis of the U.S. Dollar. In finance, this is called debt. If done correctly, debt is an extremely effective tool for economic development responsible for huge productivity gains in the last century.

Securitization

refers to a structured financial process that collects all those debt payments into a big pool of money and then chops that pool of money into smaller pieces called securities, which are then sold to investors. Risk is said to be diversified away because it is unlikely that all debtors would default at the same time – so if a few of them fail, the investment in the securities remains relatively safe.

This is very important because in the video series on Social Capitalism, we have described a structure that allows us to capitalize and securitize knowledge assets in a social currency representing real productivity.

For example. The knowledge inventory tells us the probability that a collection of knowledge assets can execute a business plan. Applying WIKiD tools, the rate of change of knowledge is a proxy for innovation. If we can predict the fact and value of innovation with The Value Game, we can estimate the risk adjusted value of the corresponding future productivity gains.

Now, the cash flows of many communities of knowledge assets can be aggregated into a diversified pool of value and chopped up into securities. Since the securities represent future productivity, they are readily convertible to Dollars, Yen, or Euros and sold to investors.

This new security, called the innovation bond, will become the basis for a new social currency.

Please Vote for The Ingenesist Project to present at SXSW 2011

The Ingenesist Project specifies an Innovation Economy built on a platform of social media as the next economic paradigm.  60 minute solo presentation in the advanced technical track.  Your help is deeply appreciated. All comments welcome.  Material based on video series here

I often make the point that a currency is simply a social agreement. People need to agree that a monetary unit represents their productivity so that they will use it to trade their productivity with the productivity of another person. The test question for any so-called currency (coined by Jay Deragon) is: “Yeah, but can you buy groceries with it?”

I am now seeing a SHARP increase in the social interest for an alternate currency to the dollar. The dollar does represent productivity – albeit future productivity in the form of debt – that’s why it is still exchanged for the work that we do. My suspicion however is that the social agreement regarding the dollar is, in fact, increasingly becoming a social disagreement.

People have a deep seated unease with what the dollar is and what the dollar represents. To escape the dollar is to escape a tangle of influence that impacts everything we say, do, and think about ourselves and about each other. It almost seems that to escape the dollar is to escape ourselves.

That’s just the idea that came to me after watching this video about a soldier questioning the occupations. He is saying something very interesting:

War is simply the soldier’s willingness to fight it. It is a social agreement.

I came across an interesting business model for the deployment of a social currency. Stock Harmony, quite simply, sells itself to interesting people. Those people then interact with each other adding social value to Stock Harmony. The more social value is created, the more the original shares are worth. The more the shares are worth, the more interesting people will join further increasing the value of the shares. From that position to deploy social value, Stock Harmony can amplify the voice for social priorities over Wall Street priorities, effectively re-allocating factors of production.

Actually, the same thing happens all the time in typical social circles, networks, affinity groups, and political action committees. However, I am not certain that anyone has yet been successful (ethically) in using social circles as a way to store and exchange value. That is why Stock Harmony is interesting.

It sounds so simple, right? Well, … not really….

It’s all about structure. The way that a process or system is structured determines how people interact with it. Structure also determines how governments, markets, laws, politics, and even public opinion interact with the process or system as well. Interestingly, the structure of facts often keeps secrets tight. In short, structure shapes human behavior and human behavior shapes structure.

Companies sell shares to raise money. Per SEC regulations, the “sale of shares” must comply with certain disclosure and accounting standards. The SEC regulates companies in the sale of shares as a means to safeguard investors.  In other words, it is illegal to sell shares without government oversight.

Raising Money

The possibility that anyone can sell shares in themselves or their private enterprise as a means of raising money is, by default, relegated to the banking system. A person essentially sells shares on their productive time on Earth to buy a house, a car, or a business, etc. The structure begins to crumble when the employment contracts begin to crumble. As people leave the old system, they take their value with them and tend to create new ones. This is where Stock Harmony treads.

What if the shares are issued in non-dollar denominations?

Today we see many non-dollar denominated structures arising apparently at the same rate that the financial system is failing. Google secretly invests 100M in Zynga – a gaming company with a common gaming currency. Facebook established a system of currency-like Credits. Groupons deploy social currency to incite monetary discounts, etc, and PayPal stands ready for the next killer currency app. Any of these transaction systems are poised to hold a black market currency if fiat currencies fail. If the fiat currencies fail to recover, the black market becomes a gray market and ultimately a legitimate market. So, there is a lot at stake.

Currency must act as a proxy for human productivity;

So this is what makes Stock Harmony interesting. The successful “next currency” will be the one which best represents human productivity. Only then will someone be willing to trade their productivity for that of another person using a currency note as an exchange mechanism. This is where other alternate currencies fall apart and where Stock Harmony shows greater strength. After all – what would you rather accept in exchange for your services – Farmville gaming currency or a currency backed by the harmony and productivity of real people in real community?

It will all come down to structure.

This video describes a set of predictions for 2020 based on an entirely new form of capitalism whose velocity and voracity will take the world completely by surprise. Nothing is sacred and nobody is immune, not Facebook, not Google, not Wall Street, not even Governance itself….

Part 1

Part 2:

The top ten reasons for business failure are due to a lack of knowledge, not a lack of money. In fact, the lack of money is itself a failure of knowledge.

Top 10 reasons why businesses fail

1. Lack of an adequate, viable business plan
.

2. Insufficient sales to sustain business

3. Poor marketing plan: unappealing product, poor customer identification, incorrect pricing and lackluster promotion

4. Inadequate capital, misuse of capital and poor cost control

5. Poor management skills: lack of delegation, leadership and/or control

6. Lack of experience and knowledge

7. Lack of managerial focus/commitment

8. Poor customer service

9. Inadequate human resource management

10. Failure to properly use professional advice: i.e. accounting, legal, financial, etc.

No excuses:

Lack of a viable business plan is an act of negligence where research, scenarios, and assumptions have not been tested. Market ignorance is not an excuse nor is the failure to know one’s customer. Death by poor marketing plan is knowledge deficiency related to product appeal, customer identification, pricing structure, and lackluster promotion. Obviously, one needs to know how to manage a company in order to be focused, let alone correctly estimate capital needs. Lack of customer service knowledge is deadly in the age of social media. Inadequate HR is an oxymoron – if it’s inadequate, it’s not a resource – human or otherwise. Finally, failure to listen to knowledgeable people is ego driven irrationality.

The financial system is not the only problem;

The innovation system (or lack of) is a crucial element. Information, knowledge and innovation, by any definition, are profoundly and inseparably connected. A failure in one kills the other two. So, just because an entrepreneur does not have the knowledge, does not mean the ‘knowledge’ fails to exist – it simply means that entrepreneur failed to find it.

So where is the knowledge?

Unfortunately, there is no public knowledge inventory – people do not know what each other knows. With social media raging all around us, there still is no way that anyone can assemble the knowledge needed to execute a business plan with a known probability of success given the information available. As such, there is no way to finance public innovation.

The emergence of Social Media technology presents an extraordinary opportunity to organize a knowledge inventory outside the construct of a corporation and marry it to the financial system, much like a corporation.

Tangibility of Knowledge

Knowledge tangibility must be the most important “innovation” in the pipeline today if we expect to meet the crushing challenges that await us. Just because we cannot predict innovation does not mean it cannot be predicted – it just means that we do not know how… yet.

Many arguments rage because of poor definitions to terms. If people cannot agree on a definition, they will not agree on much else. A definition should be definitive – here I will tackle 5 of the most elusive definitions that are at the center of much, if not all, global controversy: Data, Information, knowledge, innovation, wisdom

To state the obvious

It should be obvious that data, information, knowledge, innovation and wisdom are related. The test is simple: if you corrupt one of them, all the others become corrupted. The question becomes; how are they related?

Consider the following definitions

Allow me to provide the following 4 relationships:

1. Information is derived from the productivity of data

2. Knowledge is derived from the productivity of information

3. Innovation is derived from the productivity of knowledge

4. Wisdom is derived from the productivity of innovation

These relationships are very useful.

1. They include everyone, they exclude no one.

2. They are personal enough to reflect individual value system yet discrete enough to not contradicting the value system of another.

The question now resides in how we define productivity, that is a much simpler, more efficient, and far wiser problem to be arguing about. Besides, a singles solution solves 4 problems.

There is a great deal of conversation about collaborative environments built on trust and engagement within corporations or across corporate relationships. The problem is that when layoffs come around, people will throw each other under the bus.

It reminds me of the old backward tipping demonstration where the team dynamics leader would have everyone fall backwards into the arms of their co-workers to demonstrate “letting go” and trusting thy colleague.

People who “Let Go” …  get let go

I’ll spare you the dissertation on Capitalism, competitive markets, and all those nifty sports analogies; the dichotomy is that people are held captive within a corporation and are constrained by the corporation – when they leave, they are invisible to the world. The unfortunate side affect is that they are invisible to their communities as well.

We’re all “Derivatives”

Today, human knowledge is mapped relative to the corporation and not relative to their peers or their open community. The value of human knowledge is derived from the value of the corporation. People are not mapped to their complementary knowledge assets in a community. Intangible assets are estimated to represent 70 percent of the value of a corporation in dollars. But, by definition, they represent 100% of the value of the community – and the trade an invisible social currency.

Corporate Bias

If tangible assets are counted with a financial currency, intangible assets must be counted using an intangible currency. It would seem that there would be a high incentive to put a true “Par” value on knowledge assets and apply a clear understanding to intangible currencies.

Instead, social currencies are caste against the wall of the corporation as a means of ascertaining value. In this light, social values appear as a function of the corporation, not the community. This is the corporate bias.

The Devaluation of Communities

It is typical for a country to respond to hyper inflation with a simple reboot of the the economy by dividing the entire financial system by 1000. For example; Mexico once had a “peso”. Then after their devaluation in the 1970′s, came the nuevo peso = 1/1000 of a peso. So if you had cash. you lost it. But if you carried debt, you were able to erase it. The end game is a mad rush to have equal parts debt to assets, so the system would reboot itself with no net effect on people with ability to access credit.

A financial currency devaluation is, in effect, a transfer of social value. A currency devaluation is the invisible process of “harvesting social currency” from people and transforming it to financial currency. When people are kept below a certain economic level, they fail to organize their communities.

What if everyone were a corporation?

But consider this, Social Currency may be undervalued as much as 1:000 against the dollar. As such, a 50 Trillion dollar debt obligation becomes a manageable 50 billion dollar debt obligation if accounted in social currency.

What are the alternatives

This post is not some big-government-socialist-manifesto – something different will happen this time. Social capitalism is capitalism in occurring with minimum Government AND minimum Corporate influence.

Social media is organizing people around a substrate of social internet applications. These applications are not perfect but they are getting better. Eventually, the pillars of the financial system will be duplicated in social media and an alternate financial system will form in parallel.

]]> http://www.ingenesist.com/general-info/the-devaluation-of-social-currency.html/feed 0 http://www.ingenesist.com/general-info/the-brain-picking-economy.html http://www.ingenesist.com/general-info/the-brain-picking-economy.html#comments Thu, 08 Apr 2010 09:00:53 +0000 Dan Robles http://www.ingenesist.com/?p=3064

I 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.

Engineers are money.

China and India are producing millions of engineers as part of their global economic dominance strategy. Engineers increase productivity and productivity creates wealth. Why? Because money is only a means for storage and exchange of value and engineers create the value.

America has no idea who the engineers are

I heard an interesting comment on a group discussion board recently; “there are so many engineers on the streets that employers have their pick of the crop”.

First, I find the reference to “crops” ironic. Second, why should engineers need to fit every nuance of a job description? Engineers tell us the things that we don’t already know – who exactly writes those job descriptions if they know what they don’t know? Or in practical terms, why isn’t an Aerospace Engineer immediately qualified to be an Energy Engineer?

The Ingenesist Project identifies 3 types of knowledge assets: Social Capital refers to one’s ability to organize, perform, and manage themselves in teams of other people. Creative Capital refers to the ability to relate seemingly unrelated concepts, objects, and perceptions into new and innovative ideas. Intellectual capital refers to the ability to deploy book learning, objective reasoning, and tactical experience toward specific objectives.

Everyone has ALL of the above asset categories, however, we each posses them in different proportions. People like Steve Jobs have all of these in very high quantities, but the rest of us are somewhere in the middle. Most have a surplus in one or two at the expense of the remaining asset categories. Engineers typically enjoy a surplus of intellectual and creative capital at the expense of social capital.

Social Capital

Should we, as a society, expect engineers to meet meet the same social standards as say, Baristas? The job market favors the young, socially adept, and politically wired people. But engineers are a different – we all need them to be exactly the way they are in order for the rest of us to be who we are. If engineers were “marketers” they would either cease to be engineers or marketing would cease to be manipulative.

Who’s your money maker?

Engineers are responsible for nearly every penny of value stored and exchanged in a modern economy. Roads, infrastructure, medical devices, food production, software, hardware, housing, transportation – anything worth anything is in some way touched by God and an engineer. Engineers are responsible for creating the tangible value we enjoy so dearly but is also so easily corrupted by others.

Who is squandering whom?

So when I hear comments like; “there are so many engineers on the streets that employers have their pick of the crop”. I ask myself, “how exactly did that employer become an employer without engineers”? How does any employer expect to remain an employer without the direct, strategic, and honorable deployment of engineering assets? How does a country expect to arise from financial crisis and insurmountable debt obligation without elevating their engineers to “First-Responder” status?

I heard a story that Haiti is so poor, they would chop down a fruit tree for charcoal. Squandering engineers is like killing the golden goose. Every single engineer in America should be cherished. Every single engineer should have their pick of most qualified employers, not the other way around. Every single engineer should have a job waiting for them as soon as the prior one is finished. Engineers should be paid money, real money – not some “proxy” for money.

At the end of the day, everyone is arguing over money. How are we going to heal the poor? How are we going to police the world? How are we going to bail everyone out? How are we going to preserve the environment? The answer is always the same…it takes money to solve all of these problems.

What people do not realize is that currency is a social agreement, not a disagreement. Money is whatever people agree to use as a storage container for the value of their time, labor, intellect, or other resources. A criminal can steal your time, labor, intellect and possessions, or they can just steal your social agreements and replace them with a social disagreements.

It is easier to steal from the poor than the rich

Stealing money is not as difficult as some may think. Whenever people are held below a certain economic level, they fail to organize in communities that would otherwise protect them from outside influences. These people are often too busy holding a job, paying off debt, or traveling in search of work, or worse, a place to live – they become easy targets.

Blind leading the blind

Currency, by fiat or black market, is just a way that everyone agrees to store and exchange value. So, when people are at each other’s throats over a system of beliefs, they are effectively blinded to their true opponent – their inability to make a social agreement regarding the storage and exchange of value.

The current political strains pulling at this country are dangerous. The real problem is not your colleague or neighbor who is in favor of universal healthcare. The problem is not your old classmate on facebook calling Obama a liar. It’s OK to oppose the government – it’s our right. It’s OK to oppose bankers, they are accountable to a social charter.

The problem is that people are opposing each other.

There is no way to pay off a 50 Trillion dollar debt. All politicians know this. You would need to harvest every fish in the ocean, pump every remaining barrel of oil, and cut down every tree to extract this amount of “value” from what is left of the Earth. To whom exactly would this value be delivered and how? It simply cannot and it simply will not be repaid without some magnificent productivity gains on the order of nuclear fusion or superconductivity.

I will not speculate exactly how the currency fails. There are plenty of examples in history. Instead, I will speculate on what will replace the failed currency in the age of social media.

Social media is taking on some very fortunate characteristics, especially in the area of organizing people and communities around a common goal. Too often that common goal is to oppose another force of social media. This will change, it must change. When the dollar fails, people are going walk out their front door, look at their neighbors, and introduce themselves.

So, There you have it – that’s where all the money went. It is stored and exchanged in our social agreements.

Today 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.

The two forces among us.

One is a social media culture enabled by the Internet to span the globe, cross all oceans, and reach nearly 20% of the population of the Earth. Wow.

The other is much older, much larger, and far more powerful. It is a social media culture that spans the neighborhood, unites communities, and organizes society.  This one reaches 100 percept of the people on Earth.  Now, this too is being enabled by the Internet.  Wow.

Think globally act locally…or is it think locally and act globally?

Global Social and Local Social each have a different focus, different vetting mechanisms, different advantages and often disadvantages.  Each has different rules of engagement, different social expectations, and different long term / short term memory standards.  Each has a different cadence, stress valves, and damage control systems. The more you look at them, the more different they are.

They will diverge, then converge.

Neither can be in focus at the same time – they can only be contrasted.  Seeing the forest and the trees together effectively encrypts data, causes misinterpretation of important features, and loses track of causation.  Ironically, clarity is most often achieved by old school face-to-face encounters.  That’s no secret.

Money happens because people happen, not the other way around

The great opportunity for the all modes of transportation, tourism, recreation, entertainment, lodging, and every “experience enterprise” from Starbucks to Whitewater Safari is to provide the fabric for Global Social to integrate with Local Social.

Value is stored, shared, and exchanged by people in close proximity to each other and therefore a great amount of value can be created through the facilitation of strategic face-to-face encounters.  As simple as this may sound, nobody else is doing it because nobody else can.

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My new favorite speaker is Dr. Nick Bontis. He is smart, funny, dynamic and he has the intellectual horsepower to back it up. I found his work while trolling academic journals for intellectual capital.

Among his dozens of academic papers, I am particularly interested in one that rationalizes that allocation of knowledge assets. It’s brilliant for the reason that it employs much of the same methodology that we predict will be needed to build the innovation economy – not in the hallowed hall of industry, academia, or government –  rather, on a platform of social media.

Here’s the Twist.

The following video was filmed about 10 years ago where Dr. Bontis is making predictions for 10 years into the future, the year 2010.  His predictions do not explicitly include the phenomenon of Social Media.  Instead, he extrapolates to a somewhat more “intellectual” outcome.

This is interesting because it provides us with an experiment that can exclude a huge variable called ‘social media’ and allow us to study intellectual capital as a distinction from Social capital. Dr. Bontis provides some remarkable insights about where we would be headed in 2010 (thus, compared to where we are), free from our social media bias. Cool, huh?

One statement struck my interest when he was framing a definition for “intellectual Capital”.  He said:

“[All the data will eventually combine.  We will then need to ask the right questions]”.

This is an evolutionary change in the way people will need to think. Instead of regurgitating hearsay (a social media staple), people are challenged to provide some modicum of analysis to sets of data that they encounter lest they remain useless (both people and data).  This is expressed in the form of asking the right questions.  The opportunity, therefore, is to bring people into contact with data in their communities and allow them to ask the right questions. We’ve coined this the “Last Mile of Social Media”.

Next he points out, with a very entertaining story, that 30 years ago a school assignment consisted of 95% search and 5% analysis (hence regurgitation) whereas in 2000, he estimated that 50% search and 50% analysis was allocated to the average academic assignment.  In the future (year 2010), 5% of the time allocation would go to search and 95% would be allocated to analysis. Humans would become endowed with higher order learning and thinking skills, the ability to derive new interpretations that will accelerate  innovation.  So kids, how’s that workin’ out?

Of course, he did not anticipate Twitter.  His portrayal of “Nancy the Supercomputer” is replaced by a Facebook the super social network…but even that sets up an even more interesting and important dialog for tomorrow.  Bravo Nick!

Please take a few moments and enjoy this video from Dr. Nick Bontis

In the state of Washington, it costs 200 dollars to establish a Limited Liability Corporation. All the documents are online and there is no shortage of tutorials on the process. It’s a whole lot easier to get a job because it’s real easy for one corporation to hire (and fire) another corporation. Taxes are simple.

Everyone’s liability is limited and transactions are conducted under a uniform commercial code. And there are no incentives for people doing what they are not good at and every incentive for people to do what they enjoy most.

A corporation is fictitious.

A corporation exists in the form of a bits and bytes simulating a folder of papers in a virtual file cabinet. A corporation gets to deduct all of their expenses from their taxes. A corporation has a credit score, it can borrow money, and even have a bankruptcy just like a person. A corporation can donate unlimited amounts of money to a political candidate. Corporation garner social respect. Laws favor corporation. In fact, the cards are stacked in favor of the corporation over the employee; unless, of course, you are both.

It’s all in the Management….of knowledge assets.

All of the business theories are written to apply within the construct of the corporation. Corporate accounting provides a host of clever ways to manage assets. You can depreciate assets, you can inflate or deflate “intangibles” as needed for whatever valuation purpose. You don’t need to show anyone your accounting either (unless you are a public corporation). American corporations don’t even need to hire American employees, or any employees for that matter. Outsourcing goes to other corporations.

Land, Labor, and Capital

Corporations allocate Land Labor and Capital – well, that’s the theory anyway. Land is underwater in a real estate bubble. Labor is tragically unemployable or under employed or outsourced to the political slave markets. Capital is being consumed by the “interest” monster conjured into existence from the debt. Uuhhmmm….So how’s that workin’ for ya’ll??

So why not become a corporation??

Social Media is able to perform almost all of the functions that a corporation would normally do internally. The “Last Mile of Social Media” is when local communities organize themselves on, say, Facebook. High integrity is rewarded and low integrity is punished. Now you can reliably find other corporations to do your accounting, Human Resources, Marketing, and content design and distribution.

If you need to actually produce something “solid”, well there will always be a corporation willing to do that too. All of these things are only a keystroke away. So why isn’t everyone a corporation?

No, seriously……

We teach our kids to be good employees, not to become good corporations.  How do we expect social priorities to compete with Wall Street Priorities?

The financial system that we live in today is allocated to us all through combining chunks of Land, Labor, and Capital. It should be fairly obvious that there are some issues with land (real estate bubble), Labor (high unemployment/out sourcing), and Capital (financial system meltdown).

As Dr. Phil would say: “How’s that workin’ for ya?”

There has been a flash of conversation centered around the idea of Social Capital as a form of currency in these two blog posts by Brian Solis and Venessa Miemis. I would like to use this post to expand those ideas to one of at least two more “Factors of Production”: Creative Capital, and Intellectual capital, in future blog posts.

Introducing the subject of Creative capital (more later, no doubt), here is a video from TED about the league of extraordinary dancers. Watch them move but also listen to how they talk about what they are doing. Skip through the 17 minutes if you must (you probably can’t!), just see how different they see the world.

If we expect to deliver an alternate social currency backed by innovation, we need to reflect deeply upon this specific factor of production.  We need to think, observe, and interpret with the flexibility that “Creatives” have – if not, we need the humility to let them help us.   Only then can we start connecting the dots.

Innovation is most often defined as a good idea that has a favorable economic outcome – in other words, you know it when you sell it.

I have seen Corporate executives glow red in the face shouting down top talent barking out; “It’s not innovation unless you can show me the money!”

In reality, you can’t see the money unless you can first see the innovation.

Nobody can solve one equation with two unknowns, i.e., what’s a new idea? and what’s an economic outcome? The trick is to identify the new ideas and direct them to the appropriate economic outcome, not the other way around. Many companies live in a silo where many good ideas can’t find a place to be profitable, so they are scrapped. This is not the fault of talent or the idea, but invariably both are lost.

An Innovation economy built on a platform of social media will collect the ideas existing in a community, outside the construct of the corporation, and distribute them to the most worthy economic outcome; maybe a corporation or maybe not – that’s not the point, Boss.

The existing definition of innovation is insufficient for use as a way to identify innovation in the present. There is no way to build an innovation economy upon a flawed definition and unpredictable value of innovative activity. This new interpretation will allow innovation to properly behave like a financial instrument.

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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.

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The knowledge economy is a completely different asset than the industrial revolution’s Land, labor, Capital economy. Yet, our modern accounting systems and even our definitions of terms such as innovation, work, employment, education, are built from industrial era or military logistic roots.

Modern Globalization is a system – it must be analyzed like a system. Data, Information, knowledge, and Innovation are profoundly related in a system. If you take away one of the components, the others become worthless.

When we outsource our knowledge economy, the innovation economy is exterminated. The Ingenesist project specifies an Innovation Economy built on social media which will capture the knowledge inventory of communities – let’s hope that we have not forgotten how to build an ….

Entrepreneurs won’t make a bet without odds. So when it comes down to assembling knowledge assets into an innovation enterprise, how can entrepreneurs predict the likelihood that they will be successful? The short answer is that they cannot.

The simple truth is that humans have not evolved to the point where they will organize themselves as knowledge assets in a financial system – they still need to use a proxy for their productivity controlled by a master, a corporation, an idealism. It’s called money, politics, and fear.

This is the greatest constraint on economic growth that America faces, not inflation, debt, taxes, or regulation….entrepreneurs have simply run out of info juice. This is the greatest challenge of our times. What are the odds that we’ll figure it out?

Any taxonomy that is used to classify information is a candidate for the classification of knowledge. This is because knowledge is related to information in a differential equation that also includes data and innovation (another blog post).

The trick is that everyone needs to be using the same taxonomy so that we can all access knowledge inventories of the people around us as easily as it is to access books on Amazon.com. This will lead to a trade in knowledge assets formally the sole domain of corporations through the process of industrialization (yet another blog post) .

Please enjoy these videos, use them as you wish and let us know what you think.