The previous article identified a recurring trend in human history; each new stage of civilization resulted from the integration of tools invented in the prior stage. That is; the output of one tool becomes the input of another.

In general, this is what defines a “system”. One of the problems with systems is that if one major piece fails, the whole system falters.  Today we have computer systems, transportation systems, social systems and financial system that all behave in this way.

The financial system is built on five integrated pillars

Currency

A currency is a device that people use for both the storage and the exchange of value.  Currency serves as a proxy that represents the value of things that people produce it is not in itself a product.

Inventory

The accounting system keeps track of the things that people produce.  It is helpful to use a currency to represent the the storage and exchange of value from the things that people produce; but again, currency is only a representation of inventory.

Vetting

An economy must have a vetting mechanism that keeps the game fair otherwise nobody would play.  Today this includes a legal system, contracts, and institutions  - such as representative government – that defend the value of things that people produce.

Entrepreneurs

Classically, entrepreneurs are the merchant class who allocate land, labor, and money in various proportions and combinations as a means of organizing and matching the supply of things that people produce with the demand for what people produce.

Society

People define markets.  They supply the inventory that other people demand and they demand the inventory that other people supply.

Examples of financial system failures are legendary

The Enron Fiasco was an accounting system failure caused by a vetting mechanism failure. The housing bubble was a was a currency failure because CDOs effectively divorced the dollar from any meaningful representation of productivity.  The unemployment crisis is a social failure that limits the ability for people to supply the things that they demand.

The Inevitable Economy

So what if the functions of these same five pillars could be achieved and integrated in some other way? What if this is already happening?  Going through the list backwards to reflect a mirror image:

Society

People are reorganizing in new and different ways.  They increasingly use social media and mobile technology to supply and demand limitless information with which they then use to supply and demand many useful things of each other.

Entrepreneurs

Land, labor, and capital are becoming increasingly irrelevant in the age of non-scarce information – instead, entrepreneurs are allocation social, creative, and intellectual assets as a means of matching the supply and demand for the things that people need.

Vetting

Social contracts are playing an increasing role in keeping the game fair. It is not in the best interest for anyone to act with low integrity when they can be Googled in a matter of seconds.

Inventory

The knowledge asset inventory is forming in many applications and platforms – but it is not yet integrated. When this happens, an accounting system for social, creative, and intellectual assets will immediately emerge.

Finally, the currency

Any device that can represent human productivity better than today’s money will become that next currency.  This can only happen after the four pillars begin to integrate.

The currency is supported by the system. The system is NOT supported by the currency.  

]]> http://www.ingenesist.com/general-info/the-5-pillars-of-the-inevitable-economy.html/feed 1 http://www.ingenesist.com/general-info/social-value-is-social-enterprise.html http://www.ingenesist.com/general-info/social-value-is-social-enterprise.html#comments Mon, 15 Nov 2010 21:00:25 +0000 Dan Robles http://www.ingenesist.com/?p=4394

The fastest way to unleash the extraordinary value that is contained in communities of experienced, talented, and motivated people is to provide a substrate for them to trade their knowledge assets among each other.  When people get together around a purpose, they build things that create incredible social value. The Social Value Platform provides an electronic accounting system for social value.  In The Social Value Game, vendors deposit inventory into a strategic community of people and the community creates social value.  This new social value is then converted into monetary revenue in the next economic paradigm called Social Capitalism.

Introducing The Social Value Network:

The social value network is a debit card platform that allows for the trade of social currencies.  Using The Value Game method created by The Ingenesist Project, vendors can place socially valuable inventory into a social game.  The social entrepreneurs leverage that inventory to organize communities to build something together.  Other vendors will insert complementary inventory to drive social value in these increasingly organized communities.  These organized communities take on characteristics of “a virtual corporation” as both consumers and producers of goods and services.

Social Capitalism

The best reason for developing an alternate economy in social currency is to bypass the inefficiency of the monetary system at least temporarily so that true value and true wealth can be created.  Once true value is created, converting it back to a financial currency would be relatively simple.

Social Currencies

Social currencies account for your productivity in a community, not your productivity in a corporation.  Every time a gatekeeper extracts a fee from you, they expend your social value.  Taxes, user fees, ATM fees, convenience fees, commissions, subscriptions to automated services, all destroy social value irrevocably.  Every time someone asks you to fill in a web form, type out a captcha, walk through a full body scanner, or opt out of a privacy invasive application, they are spending your social value and stealing your information, period.  Hackers attack PayPal not you, yet ultimately you are responsible and subsidize their inefficiency with your own.

The Holy Grail of Marketing

Advertisers and vendors have long sought the holy grail of advertising – the ability to speak directly to the community of people who want their product.  Good vendors want to segment themselves from the bad vendors instead of engage in damaging price wars.  Customers want great service and a strong knowledge base of other people who use those products. Countless businesses want to support community activities with additional products or services.

Your Social Enterprise

Social Currencies are a frictionless way to conduct transactions, defeat spammers, hackers, info miners, while also building community doing the things that you love. Your information is valuable and you should have the right to give it away freely, trade it, or even sell it to whomever you choose.  Do you have an impressive social, creative, or professional set of knowledge assets but are bored to tears by employers who don’t care what you are passionate about?    Or, maybe you have just been laid off and over 40.  Have you ever wanted your own business?  Many people may be better off trading social currencies instead of chasing the greenback.

Future of Banking

When I use the term “Innovation Bank”, people conjure up the image of a cheery place where anticipation reigns as starry eyed depositors arrange their intellectual property in neat cubby boxes, Patents are peddled like newspapers, and flush pocket companies troll the halls looking for a cure for their bottom line reflux disease.

This is not exactly what we have in mind, nor is it too far off either. An innovation Bank is simply a knowledge inventory that contains knowledge assets that exists in the format of a financial instrument between people’s ears and can be deployed for the purposes of increasing productivity. Oh, by the way, knowledge makes more of itself every time it is deployed …. Interesting?

The Assumptions

This is not much different than a financial bank. In fact, in the financial bank, everyone assumes the borrower has the knowledge to execute the business plan and the bank lends the money. Oh, by the way, the money makes more of itself (interest rate) every time it is deployed.

With the innovation bank, everyone assumes the entrepreneur has the money to execute the plan, and the seek to borrow the knowledge. Other than that, they can be considered identical. The key is in the scope, depth, and format in which the knowledge assets live in a community as well as the ability to track and preserve the creation of new knowledge in a community.

A Virtuous Circle

Together with the financial banking, these two system engage in the dance of the virtuous circle of innovation enterprise. Apart, they collapse into the swirling cesspool of eternal debt and infinite interest (pun intended).

image source

Ingenesist.com

Music by Phil Felicia

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 interior exterior:

Force Field Analysis in Social Sciences analysis reflected on how things are accomplished or hindered by the way that people internalize external experiences in the process of their own psychological development.

Now, suppose that an individual goes out and influences social situations in their community.  Also suppose that social media could amplify the persons exterior impact – this would likewise impact internal psychology, etc., setting up a form of polarity between two positions.  The greater the difference (diversity) in those positions, the greater the potential (energy state) of the outcome.

The “Local Social” Force Field

I met with some old friends yesterday.  He’s an professional engineer and she is a psychologist.  They are also winemakers and very active members of the local Rotary club. She sits on 3 local boards from children’s museum, to local hospital, symphony, etc.  He is a tireless volunteer for several charitable organizations and runs a Haiti Earthquake relief project.  At least one of them is mentioned in the local paper several times per year.

They Show up.

These types of folks constantly cross paths in a small city and become friends and collaborators. They buy each other’s raffle tickets and auction items at the fund raisers.  They laugh easily and heartily.  They are generous with their time. They always have something interesting and insightful to say.  They are constantly offering to make a connection, facilitate an introduction or offer a up tidbit of inside information to the newcomer.

Now, they are slowly migrating to Facebook.

What the heck do they need social media for?  They don’t need to expand their reach.  They don’t need to market themselves.  They don’t need to build a community – they are community.  They don’t need to have a blog to establish themselves as experts or sell a “10 steps” book, or insulate themselves from public opinion.

Something entirely different is happening.

Social media is about to enter a new phase called “local social”.  The hyperlinks that bind the web will become the hyperlinks that bind a community.  The difference is that hyperlinks in “Global Social” environment converge down to specific information, Hyperlinks in Local Social will diverge up to diverse knowledge assets.

For example; The local engineer’s blog will share links with the winemaker’s blog, the community college blog, the mayor’s blog, the chamber of commerce blog, the dentist’s blog, the insurance agent’s blog, the banker’s blog, … etc.

Social media will produce extraordinary results in “Local Social” by picking up where the traditional economy is faltering.  Local social rewards high integrity and punishes low integrity. Local Social will drive fraud prevention, security, job creation, innovation diffusion, asset allocation, wealth distribution, community activism, entrepreneurism, and social services. The Local Social forcefield creates, stores, and exchanges real value.

This is not a social networking event, oh, no, no, no.  Nothing ever happens until people get together and build something.  The new economic paradigm is not a social network, it’s a social forcefield. Get in it or stay out of the way.

The following question appeared on a Linkedin Forum that I follow:

Complete this sentence: The ONE factor that is MOST important to innovation is… and here’s why…

I have said this in a few blog posts and I’ll say it again here: The current definition for “innovation” may be the single most disastrous eliminator of innovation.

Innovation Suicide:

Yeah, it kills itself. Really, look it up – it’s a horrible cacophony of buzz bits and weasel speak that amount to nothing more than “Ya know it when ya see it”.

Any definition is supposed to give the reader enough information to duplicate, recognize, and identify instances of the subject – Preferably before the event has ended. Think about it – if the definition for Innovation were clear, nobody would be asking this question.

I am always amazed at how simple the answers to complex questions – and how complex the answer to simple questions – can often be.

Question: THE ONE: Complete this sentence: The ONE factor that is MOST important to innovation is… and here’s why…

My Answer: The Definition of Innovation

Here is why:

Information, knowledge, and innovation are obviously related to each other.

1. You can’t have one without the other two.
2. If you cannot measure one, you cannot measure the other two.
3. where all three are integrated, the system becomes efficient.

Yet, the definitions of each term do not include the other two. Therefore, the current definition of innovation is insufficient to describe the condition. That is why this is the ONE most important factor.

Let me prescribe the following analogy; distance, velocity, and acceleration are obviously related.

1. You cannot have one without the other two.
2. If you cannot measure one, you cannot measure the other two.
3. where all three are integrated, the system is efficient.

This is because distance is the point between two facts, velocity is the rate at which the distance between two points changes. Acceleration is the rate at which the velocity of travel between two points changes.

Therefore let’s re-define innovation as follows:

Information are facts and data. Knowledge is defined by rate of change of information. Finally, innovation is defined by the rate of change of knowledge in a community.

If we can accept this definition, everything changes. Seriously, everything changes.

Now, that’s Innovation!!!

* note: If you are familiar with differential Calculus you may see how a new economic paradigm may arise from this algorithm.

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.

Facebook is delivering incredibly rich data about people, their activities, preferences and knowledge assets right to the doorstep of marketers, employers, and likely, Government.

Uhm…is this what the users had in mind?

“Local Social” is an absolute imperative for monetization of Social Media – every application needs some degree of local integration. Here’s why: Nothing happens until people get together and build something, produce something, or create something together. That is what “an economy” is, that is what “a company” is, that is what “a Market” is, that is what “a conversation” is.

Facebook knows this, but there is a catch; “Local Social” does not need a big platform like Facebook – a small one would do fine. However, Facebook needs the micro platform in order to monetize. In other words, Facebook needs Communities more than Communities need Facebook.

If Facebook is not careful, a huge opportunity awaits a competitor to disrupt the Facebook parade with high value, high segmentation, and high anonymity – and still monetize.

The irony is that Facebook Groups will empower the community to spin off and compete with it.

Here is what will happen:

Facebook must provides consumers with the same information about corporations as they provide to corporations about consumers. Corporations need to be willing to expose themselves to transparency. People will undoubtedly publish the names and addresses of the CEO of the corporations in their communities. Their names, preferred music, groups joined, and Farmville wiggly worms, etc.

If someone goes through extraordinary effort to not be seen, that too will become a data point – distrust.

People are not dumb, entrepreneurs will find a way to make the game fair. Facebook will find itself regulated by its own community. Only then can we expect the level of opportunity and accountability that is required to support a fully convertible universal social currency.

It’s up to Facebook now – I hope they know what they are doing.

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.

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.

Photo Credit

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

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

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.

I recently caught up with a childhood classmate on Facebook. I remembered hearing that she had lost her older brother, Robert, in a recreational accident several years ago. Nobody ever knows what to say to a friend in a situation like that. But her brother was different.

When I was a freshman in high school many years ago, a couple of goons were getting ready to kick my ass for no particular reason except that I was a freshman. Then Robert walked around the corner. He stood next to me, applied a menacing grin, and stared my oppressors down. After a few moments, he walked away without saying a word.

Robert never said very much, he didn’t have to. He had so many friends that nobody dared to mess with him. I very much appreciated his intervention because nobody ever bothered me again.

Over the next several months, I saw Robert do this few more times. That’s when I realized why he had so many friends. It was one of those “life lessons”.

I’ll leave the story here, where Robert left it for us. Draw your own conclusions about social media organization.…

Picture credit: Names and Faces are not of the actual people portrayed in article

Given the events of the last several weeks, it’s time to for the aviation industry to get serious with Social Media.   This article demonstrates how an alternate currency can be used to severely reduce or eliminate terrorist risk in commercial aviation.  Think I’m kidding, read on.

Obviously an airline will not let you board an airplane if you don’t have the financial currency sufficient to buy ticket.  Why should an airline let you board an airplane if you do not have social currency sufficient to fulfill your social obligations while in the air?

People with extreme social currency deficiencies are routinely stripped of their rights by a jury of peers and isolated from society for a period of time (where they would not board an airplane anyway).  While there are many systems in place to manage the various degrees of social currency deficiency, none appear to be able to identify a terrorist without also violating the rights of non-terrorists.

Human Writes

However, many people are willing to share information about themselves to associates with whom an economic benefit is shared or exchanged.  This happens a billion times per week on Linkedin, Facebook, and Twitter – why not among fellow passengers?  After all everyone is already connected by 6 degrees.

What would a terrorist’s Facebook profile say about them?  Do they have a lot of referrals on linkedin?  Do they post great work on Flikr? Is their community orchestra featured on My Space? Are their posts popular on twitter?

Should a social currency credit score become imperative to social transactions as the financial credit score is for financial transactions?

Banks and Insurance companies already rely on a highly invasive “Credit Score” to establish financial risk profile as a means of protecting their selves and their other clients. Why wouldn’t an airline use a social credit score to establish a social risk profile as a means of protecting their selves and the lives of their other clients?

Ruse and lose

Sure, the bad guys can adapt to social media as they have adapted to all other measures.  The problem is that the greater the size and scope of their social media ruse, the more difficult it is to maintain the ruse.  A threshold score could be set to nearly eliminate this possibility.  Those folks can then simply opt into the full body scan.

The Paradigm Shift

As the saying goes, the attacker needs to be successful only once, while the defender needs to be successful every time.   The concept of a Social media credit score flips this paradigm on it’s head. The attacker’s social credit score needs to be successful every time.  The defender needs to be successful only once.

Leading into 2010, The Ingenesist Project will release a series of videos that specify the construct of the Next Economic Paradigm.  We begin at the beginning.

The following video discusses the flaw in modern globalization market economics that started with the failure of an obscure sub section of NAFTA – the free trade of services. The objective of the Ingenesist Project is to correct a tiny little flaw in market economics. This simple adjustment will result in dramatic change.

As brands get social, they enter the new media performing their best interpretation of a conversation. Face it, they are still going for the kill – like a wolf in sheep’s clothing – the dance of the pitch is just getting more sophisticated. Social media is powerful followed closely by the of abuse .

The danger is that the more it resembles buddy talk, the more likely it will be mistaken for buddy talk. The sales pitch is being elevated to an art form. Now social media can be as much as a social cure as a social anomaly.

The 4 Big Lies of Marketing:

The integration lie; Ingratiation efforts are manipulative and calculating but serve as a very subtle way of obtaining increased power over another person. Appearing to be similar to the target the ingratiator appraises the target person’s attitudes, opinions, and interests and modifies his/her statements to match the perceived beliefs of the other conforming to the target’s wishes.

Major Brand: The key principles underlying [company] decisions and actions in social media are: Listening, Learning and Engaging in conversations with our customers where they are…while hiding where we are.

The foot-in the door lie: To increase the likelihood of a prospect saying yes to a moderate request, a person may ask for a smaller request first. By saying yes to the first, small request, the person may agree to the second request to maintain consistency with self perception.

Major brand: we recently launched an on-line quiz with a widget component exclusively through social media and it has been a great success just in terms of the number of people taking the quiz and then word of mouth as a result. This goes back to us showing people can engage with [company name] not yet buying the product.

The ‘Istanbul bazaar’ Lie: The initial request is very large – large enough that no one could be expected to comply with it. It is then followed by a smaller, more reasonable request. This technique relies on the norm of reciprocity. The norm of reciprocity states if a person does something for you, you should do something in return for that person.

From a famous social media marketing evangelist: Extrapolate the potential points of touch between your customers and your organization, by showing them what full engagement looks like but then asking for a smaller subscription, enables participation in some of your processes, in some way.

Even a penny will help Lie: This technique is based on the tendency for people to want to make themselves “look good.” Since everyone has a penny, one would look foolish to say no to the request. The target cannot simply give a penny without looking foolish. The target tends to give whatever is appropriate for the situation.

From a Social Media Marketing Guru: FB Friending, Twitter, and even Linkedin are brilliant in delivering mutual follow mentality to marketing – people want to feel good for having followers and will often put up with constant, yet fleeting marketing messages. Tweet meme is another way for people to feel good about thier self for a tiny investment of a single click.

Inherent in all 4 techniques is the attempt by an influencer to manipulate another by engaging in subtle subterfuge. The only way to undo the lie is with a simple truth: knowledge and understanding that the influencer is always lying.

We have posted a few articles about the Deep Web and presented an emerging technology project that promises to provide a database of databases for the next great development of Internet Search.  This short post considers the significance of one aspect of Deep Web Search.

Economics is the science of incentives

Google Search has provided a set of incentives that drives people to document their world by blogging, developing social media, and creating seemingly infinite video content.  The ability to see and be seen is the essence of market economics.

While the promise of searching a huge store of databases may not sound like Saturday social night at the local drive in burger joint, it does by extension, introduce new incentives.  The new technology will drive people to build databases.  A new generation of entrepreneurs will collect, organize, analyze and create – not information – but data.

Database of databases of databases

The first things entrepreneurs will organize are human knowledge data – starting with their own, then relating it to others. Not unlike the human genome project, the vast human knowledge reservoir will be mapped. Entrepreneurs will enter their communities (on line, neighborhood, work, school, church, social networks) and create a database for what other people know and parse the data in any number of important and useful databases.

The reason for this is simple; data are collections of human observations.This is the only thing people are willing to pay for. Markets cannot and do not get any more fundamental than that.

Old News is Bad News

Anyone who follows the news, social media, or some of the tech blogs may have noticed a lot of rehashing of old data – every blog has a posts about how social media will “really catch on”.   New media isn’t so new anymore.  The only thing that makes money is is the disclosure or new data – followed by weeks of rehashing of the data all the way down the rankings.

Next Economic Paradigm

All Financial instruments are characterized in terms of a quantity and a quality. Real news, real insight, and real productivity results from new and reliable data, qualified interpretation of data, and relevant analysis of data – relative to time.   The value of money is directly associated with the quantity and quality of the data representing money – relative to time.

Summary: Going to the source

Data alone are useless.  People must process data into information – the backbone of all economics.  Human knowledge and productivity is the source of all information – derived from data.  Therefore, the only things people are willing to pay for are, in fact, data. Monetization of social media may be the deep dive into the data. Do the math. That’s big news.

Conversational Currency Blog continues to present components of the Next Economic Paradigm as we spot the integrations. We believe that one of these features is the Deep Web, estimated to be 500 times bigger than the surface web or “Google-verse”.

One way to get an idea of how the deep web is hidden from view is to perform any simple Google search except add the term “database”. You immediately notice that an entirely different set of results appear – much of it is extremely interesting and useful. If you do this several times over several terms you will soon ask yourself:

“Where can I find a database of databases?”

Now take your original search term and add “database of databases” to it and again an entirely new search result appears. The results become highly localized and less organized. The results show FAR LESS ADVERTISING and even a few more subscription based data enterprises. But more than anything, the results give you an idea of how large the Deep Dark Web may be.

Now return to the surface web and visit your favorite blog. Where exactly are bloggers getting their insights? Follow the trail of references back to the sources (pass through Wikipedia and Forrester) and you will eventually wind up back at the Deep web.

Revenge of the Librarians

Now here comes Internous. A technology start up by library Scientists who shines the light on the Deep Dark Web with a search engine concept that combines both algorithmic search with human classification. By introducing a new standard called The Internet Search Environment Number, Internous will soon organize the database of databases.

The Next Economic Paradigm

Meanwhile, The Ingenesist Project has specified a parallel financial system with a currency similar to the dollar except backed by innovation instead of debt (both are a proxy for future productivity). In the specifications they call for a knowledge inventory system for what people in a community know (“what’s between their ears?”) as an requirement for a proxy for future productivity in a new financial system. While nobody can predict exactly how this may eventually arise, we most certainly will watch new technologies such as the ISEN very carefully.

Special thanks to Matt Theobald. Here is the Internous video – well worth the time!!

(Editor’s note: originally published on our sister blog Conversational Currency.  The questions continue regarding the monetization of “word or mouth”… and payola is nothing new.  Meanwhile, attempts to regulate or govern the Social Media will have far reaching consequences.)

The FTC recently issued guidelines for payola to bloggers.  The impact and opinions are now emerging over what this means for social media. As with any game played on a new field, rules need to apply.  The questions emerge regarding who the rules hurt, who they help, and how the game will develop in the future due to those rules.

Straight from the horse’s mouth:

The revised Guides also add new examples to illustrate the long standing principle that “material connections” (sometimes payments or free products) between advertisers and endorsers – connections that consumers would not expect – must be disclosed. These examples address what constitutes an endorsement when the message is conveyed by bloggers or other “word-of-mouth” marketers.

Extrapolate into the future:

As we introduce ideas related to the Deep Web and the prospect of search engines reading a database of databases, it is increasingly clear that people will process vast stores of data into ‘useful’ information simply because that is the only thing people are willing to pay for. As such, a host of new economic incentives will be in play.  It is not uncommon to cite data used in academic papers nor is it unknown to challenge data used as a basis of a conclusion.  We also note that social media often picks up where government and corporations leave off, fail, or proves inadequate at servicing the social charter.

Where is the line in the sand?

For this reason, we watch what other people say about emerging trends that amount to the vetting of data for any of an astonishing array of potential abuses as well as an once-in-a-species evolution opportunity to build social media correctly.  In present time, the FTC holds the crown of vetter-in-chief driven by “social priorities”. Others feel it is a constraint on freedom of expression decidedly not driven by “social priorities”.

Here we’ll publish a short article by Strategis Advisers and hereby disclose that we do not hold a material relationship with Strategis Advisors except that they let us re-post their splendid analysis on our blog without sending nasty cease and desist letters accusing us of gross violation of copyright laws and demanding payment for release of said rights, etc….

Keep an eye on this stuff, we do.

By Strategis:

The Federal Trade Commission has implemented new guidelines that require full disclosure from bloggers in regard to any product they review that was received for free. These guidelines are a web 2.0 enhancement of their 30 year old rules for the use of testimonials in advertising. The guidelines address an issue some folks have with the credibility of bloggers versus news and paid content.

Any company that is doling out the free product will be responsible for directing the blogger to follow the new guidelines.

The blogging community is outraged as the new guide applies to bloggers and reviewers and not news publications and magazines. The bloggers feel as though this is just one more attack on citizen journalism.

Most affected? Probably the Mommy Blogger (by the way, have you seen our whitepaper on the Social Media Mommy?)

Want to read more? check out Joan Anderman’s article on Boston.com.

The Ingenesist Blog has been accepted by Trakkrz, a new and rapidly growing aggregation site of vetted content. Trakkrz’s vetting processes is rigorous and highly selective. For this reason we are proud to be a member of the Trakkrz community.

The idea of trust as social currency is appearing in more articles, conferences, and books.  This is all highly consistent with the TIP thesis on Innovation Economics which describes the necessity of a vetting mechanism among the knowledge inventory as a means for the emergence of a currency in a market – that is, a conversational currency.  People need to trust the currency if they are to trade the currency.

Shefaly Yogendra provides some excellent insights below.  Keep in mind that American Culture does not have a monopoly on the definition of trust.  It should not be an American expectation to define the conversational currency in our own image.  Indeed, convertability of such currency will be, and must be, global.

I kept the analysis sparse on this article because it is a valuable exercise to form one’s own perspective on trust prior to diving into someone Else’s opinion.  After all, it’s your currency – you own it.  Good luck.

******************

by Shefaly (please see her Bio here)

Trust is a non-negotiable essential in business. The post linked here refers to web-based business-to-consumer interactions. But as social currency, Trust is the most significant in interactions amongst organisations, customers, employees and regulatory bodies.

Definitions

Wikipedia defines social currency as “information shared which encourages further social encounters“. Social currency is different from social capital which refers to “connections within and between social networks and individuals“.

Social currency – some characteristics

a) No distinction between ‘physical’ and ‘virtual’ worlds

b) No distinction between ‘individuals’ and ‘corporate entities’

c) No distinction between validity of negative or positive normative labels

Determining the value of Trust as social currency

a) Verifiable Identity and antecedents

b) Consistency

c) Reliability

d) Peer recognition

e) Value of the network

f) Individuality and collaborative consciousness

The original article can be found here and it elaborates on each of the points above.

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.

As the World Churns:

The cost of placing an employee approaches 30% of that employee’s salary.  In fact, most head hunters charge roughly 30% of the employee’s salary to find the right person to fill the job opening for a client company.  Sometimes the employee is recruited from a competitor causing a net productivity loss in a market due to disruption or “churning”.

The company also has a choice of hiring with the internal HR department.  In this case, they are paying HR personnel to place ads, review resumes, check references, and conduct interviews.  These costs can also run into a substantial percentage of the new employee’s salary.  From previous articles, The Ingenesist Project suggests that these methods may not even result in the best employee selection:

The Unnecessary Market Friction

Text only Résumé is no longer adequate in our complex business environment due to subjectivity, semantic inconsistency, and the time and resources required for fully interpreting the content. The cost of delivering a résumé has been decreased by computers and the Internet while the cost of reviewing the résumé has remained constant.  Keyword search programs often eliminate excellent and creative candidates based on criteria not related to the candidate.   Managers tend to hire what reminds them of themselves – from world that no longer exists.

Estimated wasted productivity:

Suppose that 50 Million professionals; doctors, lawyers, engineers, professors, administrators, managers, and directors are employed in the United States.  Suppose that the average salary is 70,000 per year.  Suppose that they change jobs 3 times in their career and that the cost of placement is 30% of salary, or $21,000 dollars per placement.

The total cost is $ 1 Trillion dollars multiplied by 3 placements in a career equals nearly 3 Trillion Dollars.  Now, divide this by 30 years in a career and we can see that 100 Billion dollars worth of human productivity are spent every year not necessarily matching the most worthy employee to the most worthy employer.  This does not include moving expenses, salary increases, disruption costs, or inflation.

The probabilistic electronic résumé system

The Ingenesist Project specifies a vetted knowledge inventory that resides in Social Media. The knowledge inventory, probabilistic electronic résumé system, and innovation bank together would make the paper and language Résumé obsolete.  The percentile search engine would scan the knowledge inventory of the corporation and scan the knowledge inventory of the labor market and seek matches with high probability of increasing net productivity – not unlike Amazon.com predicts what book you would like to read next.

Options, options, give the market its options

election criteria can be adapted to reflect social priority such as reduced traffic congestion or to reflect strategic objectives such as incremental or blue sky innovation requirements.  Trades across companies and industries can occur opportunistically not unlike interdepartmental transfers or even like trades in professional sports are conducted today.

Companies can manage peaks and valleys in employment by trading across diverse industries. avoiding layoffs all together.  Employees that can stay productive in diverse industries transfer new ideas and discover transferrable efficiencies.  Experience gained would be added to the knowledge inventory to enhance the probabilistic résumé inventory available for continuous improvement and tangential applications of innovation enterprise.

A virtuous circle? … A 3 Trillion Dollar opportunity nonetheless.

The Social Media Production System

Social Media has demonstrated in many ways capable of meeting or exceeding the deliverable output of many traditional industries such as advertising, marketing, journalism, human resources, design, community organizing, education, and social vetting.

We have also seen social media form communities that increase productivity in manufacturing processes, software development, and project management.  We have seen people self manage in social media to segregate and elevate good information away from bad information.  We have seen communities act with logic, tact, and precision previously thought to be the province of top management guidance.

In short, we have seen social media replace or duplicate almost every structural element of the traditional corporation outside of the construct of corporations.  Can social media provide a corporate structure in and among itself?

General Accounting Practices:

Corporations have an internal accounting system, internal processes, internal procedures, and often their own lexicon and unique job descriptions relative to their product.  This is how a corporation stores knowledge and trades value internally and defends itself from external influence.  The common thread is that each department is accounted, assessed, and compared in terms of money.  Standard balance sheets are compared by banks and investors.

Social media uses the exchange of information, knowledge and new ideas to store value.  Processes, procedures, job descriptions, and accounting are done in a public lexicon that everyone develops collectively.  People share, trade, and exchange information, knowledge, and new ideas like tangible property; and they trade options on futures in the same.  Increasingly, access to the community knowledge inventory is becoming a means be which people can convert productivity to money.

Standard Balance Sheet for Social Media

Most elements of a corporation can be duplicated in social media.  For those parts that cannot, the entrepreneur will soon figure out how they can.   The entrepreneur does not worry about money, they worry about productivity and the money always follows.  The next paradigm of economic development will reside almost entirely on a statistical game of managing risk and return, matching surplus to deficit, and increasing human productivity in the operating system of Social Media.  Every Newspaper that falls to Social Media is simply transferring its value to the new paradigm.  That value is still in play.  This trend will continue until a new currency representing that value is introduced.

Business Plans of the Future:

As you witness the progression of Social Media unfold, look for innovations that contain incentives for people to reorganize themselves.  Look for similarities between new social media developments and traditional corporate departments.  Look for businesses and institutions that support social vetting mechanisms, knowledge exchanges, and groups bringing together strategic combination of diverse knowledge assets, not just similar knowledge assets.  Most importantly; look for the “Last Mile of Social Media”; diverse groups of 5-10 people living within a few miles of each other forming new enterprise.

Threats:

Finally, look for the threats that can corrupt an innovation economy.  Social Media is currently responsible for trillions of dollars of productivity gains – all this money is still on the table for social entrepreneurs to monetize once the integration reaches a tipping point.  Be watchful for attempts at censorship, attempts to monopolize information nodes, and the corporatizations of social networks.   Wall Street was corrupted when the value of the currency became divorced from human productivity.  Don’t let the same happen to Social Media.

Periods of change in any market open the doors for abuse as control systems often lag behind the waves.  This is especially true for social capitalism where the social contract is changing rapidly and the enforcement mechanisms are largely non-existent.

All markets must have effective vetting mechanisms in order for the market to be viable.  If the game is not fair – real investors and real entrepreneurs don’t walk, they run…away.  While much fraud is obvious and predictable, the most damaging is the type that nobody sees coming but can destroy the standard of trust for everyone, forever, like the Trojan horse.

Hypothetical Case Study:

A self-proclaimed innovation consultant runs a blog out of anywhere USA.  They have a catchy domain name and their ranking is unusually high for a 5 month old blog with splashy but infrequent articles.

In the spirit of the X-prize, the blogger promotes an Innovation Contest offering $60,000 dollars worth of his company’s “Marketing Consultation” services as a prize to the next innovation that will change the world! … as judged by a “panel of experts”.  The blogger encourages all entrants to send their social network to vote up their innovation as this will weigh heavily into the judging.  Many people submit their work and diligently mine their Facebook and Linkedin networks for the vote.

The contest ends and the winning idea earned zero external votes but it is in an industry that is very popular in mainstream media and slated for government stimulus.  However, it is clearly not up to par with many of the other entrants.  Upon inquiry, the blog author does not specify the criteria for judging, he does not itemize the prize, he does not publish his “panel of experts” and he does not post any dissenting opinions or inquiries submitted to the moderated comments.

A few days later, a press release appears on Google news; “$60,000 dollar innovation contest prize awarded for breakthrough in targeted industry”.  Leading tech media pick up the story and the “consultant” is hailed for defending the struggle of the unsung heroes of the innovation economy.  It appears to the contestants that the consultant is promoting himself at their expense.

So, what’s wrong with that?

First; for all of the innovators who submit themselves to judgment and expend their social capital on votes, the integrity of the contest must be bullet-proof.  The definition of the objective, the judges, and judging criteria must be specified absolutely. Otherwise, good ideas will not be shared.

Second; if potential sponsors of a legitimate X-prize-type contest are challenged in their sincerity to promote world-changing innovation, and instead are accused of self-promotion and media bias, a tremendously valuable resource of the innovation economy will be squandered.

Finally; if a person’s social networks are mobilized to vote in any type of contest – they must know that the time they invest will be respected and valued or they will no longer participate in other contests.

To this day, the clever ruse of the Trojans remains the fraud of choice for new market technologies. It has also marked the standard of trust that we hold forth in our relationships and invitation to our inner circle. Sharing of one’s friends is a deeply intimate act of faith and trust many times greater than sharing one’s ideas. The caregivers, those who hold forth the willingness to nurture that trust, must be qualified as stewards of the public endowment of social capital, creative capital, and intellectual capital.

Social Capitalism depends heavily on the function and performance of communities. A “paranoid bias” could be vastly damaging – possibly constraining the next great paradigm of economic development from achieving critical mass.   Social Capitalism is not a game, it’s serious business.