Think Bigger. Aim Higher. Go Further.

Month: November 2008

Social Media; the Integrator of the Innovation Economy

Where are the gray suited diplomats holding each others forearms against a world map backdrop vowing to correct the world’s innovation system?  Where are the politicians joining across party lines about how to inject 700 billion dollars to fix the nation’s innovation system?  When will the Federal Reserve Chairman find the flaw in our national innovation system?  Hey, when will someone notice that we don’t have a national innovation system?

Schumpeterian Economics argues that corporations represent our nation’s innovation endowment. However, the primary function of a corporation is to make money, not explicitly to innovate.  Sure, they innovate if they must – most likely to beat down a more innovative competitor.  But, as soon as bad times hit, most will shift money from R&D to marketing.

If we look back only 400 hundred years, everyone on Earth lived on an average of about 500 dollars per year.  Then the innovations from the prior 2,000,000 years started to converge.  Counting backwards; the knowledge economy was “derived” from the information revolution, which was derived from the manufacturing revolution which was “derived” the Industrial revolution which was “derived” from the scientific revolution, which was “derived” from the agrarian economy.  Each revolution “Integrated” the tools of the prior revolution; The Knowledge economy integrated the tools of the information age and the information age integrated the tools of the manufacturing economy, etc.  By the way, the term “derived” is related to the term “derivative” – the primary hedging tool integrated in our current financial system.

Each economic revolution was marked by a tremendous increase in human productivity – we no longer need to milk our own cow. Victoria trades a dollar’s worth of her time as an airplane engineer for a dollar’s worth of the Robert’s time as an agricultural engineer.  Bill Gates is worth 50 billion dollars because he increased the productivity of a minimum of a billion people by a minimum of 50 dollars each.  I save 5 dollars in gas by not driving to the library when I can just search Google or Wikipedia.

The only way to “make” more money is to increase human productivity and the only sustainable way to increase human productivity is to find better ways of doing things.  Anything else is simply a transfer or redistribution of money.  Both are important – but often we confuse them under the same terminology: “making money”.  Or, we reverse the two by literally making (printing) money and then transferring it to corporations under the assumption that they will innovate enough to support everyone else plus the debt.  This system worked great for many years and in many political forms – it brought us from living in caves to a 65 trillion dollar global economy.  But like the economic revolutions before it, the current economic structure will soon give way to a new paradigm as we are forced to reach for higher productivity.

What the brilliant economist, Joseph Schumpeter did not have in his time was the technological breakthrough of Computer Enabled Society.  Taking a hint from the past; the new economic paradigm will be derived from the knowledge economy by integrating the tools developed during the knowledge economy. That is why we now have Linkedin, Facebook, YouTube – and all the rest.

Everyone agrees that information, knowledge, and innovation are profoundly related.  In fact, we can say that knowledge is derived from information and that innovation is derived from knowledge.  The new paradigm will be called the Innovation Economy and it will arise from the integration of the tools of the knowledge economy using social media. We see terms like open-sourcing, crowd sourcing, social networking, groundswells, innovation exchanges and a host of new Social Media Internet applications.  All of these have one thing in common; the tangibility of human knowledge.  This is the Holy Grail of modern finance and it is not a coincidence – it is now within our grasp.

In the past, human knowledge was only tangible inside the construct of a corporation – the corporate structure integrated knowledge assets to make things people want and need. However, with Social Media, knowledge assets will become tangible outside the corporate structure and integrated by knowledge communities, social networks, crowds, groundswells, etc. Knowledge communities will mix, combine, interact, and share knowledge; inevitably the end result is innovation – to make things that people want and need. These knowledge communities will become the next “corporation” acting directly as the integrator of human knowledge.  Ironically, Social Media “outsources” management.  Traditional corporations will not disappear as the agrarian economy never disappeared – they will just integrate.

Ideally, Wall Street is a simply a horse race where money is bet on corporations to fund innovation.  There is nothing wrong with that.  We don’t need a new financial system; we need a new and improved innovation system.  We have the technology; all we need now is the “integrator”.  The Ingenesist Project is the only viable comprehensive integrator now being proposed.  Perhaps it is not perfect, but the next economic paradigm will be certainly be derived from its improvement.

Social Media; A Public Innovation System

In order to restructure our financial system; we first need to restructure our innovation system.  ALL of the top ten reasons for business failure are due to a lack of knowledge, not a lack of money.

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.

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 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 it 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.  There is no website where that people can go search for all 90th percentile social media experts living in zip code 06776, let alone build a dedicated local management team.  There 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.

Insurance companies can tell you the probability that you will die exactly on your 80th birthday, but we cannot estimate the probability that a business will be successful.  Nothing has more variables that human physiology, yet it is predictable and business success probability is not.  Why can’t this be fixed?

If we could identify, integrate, and predict public information, knowledge and innovation, we could diversify risk exposures away.  With risk exposures managed, we could insure start-ups risks.  With start-up risk eliminated, we can sell innovation bonds at, say, 6% to fund the extraordinary rate of public innovation that we need to support our debt and pressing social liabilities.   If the innovation bond returns a modest 20%, human productivity, by definition, has increased by 20%.  A 20% growth in human productivity is a 20% growth in an economy.  Again, financial system is not the only problem; the innovation system – or lack of an innovation system – is the problem.  Perhaps oversimplified, but this is an astonishing omission from the national dialog on the financial crisis.

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.  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 done – it just means that we do not know how… yet. This is not about inventing a new currency, it is about the public taking control of the old one. We, the people, don’t deserve to lose this game; join The Ingenesist Project and help build a sustainable Innovation Economy.

Social Media; The Central Bank for Knowledge Assets?

It is very interesting to watch Social Media follow familiar trajectories as earlier paradigms in finance.  I see many social media platforms struggling to make human knowledge tangible in their respective markets.  The challenge is so simple, yet so complex.  Let the litmus test for knowledge tangibility be as follows; “Can you buy groceries with it?”

The Romans Empire had a similar problem; how to sack Europe and bring home the booty.  The only thing most people had at the time were sheep, fish, and wine.  So the emperor created a coin that represented a peasant’s productivity in raising sheep, catching fish, and making wine – and it was a lot easier to collect taxes.  The conquest of a continent has far more to do with the social acceptance of the currency than the actual pillaging – pillaging, after all, would be counter productive in a social network.

Today the dollar also represents human productivity – except a ‘necessary flaw’ was introduced to finance innovation leading to fantastic worldwide economic growth from which many people benefit greatly.  Now, this flaw threatens to topple the whole system.  Money still represents productivity, except it now represents future productivity allocated to paying debt.  As long as innovation increases fast enough to outpace debt, everything is OK.  Problems happen when debt exceeds our structural ability to innovate.

We do not need to restructure the financial system – we need to restructure the innovation system.  The human race is exceedingly fortunate that the end game for debt economics will happen at the exact moment in history that the technology required to start a new game of sustainable innovation economics has arrived.   If done correctly, Social Media (computer enabled society) can become the most important human invention since to the printing press.

Today, human knowledge, in the form of social capital, creative capital, and intellectual capital, is captured and hidden inside corporations.  Each corporation has its own business plan, lexicon, culture, organization, structure, and processes by which human knowledge is exchanged in the creation of a “product”.  Outside the corporation, however, true knowledge assets are either invisible, incomplete, or only appear as a proxy of the corporation.  This leads to stagnation, silos, mis-allocation, vulnerability to external shock, and greatly limits the diversity needed for sustainable innovation.

In the 1700’s Banks printed their own currency – these were called “bank notes” because they were little notes that declared who had a surplus and who had a deficit of money relative to the bank.  People would trade these notes in society to purchase things, buy feed or seed, and to keep track of things.  Everyone had a job to do and the general flow of these notes is what “incorporated” townships. Unfortunately, such banking also lead to industrial stagnation, silos of wealth, and lack of diversification leading to corruption, bank failures, and ‘bottle necks’ in the flow of capital.

Barely 150 years ago, the U.S. government established a central banking system with common currency, common practices, common accounting, and common regulation. The system became much more efficient, diversified, and accessible across the landscape.  The industrial revolution, manufacturing revolution, lots of wars, the era of information, and the Internet Industries were all financed through a central banking system.  Human productivity increased at a tremendous rate and the relative wealth that we enjoy today is a tangible result of innovation.

Now the Pied Piper has come to take the children to sea.  The banking system needs to invent new, exotic, and increasingly risky financial instruments for trading your productivity in order to keep the game alive.  Meanwhile, the tangibility of human knowledge is stuck in an 18th century banking system.  There is no common knowledge inventory, there is no common accounting practice for skills and abilities, there is no way to measure social capital and creative capital – the system is too biased toward “intellectual capital” measured by Ivy League degrees and access to wealth.  Knowledge assets are not tangible, organized, classified, or collected in a society in any structured way.  “Can you buy groceries with it yet”?

With the emergence of Social Media, we have an extraordinary opportunity to make knowledge tangible outside the construct of a corporation much like banks notes became tangible outside the construct of a single township.  There are vast and crushing problems in the world today.  The only way out of this mess is to massively increase the rate of innovation in society.  Like off-shore drilling – vast wealth in the form of social capital, creative capital, and intellectual capital lays hidden beneath thousands of layers of philosophical limestone.  Social Media and the first amendment = drill baby, drill.

The only thing separating us from a debt economy and an innovation economy is social agreement. The philosophical chasm holding us back is about to be broken by The Ingenesist Project: In the current paradigm, money is backed by future productivity allocated to pay off today’s debt.  In the social media paradigm; money will be backed by future productivity created by today’s innovation.  At the end of the day money still represents productivity.  The conquest of a continent has far more to do with the acceptance of the currency than the actual pillaging.  Hey, why not buy groceries with it?

Tangible Knowledge; Options and Contingencies

In order for knowledge to become a tangible asset, we need to come to grips with the fact that human knowledge is fluid and mobile, whereas a condo or a piece of machinery is static.  A machine can’t walk away if it does not like their management.

With knowledge assets, the typical “Return on Investment” (ROI) model breaks down.  When assets have a mind of their own, there is no reliable way to calculate ROI without somehow corralling the asset inside some form of closed contract, a corporation, political system, social class, or by introducing barriers to exit, etc.  In the modern financial system, human assets are held tangible by debt obligations – today many people go to work in servitude of debt, not in creation of new ideas.

An option* is the right, without the liability of obligation, to exercise a decision in the future.  Human interaction accommodates this valuation model quite readily; it’s called free-will.  Therefore the option valuation model is an adequate method to assess knowledge assets as a means of making them tangible.

The value of a financial option can be calculated if one knows the following 5 variables: The asset price, the strike price, the date of maturity, the risk free interest rate, and the volatility – or, the odds on the bet.  By contrast, the ROI model requires us to know basically the same things; the cost today, the strike price (future sale price), the date of maturity, the risk free interest rate, and the probability of success – or variance of the expectation.  The equation is just a little different.

Individually, human behavior often appears chaotic and irrational, but in aggregate, we know that human behavior is really quite predictable.  If you put similar people together, you get similar ideas.  If you put extremely different people together, you get extremely unpredictable ideas.  If you put strategic combinations of people together, you should be able to predict the variance of the ideas.  This is all the information we need to place a value on our bet.   If human behavior is predictable, it is tangible.

Suppose we enter into a ROI venture and it fails miserably; the market was wrong or the product was wrong, or the people were wrong, etc.  Even though the investment failed, the knowledge accumulated from the attempt can be exercised in many other projects in the future. While the Patent may turn out to be worthless, the knowledge gained by the team can be used over and over again.  Each person gains a statistical data point in their experience set with which to assess comparable situations in the future.  This is an option and this option has value.  If the team were disbanded without somehow capturing the inventory of new knowledge assets, a very valuable set of options becomes squandered.

Some companies such as Google, try not to kill an idea, they morph the idea into something else.  Free-range knowledge tangibility must achieve those same objectives.  Today we see people building networks on Linkedin – this activity resembles the collection of options on future opportunities.  People post on social media to see and be seen by other knowledge assets as a means of collecting more options for their careers or actions. People would not be doing it if there was no intrinsic value.  The next big leap will happen when knowledge tangibility is married to the financial system through the direct valuation and capitalization of options.  Did I mention there is an equation for that?

The Ingenesist Project specifies a method and system for knowledge inventory that would produce a variance for knowledge assets.  The Percentile Search Engine would pull knowledge assets in combination that diversify variance into a highly predictable surplus assets and deficit assets.   The Innovation Bank would match most worthy surplus to most worthy deficit.  As such, the Innovation Economy itself is now a most worthy option for supporting a feeble financial system.

The ROI model is the mother of all squandered knowledge assets – the very same assets that are really purchased on a project, successful or not, are often willfully abandoned.  All of the parameters of an option valuation model can now be met with social media and The Ingenesist Project integration methods. Free-range knowledge assets can then be directly financed toward business objectives.  The idea of an innovation economy based on knowledge tangibility is well within our grasp technologically, culturally, and systematically.

Social media has an astonishing opportunity to integrate social, creative, and intellectual knowledge assets to trade that single most important part of the puzzle, tangible knowledge assets.  I suspect that this outcome will depend on whether these new tools are treated to an ROI valuation model or on an options valuation model.

* Italic used for clarity

2008 Financial Crisis – The End Game

The year is 2020, no burning cities, no mass hysteria, no bread lines; the economy is on an exponential growth curve.  The financial crisis of 2008 ended in an anticlimactic sort of way.  Sure, lots of hedge fund bankers were unemployed for a while and many companies once deemed titans of industry have disappeared, but nobody seemed to notice much.

Government debt has been eliminated and Wall Street has become the steward of what has become an Innovation Economy rising from the ashes of debt economics.  The transition, in fact, was surprisingly smooth.  Social Networks figured out a way to make knowledge tangible outside the construct of Wall Street, the central banks, and the traditional corporations.

When the dollar started to fall, people began trading a different currency called the rallod.  The rallod was backed by future productivity resulting from innovation rather than future productivity supporting debt.  The vicious cycle of debt economics was reversed just in time.  When the dollar finally crashed, it pegged to the rallod and the economy began to grow again with an astonishing, yet peaceful, transfer of wealth and power to self-regulating communities, society is general.  It’s still hard to believe what happened.

Today the engines of economic growth are millions of hot new start-ups that exist in the form of “Communities of Practice” related to specific technology areas rather than the old corporation model.  They automatically cluster around a technology and spin off other start-ups at an incredible rate in a strange nesting arrangement called the “tangential innovation” market.  Most innovation is open sourced because the “Patent” (and protectionism in general) is no longer the center of the innovation finance universe, rather, the “secret sauce” of social, creative, and intellectual capital is the most valuable player today.

About 10 years ago, something resembling the human genome project mapped all knowledge in the form of social, creative, and intellectual capital that exists in society to a very high granularity.  A programming language was invented to represent knowledge assets like packets of code that are processed by a community algorithm (The CV/resume is a bar joke now). Thanks to a visionary government, 1st amendment protections were built into this inventory with anonymity laws.

Part of Google was democratized in a public takeover and spun off to design an open source percentile search engine to help entrepreneurs build unique collections of knowledge assets and predict the probability that various combinations of these assets could successfully execute a business plan.  These unique combinations then induce hyper-innovation around a technology and the resulting innovations get spun off to be reabsorbed by different and diverse communities of practice in continuous iterations forming a virtuous vortex of new systems, methods, and solutions.  Sketched out, these arrangements looked like electrical circuits.  Wealth creation is intense.

Instead of having jobs, many people in a geographic area are pinged by a Percentile search engine which calculates the likelihood that their interaction together will increase the probability of successful execution of a business plan when combined with other knowledge assets.  Instead of earning wages, people are paid with micro-royalties specified by contracts on capital asset sub-sections. These micro-royalties add up to substantial residual income enjoying a multiplier effect as their work continues downstream. The government funds social security through it’s own innovation ventures. Service workers such as police, teachers, fire fighters, nurses, local merchants, etc., are key beneficiaries because of their impact on the community is directly associated with productivity.

Many of the senior knowledge workers have determined that they can earn more money by taking an equity position in their students, and the students of their student – such pyramids are in fact sustainable and generate astonishing returns.  Mentors have entered the landscape in vast numbers and apprenticeships have become abundant.  The income potential for the “creating creators” boggles the imagination.   Again, a virtuous circle has formed between the mentor and the student. In aggregate, wisdom is being retained, refined, and transferred efficiently throughout social networks.  Universities have begun doing the same forgoing tuition in exchange for an equity position in students.

University “degrees” have disappeared in favor of unique combinations of knowledge assets that are continually SEO’d for best Percentile Search Engine Placement.  People do not compete directly, rather, they compete with the Percentile Search Engine in the local market place – although virtual work is becoming popular again.  As owners of their knowledge assets, the entrepreneurial spirit is ubiquitous.  No individual has either a monopoly or an identical knowledge set as anyone else.  Everyone has perfect information about the knowledge assets in a market.  People are pinged for different reasons at different times for different rates depending on supply and demand.  Continuous education is a social event in itself often mistaken for recreation!

Since the knowledge inventory has mapped all knowledge and the Percentile Search Engine calculated probabilities and scenarios, the Innovation bank formed to make most worthy and optimal matches between knowledge surplus and knowledge deficit in a community.  Since the probability of innovation success has become predictable, innovation risk is now diversified away.  Innovation insurance products abound. With near-zero innovation risk the cost of venture capital has approached 5-7 % instead of 500-2000% of less than a decade ago.  Banks now issue innovation bonds on the public market to finance innovation in society.  For an investment of such high return and such little risk, participation is near universal.  This created another virtuous circle; the more innovation that occurs, the more money is created.  The more money that is created, the more innovation occurs.

Even the poorest areas of the planet are getting into the action because, by definition, parts of an economy with the highest potential for technological change are the same places that return the highest dividends in an innovation economy.  Arbitrage opportunities between master and oppressor have disappeared worldwide.

Like a neural network, the economic system of tangible knowledge is self-correcting, fault tolerant, and self-regulating.  Governments across the globe tried to stop the social network driven innovation economy – but they eventually gave up.  It was like water; it flowed between the cracks and simply eroded the barriers. China learned to show it’s sense of humor exporting some of the funniest jokes ever conceived.

Oil production has been replaced by superconducting wind turbines, global temperatures have stabilized, all cars are electric or “water leakers” (as the hydro’s are affectionately known), many diseases have been cured, and the list goes on.  It is hard to believe this happened in only 12 years.  Then again, the Internet had only been widely used 12 years prior to 2008.  Did I mention, we’re finally sending a multinational expedition to Mars…

The Tangibility of Knowledge

Knowledge Tangibility should be the most important conversation in Social Media circles given the current financial situation in America.

I lived through financial devaluation in another country and the effects were crushing: after the run on the banks, there will be a run on Walmart.  People will buy TVs, small appliances, shoes, and useful stuff that will hold more value tomorrow that they cost today.  These items may become a de facto currency of trade.  Americans will be astonished by how fast a devaluation event plays out; hours and days, not months or years.  When things settle down, the government will retire the old dollar and introduce a new currency at an exchange of, say, 1 megabuck equals 1000 old dollars.  Then the chips are cleared, assets are transferred, and the same game can start all over again.

The difference is that for the first time in history, there is a window of opportunity for social media technology to break this cycle. Please let me explain:

Suppose that a BMW costs $50,000 dollars and a KIA costs $10,000 dollars.  These prices reflect the quantity and quality of the car in terms of availability and popular amenities such as, handling, road noise, comfort, status, etc. Suppose the government introduces a new currency called the “megabuck”.  Suppose the government pegs the megabuck to cars saying that all cars will have a value of 30,000 megabucks. Since these cars are not equal, people will begin trading; the BMW will be bid up to 50,000 megabucks and the Kia will be bid down to 10,000 megabucks based on supply and demand – right back where they started.

Admittedly an oversimplification, but the point is does not matter what you call the currency – the most important thing is the quantity and quality of the asset.  This brings us back to the idea of knowledge tangibility.

Suppose that, on average, 1 hour of human labor is worth 20 megabucks.  As above, hard labor will be bid up while soft labor would be bid down.  The same is not really true with knowledge because knowledge is invisible and it can’t be counted with bricks or bushels.  There is no knowledge inventory in America’s communities.  Therefore, there is no way to establish supply and demand for knowledge assets.  People in a community do not know what other people in the community know. This is where social networks will make a huge difference.

Human knowledge, if formatted correctly, would make an excellent asset upon which to peg a currency. Today, accountants say that human knowledge is “intangible” but social media demonstrates otherwise; human knowledge is simply invisible – hidden inside corporations under the thumb of Wall Street. Social media demonstrates that knowledge assets are itching to be release to the public domain in a highly tangible manner.  Believe it or not, we are now 95% of the way toward real knowledge tangibility today.   We should be very excited about this because everything changes.

Like the example with the cars, we need to have a comprehensive inventory of the knowledge assets in our communities so that they can be strategically combined into productive organizations.  This inventory must be formatted in terms of quantity and quality and include all knowledge living including social, creative, and intellectual capital.  If done correctly, it will not matter what happens to the dollar or what currency is used as a scorecard, the value of human knowledge assets will remain intact.

Again, the value is in the asset, not the currency – it is in you, me, and our diverse communities who will favor community priorities rather than Wall Street priorities. This is how where we will find equity, sustainability, and fairness in a capitalist system.

The Ingenesist Project has specified exactly how to create knowledge tangibility in a capitalist model using 3 simple web applications for Social Networks; a Knowledge Inventory, a Percentile Search Engine, and an Innovation Bank. Please read the intro and the articles on page IEc101.  If you agree, please pass it on.  If you do not agree, please help us make it better.  If you don’t understand, email me. This needs to happen fast and unfortunately nobody will do it for us – we must do it ourselves.

The Balance Sheet for Knowledge Assets

Innovation economics has a way of forcing us to look at the mirror image of conventional wisdom.  This article will look at knowledge assets as they might appear on an accounting balance sheet.  You may be surprised at what happens at the bottom line.

Wall Street will often reward a company that has a large backlog of orders. This can appear in the eyes of most observers as an asset. After all, who would not want a backlog of orders?  However, in the world of social media, a huge backlog causes a serious problem – it represents commitments made that have not yet been delivered. An unfulfilled promise in a social network is a liability and not an asset.  By extension, a backlog in an innovation economy is a liability and not an asset (note: climate change).

Applying conventional wisdom to an innovation economy, we find that most companies have an excellent inventory of the “liability” but a poor inventory of the “asset” that will execute those promises. All of their plans, specifications, blueprints, job descriptions, policies and procedures, etc., are liabilities in an innovation economy because these define the promise that is unfulfilled, not the asset that will fulfill them.

Until recently, companies assumed that the right knowledge assets will always be available – an assumption that for a long time has limited the level of productivity that humans can achieve, specifically, the sustainability of natural resources. The absence of a knowledge inventory limits the complexity of problems that humans can solve much like industry was limited to custom machinery before Eli Whitney demonstrated the concept of interchangeable parts less than 200 years ago.

Further, if the product line is expected to have a life cycle of more than a few years, the knowledge inventory must extend beyond the doors of the company and into the surrounding community.  Therefore, the knowledge inventory must take on the taxonomy of the community, not the taxonomy of the corporation such as skill codes, levels, titles, etc. The requirement is now clearly in the domain of social networks.  Yet, I still hear grumblings in the blog sphere that social networks cannot be monetized – nothing should be further from the truth.

So, let’s talk about the bottom line.  For example, Boeing announced today that their greatest future challenge would be the availability of engineers. Boeing has a market capitalization of $34B and a $300B backlog.  Money has a 10:1 multiplier as it travels through and economy.  For a balanced accounting statement, what would be the real value of a social network that can capture the correct knowledge inventory to support Boeing; 34B, 300B, or 3T?

In general, valid estimates of the bottom line can vary by 2 orders of magnitude depending on the point of view of Wall Street, corporate management, or the social network community.  Who would be the better steward?

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