Think Bigger. Aim Higher. Go Further.

Month: January 2011

When Everyone has a Coupon, They Will Innovate

It is extremely important to recognize that, for better or for worse, Discount Coupons can have an extraordinary influence on people and their behavior.  This influence is what makes a discount coupon very powerful and extremely valuable. Coupled with social media, a coupon can be leveraged to influence the behavior of whole communities in extraordinary ways.   The ability to manipulate coupon values is tantamount to the ability to manipulate the value of money itself.

However, coupons, in the marketing world, function as a form of price discrimination that enables vendors to offer a lower price to people who would otherwise go elsewhere.  Since coupon customers are price sensitive and not necessarily loyal to a brand, coupons tend to reward ambivalence in a community rather than trust, commitment, or long term relationship. Normally, one would seek to create incentives for loyalty, quality, and trustworthiness. Instead, such transient market can act against both product quality and new value creation.

Another use of the term “coupon” arises from finance where coupons are used as proof of ownership for a bond, “bearer certificate”, or similar financial instrument. Possession of the coupon is considered conclusive proof of ownership of a tangible asset.  Money, in fact, is simply a coupon representing ownership of a unit of a productivity. Ownership is a cornerstone of all forms of Capitalism, including Social Capitalism.

As such, it is of little surprise that the Internet Coupon industry is exploding with huge valuations of Groupon by Google, The emergence of Google Offers, and Yelp Coupons, and many more.  What is very interesting is that this explosion is happening concurrent with similar innovations in Travel, Currency, and Gaming deemed the “Great Integration”.

The next obvious step is for coupon exchanges to form where holders of one type of coupon can trade value with holders of another coupon not unlike one can now trade Coca Cola stock for shares in The Boeing Company.   Coupons today have limitations on their usage, but over time, continued innovation in “Coupon Currency Games” will result in powerful mechanisms for the storage and exchange of value.

There is a classic business game that plays out in markets everywhere.  Suppose that a vendor offers to discount all prices by 20%.  A competitor simple has to say “We’ll match any price”.  After a day or two, the resulting stalemate is inefficient because it simply resolves to both vendors losing 20% with no net shift in market allegiance, only increased transcience.   This is a the divergent force that weakens ties and introduces susceptibility to disruptive innovation.

Meanwhile, The Value Game uses coupons to leverage relevant communities around physical assets such as airplanes, zip cars, alternative energy, and public infrastructure.  This will be the convergent force that strengthens community ties and introduces huge opportunities for social entrepreneurs to create new value.

As a result, the strategic use of Coupons will play an important role in both the acceleration of innovation disruption AND the subsequent creation of new value. In fact, if used strategically, coupons may help usher out the old economy and bring in the new.  The Domino Effect.

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(Editors note: The above post is #3 in a series [1][2][3][4][5] introducing The Value Game to a new class of business methods.  The first real world application is Social Flights; a collaborative production / consumption game being deployed to the market.  If this works, the new business method class will be generalized throughout the economy to catalyze the convertibility of social currency.  Please join us at The Future of Money and Technology Summit in San Francisco on february 28th 2011 where we will unveil the work to the technology community)

Ideas Travel Where People Travel

Good ideas travel easily and far along trade routes.  Ideas like irrigation, Apples, grapes and wine spread along the Silk Road. The paper and writing spread new ideas leading to increased literacy, the scrapping of old philosophy and the creation of new social orders. The printing press then led the way for today’s mighty publishing Industry.  But don’t forget a simple fact, travel is the substrate of the next economic paradigm.

Ideas: A Chain with many Weak Links

Seth Godin wrote a wonderful article about the publishing industry called The Domino Effect.  He observes that:

1. The middlemen (bookstores) have too much power to limit shelf space.

2.Authors are separated from their readers and don’t have the data to contact them directly.

3. Pricing is based static, slow, and largely irrelevant of content or any form of supply and demand which is of little benefit to the reader or the author.

4. Ideas from books travel much farther and faster than the book itself which does not translate into book sales.

Mr. Godin’s point is that given how important books are, the Chain has many weak links between the author and the audience. Publishing is due for an extraordinary disruption and Seth is going to change it with The Domino Project.  But how many other industries suffer from the same weak-chain syndrome?

Travel: A Plane with many Weak Links

Well, if Books and Travel spreads ideas along the Silk Road, then they must have a lot of other things in common.  If we apply Seth’s observations to the commercial airlines:

1. We see that Airports and airlines have tremendous power to limit gates, times, and availability of routes.

2.  Airlines have no idea why they are carrying all those people around.

3. Pricing is static, segmented, slow, and has very little to do with the actual supply and demand for travel.

4. Travelers are transporting ideas which move faster and more broadly than the aircraft itself and which does not translate into more airline tickets sold.

Where ideas spread; value is created

What is so powerful about ideas?  Most innovation gurus discount raw “ideas” as the useless drivel of idle minds. “Show me the money, not the ideas”, they bark.  If ideas are not innovation, then what are they?  If Ideas are not valuable, then what are they?

The Travel Economy

Travel technologies and applications are being sold for incredible sums of money.  Every airline merger is big news and every geolocation application is huge business.  Travel data is a lightening rod for everything from pricing to privacy.  Social Media applications are getting that migration routes are an excellent marker for “value flow” and therefore, cash flow.  Airline Travel is still the most favored mode political disruption because the links in the economic chain are so weak.  Travel is serious business.

The “New Value” Integration:

Every industry with weak links between production and end use are candidates for disruption in the great integration. Any idea that can strengthen the link in the chain between origin and the destination of an idea is a product of the great integration.  The Social Value creation process and astonishing opportunity will happen at the weak links between origin and destination of any product or service.

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(Editors note: The above post is #2 in a series [1][2][3][4][5] introducing The Value Game to a new class of business methods.  The first real world application is Social Flights; a collaborative production / consumption game being deployed to the market.  If this works, the new business method class will be generalized throughout the economy to catalyze the convertibility of social currency.  Please join us at The Future of Money and Technology Summit in San Francisco on february 28th 2011 where we will unveil the work to the technology community)

The Future Of Money And Technology Summit 2011

fom2In my opinion, The Future of Money and Technology Summit is among the most important conferences in America.  FOM&T is not the usual parade of polished celebrities selling books, consulting, or seminars.  Here you’ll find the people who work deep in the caldron of innovation enterprise bringing together some of the most important ideas in the world today.

The Moment is now

The challenges for the future are immense, the technologies unfolding before us are extraordinary, and the people on the front lines are visionaries.  For better or worse, future generations will look back on several key moments that marked the beginning of a new era.

Last year I was deeply humbled by the quantity, quality and razor sharp intellect from the audience and the speaking panels alike.  The panels were great, but the audience was just as awesome.  Every question asked of the panelists was as profound and inspired as the panelists themselves.   One common thread binds this conference like no other that I’ve attended:  we’re all in it together. I consider myself privileged to be a participant in this event.

A Portrait of The Future

For me it seemed like 800 pieces to a huge jigsaw puzzle walking around finding their place in a yet unknown portrait of the future.   Everyone has part of the answer and nobody has all the answers – this makes for an extraordinary collaborative learning environment and likely the best place to peer deep into the future.

I strongly recommend that anyone who engages in this conversation of the ‘future of money and technology’ in their work, research, blog, or start-up must attend this historic event.  This is truly an example that the whole is far greater than the sum of the parts, and there are some great parts!

Fight your reservations with your reservation

The Future of Money and Technology Summit will be held on February 28th 2011 at the beautiful Hotel Kabuki at 1625 Post Street, San Francisco, CA.  More details can be found here.

The “New Value” Integration Begins

The New Integration begins; Travel, Coupons, Gaming, and Currency

Each stage of humanity’s social evolution did not replace the prior social order; rather, it integrated the tools created during the prior social order. The agrarian economy is going strong and feeding the world. The industrial revolution integrated the tools of the scientific revolution – both still exist.  The knowledge economy integrates the tools of the information age as we speak. The next economic paradigm will result from the integration of tools developed from the technologies of the knowledge economy. So what’s happening out there now?

Travel: Nothing economic can happen until people get together an build something.

Tripit acquired for 120M, DoJ Mulls anti-trust suit for purchase of ITA, Travel sites gang up against ITA Sale, American, Expedia, Orbitz in 3-way dispute, Facebook buys Nextstop,

Coupons: Hey, who exactly is subsidizing all that discount value?

2 y.o. Groupon rejects 6B offer, mulls IPO.  50 top Groupon Copy cats, “Google Offers” Groupon Competitor, Groupon Bachlash builds, Foursquare and Groupon go after “Local Social”

Games: A business as old as money.

Zynga valued at up to 5B. Zynga goes on a buying spree (8 acquisitions in 8 months); Google buying spree in mobile gaming and invests 100M in Zynga,  8B in virtual goods sold worldwide – china leads. Facebook Credits become mandatory for games.

Currency: storage and exchange of social value.

Google buys Social Gold for 75M – social gaming/virtual currency platform. Alternate Currency Movement gains popularity,  Zeitgeist Movement goes on the defensive.  Symbionomics to organize the “new value” conversation. Facebook rolls out new currency. AMEX launches “social currency” with “geolocation”……..

Bringing us back to the beginning: Travel:,  

Unveiling The Catalyst

The Value Game developed by The Ingenesist Project will be unveiled at The Future of Money and Technology Summit on February 28th 2011. We will demonstrate how a high value asset such as an aircraft, zipcar, renewable power, or even public infrastructure can be massively leveraged to create New Social Value.  This represents a new class of business methods designed to integrate the tools of the knowledge economy and produce a closed-loop prototypical innovation economy.

Leveraging fixed assets, socially

The Value Game uses the example of how entrepreneurs can leverage an under utilized asset such as a corporate jet fleet and match routes to the Geographic Social Graph at small airport (Travel) instead of competing with an inefficient Commercial Airline model.  Vendors could join social networks to subsidize airfares with contingency (Coupons) for related products and services. A true value calculator would compare door-to-door social value of private travel with the financial value proposition of commercial airlines.  This comparison creates a conversion factor between social currency and financial (Currency) which monetizes social value.  The resulting interactions between traveler, vendor, and 3rd party entrepreneurs creates an “Intentions Game” in social media where it is in everyone’s best interest to create social value and deploy it to the (Game).

The game starts and ends with money, but all the “New Value” is created inside the game and denominated in social currencies. Entrepreneurs will game the game, the planes will get bigger, the coupons will get stronger, and the social currency will out-perform the financial currency in new value creation.  This business method is now being tested in a live venture. What we learn from this may help catalyze a new and more sustainable economic model called Social Capitalism.

Don’t miss this historic unveiling at The Future of Money and Technology Summit on February 28, 2011

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(Editors note: The above post is #1 in a series [1], [2], [3], [4], [5] introducing The Value Game to a new class of business methods.  The first real world application is Social Flights; a collaborative production / consumption game being deployed to the market.  If this works, the new business method class will be generalized throughout the economy to catalyze the convertibility of social currency.)

The New Value Movement

I believe that it is important to make a distinction between New Currency and New Value. The potential for confusion is high but the implications of getting this wrong could be catastrophic.

The Storage and Exchange of Value

A currency is a social system designed to store and exchange value.  Value is what people make when they do things together.  Not so obvious is that a particular type of currency may not be very good for storing and exchanging a particular type of value.  It is obvious that dollars may adequately representing the physical value of a computer, however, those same dollars may not be very good at representing the social value of a community using computer systems to interact with each other.

The New Value Movement:

From yesterday’s post: I have encountered hundreds of people developing social currencies with increasingly creative and constructive methods because their community is important to them. People are trying to solve the great puzzle of  human division because their community is important to them. People are trying to resolve the constraints in natural resources and the limitations on our planet, because their community is important to them.

The New Value Movement is precisely that; a movement to articulate, store, and exchange New Value arising from technological advances and NOT adequately served by the existing financial system that enabled those technological advances in the first place.

The Total Value is the True Value

The idea of New Value is not to replace the current financial system, rather, the net total of value articulated by both systems exceeds the maximum value that traditional money alone is capable of processing.  Convertibility between New Value and old currency will be conducted using a yet unknown New Currency that many now call “Social Currency”.  When the total monetary system can articulate the total value of the Earth AND it’s human resources, only then can an organic set of priorities be delivered to a market.

The New Currency Movement:

On the other hand, the image of a New Currency often evokes the wholesale replacement of an old currency brought about by the collapse of a financial system, hyperinflation, destruction of the factors of production, the introduction of some unforeseen peril, induced volatility, political risk, nationalization, war, terrorism, famine, plague, pestilence, etc.,…Obviously, the differences between the two movements could not be more stark…

A Clear and Present dAnger

It is also apparent that the traditional financial system has become fragile and it must never be in the best interest of anyone to benefit from increasing this fragility. The Internet and emerging social media technologies have finally integrated the tools that people need to organize themselves into New Value economic developers. However, during the transition, individual people or groups will hold the power to both stabilize and destabilize.

The danger is that a new currency ideal may seek to benefit from the premature collapse of the old currency system. This is not creating new value, this is the transfer of value by the abuse of power against the very system that supports that power. This is precisely the flaw that the new value movement is trying to correct.

The Spirit of The Age

I read the mainstream media headlines about how the Arizona Assassin was influenced by the Zeitgeist Movement and wondered, ironically, which of these four parties represents The Spirit of the Age?

The Future of Money

There are many people questioning the past, present, and future of money. For the first time in human history, there is substantial access to information and scalable social technology that can enable people to create, store and exchange new value in their communities.  I believe that the act of people building community, in itself, creates new value that may be exchanged through many forms called social currency.

Economics happens when people do things that are important to them.

I have encountered literally hundreds, (I am certain that there are hundreds of thousands), of people developing social currencies in increasingly creative and constructive ways because their community is important to them. People are trying to solve the great puzzle of  human division because their community is important to them. People are trying to resolve the constraints in natural resources and the limitations on our planet, because their community is important to them.

The New Value Movement

It is also increasingly clear that social-economic systems that may have once served well in prior times are operating sub optimally with today’s technology and social order.  What I do NOT see in the New Value Movement are people intentionally trying to benefit from the wholesale failure of others – regardless of whom. However, herein does lay the danger.

Disruption is good, destruction is not so good.

It is easy to form a utopian ideal where humanity’s presence on Earth is redesigned into the system of one group’s design. It is easy to say that all problems are technical or spiritual, and not political.  It is easy to call to action a confrontation of culture as a requirement for building future society in one’s own image.

The problem is when the urgency to realize a utopian vision can result in actions that are destructive to the support system upon which that vision must depend. As such, it should never become the best interest of one ideal to force the collapse of the old system in order to create the new system.  This is the nature of the same “competition” for resources that is clearly inconsistent with natural synergy.

This is the story of much of our human history, unfortunately with predictable results

I believe that it is precisely such a failure that can make the new ideal impossible to attain. To bring about the end of the old era before the new era is sufficiently developed is the great technical challenge we are faced with. No sustainable stage of human evolution has ever been brought on by the wholesale demise of the prior – there was always an integration of the tools developed in the prior paradigm that resulted in the new.  That is the discussion that we need to occupy ourselves with – this is our Zeitgeist.

Fungible Coupons And Collaborative Production

When we think of coupons, we imagine that most contradictory statement “Buy now and save money”.  Obviously most people recognize that spending is NOT saving but the objective of this apparent contradiction is to project the idea of “value”.  So what is value and exactly how valuable is someone’s the idea of value?  Is Value Fungible?

Inventory management tools

A coupon is a powerful inventory management tool that is made up of several parts.  The first part is the face value, often called “retail price” – this is the price that the retail market is willing to bear. The second part is the discount value which is the actual price of the offering based on a vendor’s need to move inventory.  The difference between the two numbers is the “Value Proposition”.

Public Stock Exchange

Alone, that would be a very simple form of currency creation.  By limiting the number of coupons precisely to the amount of inventory that is subject to liquidation, the coupon becomes a fungible instrument.  If the supply is limited, then people will trade the coupon value that they hold (but don’t need) with people who hold coupon value for other items (that they do need).  Or, since the value proposition is denominated in dollars, they can trade the coupon for dollars up to, but not exceeding, the retail price.  After a while, people will literally form a “stock” exchange out of the community inventory of goods and services represented by coupons.

Most enterprise can expect to spend 10% – 30% of their revenue on advertising.

The third and often misunderstood component of a coupon the friction value – a negative number.  This is the cost of producing the coupon campaign (marketers and printers) as well as the cost of advertising, distributing, and processing the coupon. Finally, there is a certain amount of social friction associated with redeeming a coupon such as clipping, organizing, and presenting the coupon to the vendor.  Rebate schemes will often introduce so much friction that the buyer gives up or forgets the expiration date, etc. On the other end of the spectrum, Groupon often exceeds the inventory intended to liquidate and increases cost of liquidation.

Social Currency

In a coupon economy, we can initially define social currency as the absence of an “anti-social” currency.  We can say that social currency is equal to the coupon’s original value proposition (denominated in dollars) minus advertising friction.  We can make this assumption based on the fact that social capital can be deployed in a community INSTEAD of advertising.

Collaborative Production – when the community decides what to produce

When advertising friction is removed, it becomes a very simple matter to make coupons fungible. In the event that the dollar collapses, people can easily switch from the discount currency to the value proposition currency, i.e., social currency.  After a while, social priorities will drive wall street production priorities instead of wall street production priorities driving social priorities.

Believe it or not, the key to financial sustainability may just be in the wholesale elimination of advertising. The Value Game by Ingenesist project is designed to correct this market friction.

Collaborative Production, Consumption, or Destruction?

Many important ideas are emerging related to collaborative consumption and the sharing of physical assets.   The primary idea is that communities can save money and conserve natural resources. The most powerful byproduct of collaborative consumption, in my opinion, is that communities can organize around physical assets to produce what they actually need, not what they are told to need.

The idea of collaborative production is generally referenced around a host of enterprise collaboration tools.  However, many of these tools are designed to benefit the for-profit enterprise allowing them to collect high value knowledge assets while eliminating high risk employment liabilities under the noble flag of “Crowd Sourcing”.

Collaborative Production

True collaborative production is related more to the idea that communities decide what to produce. In classical economics, the merchant class allocates land, labor, and capital and largely decides what will be brought to market but also what can be withheld from a market.  Collaborative Production starts with the idea that a community allocates it’s own knowledge resources to produce what they need and withhold what they don’t need.

This distinction is actually quite important.  Combining some sugar with fat and stirring in a lot of advertising to produce candy is much faster and easier to do than raise carrots, for example.  While the farming community may prefer to raise carrots, profit margins on carrots are driven by supply and demand for calories – as such, carrots compete directly with candy.

Have you ever seen a commercial advertisement for Carrots?

Ultimately what gets produced is that which is easiest and cheapest to produce, store, and transport – not necessarily what a community needs to be cheaply and easily produced.  Eventually the knowledge assets required to grow carrots begin to atrophy by the process of collaborative destruction.

Collaborative Destruction

Today, many communities are trapped behind closed doors.  People do not know their neighbors.  They are unable to reach an agreement about what they can build together.  When they lose their “Jobs” they lose their identity and direction and they attach to whatever idealism crosses their fear threshold.

The greatest challenge ahead of us – and the greatest opportunity as well, will be to interact with each other.  We need to know what the other people around us know and find a place for our own knowledge assets in our community.  Communities need to collaborate outside the construct of a corporation and produce the things that they need.  Social Media provides an astonishing tool for a new form of social organization if and only if it can be used to beat the effects of collaborative destruction.

Creating An Intention Currency

In the last few articles, I’ve discussed the importance of Intentions as a superior means of storing and exchanging value because of the ability to predict economic outcomes.  Only from these conditions can we construct an alternate currency.

For all Intents and Purposes….

Suppose that we suggest that one’s knowledge inventory is a good representation of their intentions to do things.  You can test this by strolling through the aisles your neighborhood Barnes and Noble book store and observing your own reactions to the titles as they flash by.  Notice how your tendency to act  (stop to read the byline or even pick up the book to read the cover) correlates to your organic knowledge, passion, interest, or experience.  Notice which sections you tend to linger in and how your eyes float up and down through the shelves, etc.

So let’s say that you studied business in college.  We can then say that you have an intention to conduct business.  The same holds true if you studied math, engineering, art, music, creative sciences, and/or social sciences. So we can say that a knowledge inventory is an intention inventory – assuming that you are not distracted by ADVERTISING.

Let’s make some predictions:

If you have low knowledge and high interest, your intentions would correlate to those of a student. If you have high knowledge and high interest, your intentions would correlate to those of a teacher.  If your have low knowledge and low interest, you would register no intentions.  If you have high knowledge and low interest, your intentions are ambivalent.

One step deeper:

If we were to assemble a community’s knowledge and interests on a few bell curves, we could make predictions about what a community intends to produce. If a community has high knowledge and high interest to build airplanes then we can place a value on those intentions in a market.

Now here is where the fun starts:

If we can predict future value, we can create and “intention currency” and capitalize it.  That means that we can turn it into a debt instrument and make a promise to pay back the today’s intention currency with future intentions.  If we can capitalize an intention currency, we can securitize a combined pool of many intentions and sell “Intention Bonds” that finance today’s intentions with those of tomorrow. Meanwhile, as we build the airplane, we have the incentive to innovate and create new knowledge that we can use to pay off the intention debt in the future.

Preoccupied or unoccupied?

If is sounds crazy, be assured that it happens all the time by corporations, marketers, demographers, politicians and even among some prison inmate populations.  Of course they will never tell you this, but unfortunately communities of people, social networks, and all the knowledge inventory sequestered inside corporations or messing around on Facebook have not figured out how to monetize all these intentions for themselves.  This is because they are preoccupied by an influence currency called – ADVERTISING

Walking Into The Trap Of Influence Currencies

My earlier post about influence vs intention created several interesting conversations on several blogs where it had been re-posted [1], [2]. My assertion is that an influence based currency may be an easier path to forge but a dangerous path to follow.

Any new currency that claims to improve on the current financial system must ultimately be able to be capitalized and securitized.  Indeed, people should be influenced to use Zipcars  – but how exactly did the Zipcar get there?

Influence goes nowhere

Sorry folks, I know that the Klout people are working awful hard to become the standard of online influence. Fueled by corporate marketers, It is also clear that those who have influence in this domain are going to try to keep it at nearly any cost.  It is obvious that there is increasing pressure to monetize social media and Twitter is easy to scrape into loads of data that must mean something economic if one were to look at it hard enough.  The end game on influence, however, is Politics – influence currency will ultimately resolve to a state of mutually opposing forces.

Skipping stones

Assume that the pond is calm.  My influence causes ripples that cause others to react or take action.  Likewise, the people around them react as well, and so forth into a set of infinity consequences.  By definition, consequences are not intentions.  The only intention is to influence and the only influence is to induce consequences to an otherwise calm place.

Intension Currency is a far more difficult nut to crack, but crack it we must.  Intensions are organic – everyone has them.  They originally appear in a person’s God-given natural interests, talents and passions.  Intensions appear in what a person studies, the collection of knowledge that they choose to accumulate and subsequently act upon. Unfortunately, far too often the influence of the few interferes with the intensions of the masses – again, allow me to make a reference to politics.

Intention lives in our knowledge inventory

Rational people act on a basis of what they know how to act upon. Predicting intensions is a function of reading a person’s organic knowledge inventory.  Unfortunately, the human knowledge inventory remains sequestered behind the corporation, HR file cabinets, and the deeply flawed and archaic resume system.   There is not, however, an inventory of what people know in a community, what they are passionate about, and what they intend to do with their lives.  Knowledge is the most basic storage and exchange of value – but where is the inventory?

Goldman Sachs knows this well

There is no economic system that capitalizes and securitizes the intentions of a person, a community, or a network of persons except the “Corporation”, which happens to be the ultimate political influence machine.  We need to be really really careful about falling down the vortex of “Influence” currency – we may just be walking into a trap.

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