Think Bigger. Aim Higher. Go Further.

Tag: business

The Value Game Primer

This reference post serves as an introduction to The Value Game (TVG).   The Ingenesist Project will be posting Value Game Solutions to many specific scenarios that our readers and clients propose.  Having this post as reference will help those new to The Value Game catch up quickly.

The following 12 minute video gives some historical perspective of The Value Game as we have applied to the aviation industry (see SocialFlights.com).  This video also expands the idea to any shared asset and provides important insight as to how to generalize The Value Game across the economic spectrum.

Introduction to Value Games

  • The Value Game is a new class of business methods that manufactures New Value.
  • New Value represents all value that is not normally convertible to U.S. Dollars; i.e., creativity, community, sustainability, resilience, compassion, trust, etc
  • Currently, The Value Game begins and ends with dollars, however, all New Value created within the game is denominated in “social currency” which has no physical manifestation.
  • The Value Game converts between Social Currency and Dollars; i.e., business plans that are not viable in dollars may become viable when social currency is included in the bottom line

Building A Value Game

  • The Value Game starts by identifying any asset, tangible or intangible, that a group of people would share.
  • The next step is to find 3 or more communities that have a vested interest in the asset
  • The New Value Entrepreneur is able to discern which communities and which assets will interact successfully in a Value Game.
  • In general, once a value game is started, it will improve itself since only those who have a vested interest in the asset will continue playing.
  • Players that are inappropriate for the given asset and related communities, will drop out or find another value game
  • All players will eventually find and play value games that correspond most closely to their natural interest and passions.

The New Value Entrepreneur

Just like with any business venture, it is up to the entrepreneur to identify and engage all of the right components required to build any enterprise; this is no different for Value Games.

  • The objective of the new value entrepreneur is to organize three or more communities to interact around a shared asset
  • The interaction among these communities acts to preserve the asset rather than consume the asset.
  • Each community acting in the best interest of the other community is, in fact, acting in their own best interest.

The material that references this post will help identify what types of assets are suitable for value gaming and what types of communities would make worthy participants.

The Ingenesist Project is currently building Value Games for clients in aviation, construction, education,  affinity groups, and social service communities.  Please let us know how we can serve your New Value creation enterprise.  

The All You Can Eat Option

The proverbial “all-you-can-eat” business model works great for some products and not-so great for others.  The opportunity, of course, is to be able to transform non-viable business methods into viable one’s using social media tools and data.  In this article, we explore how the AYCE model can be improved.

Netflix for the Sky

The Netflix model for movies has been touted as one of the greatest business innovations in the modern era of technology – not because it is new, but because it works.  Now, consider that the AYCE model has been applied to transportation, club membership, and telecommunication (cell phone data plans), etc.  Some work better than others….

I found this recent article about American Airlines experience with the AYCE model – which became their worst nightmare.  In 1981, you could buy a lifetime all access pass to first class travel on United Airlines for 250,000 dollars. While touted as a good way for AA to raise a lot of quick money, it proved to have long term liabilities that far outstripped the performance of the fund raising.  Today, a small carrier called Surf Air is now trying to use a subscription based system on a limited circuit using executive turboprop aircraft.

What is the comparable human behavior?

AYCE models impact human behavior in often unpredictable (read “unprofitable”) ways.  We’ve seen the unlimited plan for cell phones becoming a thing of the past.  Taxi drivers have not yet introduced the subscription travel plan but certain bus routes and commuter modes lend themselves to unlimited passes where an alternate single use rate and behavior record can be used as a price comparison.

I recall a wise and successful colleague in the insurance business revealed the dark truth about unlimited subscriptions.  “They are like extended warranties, the only people who should actually buy extended warrantee are those who fully intend to beat the crap out of the item that they are covering”.  Like gym subscriptions, low use members are needed to subsidize high use members.

Simulated Economy

Another way to simulate the effect of an unlimited prescription without leaving the business with an unmanageable long-term liability is to create an option-like instrument.  The buyer would hold the right without the obligation to purchase the service at a discount during a specific period of time where behavior will be regulated by market forces.

Holding the option would be priced relatively cheap so that the buyer does not feel a deep loss for not exercising the option, yet sufficient to subsidize the activity of those who do exercise the option for discounted service.  Another feature is that the option can be traded allowing holders to build a proto-economy around the asset that they possess.    This would decrease the marketing costs of the provider as the price of the options floats to meet the needs of the market.

These strategies are commonplace on Wall Street but a statistical construct for their deployment on Main Street may be emerging.  New “platforms” will arise which produce and  aggregate data in the right format to support an options type of instrument for the trade or exchange of any number of goods and services in a non-cash environment.

Maybe the all-you-can-eat buffet of the future will resemble a cornucopia of options for assets that everyone shares.  Bon Apetite.

BizDev with Cascading Info Game

Social Flights is a complicated game.  Aviation is a complicated business.  This makes Social Flights a challenging business model as much as a great opportunity for those who can figure it out how to play for keeps.

The Challenge

The challenge is to bring on as many as 5000 independent Travel Tribe leaders distributed broadly across a wide geographic area.  Their task will be to strategically build flight plans for private aircraft in their communities. Community leaders will be compensated financially for driving revenue … much is common to a traditional sales channel.

However, each of these community leaders will have already accumulated a vast set of strategic knowledge and experience that can benefit Social Flights across the system. Likewise, Social Flights needs to bring each of them up the ladder of domain specific knowledge in the aviation business.

For compensation, Social Flights offers a tiered affiliate program that pays out various levels of commissions on flights booked according to the affiliate’s tier.  One concern is that this strategy may not create an incentive to share information broadly if one is protecting their own tier standing or their own order of influence.

Cascading Information

Another approach would be to use a cascading information system.  This is a gamification theory that suggests: information should be released in the minimum possible snippets to gain the appropriate level of understanding at each point during a game narrative.

Initially, information would be released by social flights in our initial training program.  Later, other players of the game can release information to each other in specific packets defined by the flight scenario.  Such packets of information can be rewarded with other packets of information – or access to more scenarios. The Cascading information theory promotes loyalty, engagement, influence, and time involved in the game of building flight plans.

Gaming the game:

From the onset, Social Flights encourages gaming the game.  This means that we expect to learn a great deal about our business by watching other people play it.  There are far too many scenarios and permutations of business strategies for us to predict how and where they would apply.  All we can do is specify a baseline game scenario form and watch the ways the game is gamed.

In a sense, Social Flights would also be subject to the Cascading Information Theory, thus demonstrating how a corporation would enhance their own engagement, loyalty, influence, and time-quality in the communities where they operate.   

(reference: Gamification.org – wiki; Cascading Information Theory)

Lead By Getting Out Of The Way

By giving people power and observing what they do with it, a leader can learn a great deal about available opportunities.  The problem is in getting out of their way, and consequently, getting out of your own way.

Human capital refers to the set of skills and knowledge that can produce an economic value.  Everyone has distinct combinations of social capital, creative capital, and intellectual capital, which they deploy uniquely. The entrepreneurial spirit in indomitable.

Likewise, the education, experience, and abilities that people deploy to their communities, employers, social organizations, and for the economy as a whole, are hugely valuable; unless you try to contain them – then they become volatile.  So, no matter how proud you are of your own accomplishments, it’s probably not a good idea to get in the way of others’.

As we build out the Travel Tribe Leader functionality, we do not attempt to model the community leader after ourselves or any archetype, instead, we seek to model Social Flights around the human capital of the community that the leader represents.

Then, Lead by Observing

As we develop Social Flights, we listen to a great diversity of ideas from our extraordinary Board of Advisors.   The hardest part for some of us on the executive management team is to stay out of the way as these brilliant people tear away at our own creations, preconceptions, biases, and even our hopes and fears for the outcome of our work.  This is not easy to watch yourself getting in you own way.

We give our advisory board the power to criticize us.  We give them the power to change us.  We give them the power to hurt us and we give them the power to make us better.  We watch, and we learn and we are grateful to them because we will give that power to travel tribes.  This set’s up a very powerful incentive to play The Value Game.

A Game of Derivatives

On of the biggest complaints of the gamefication movement is that people will always figure out how to game the game.  by contrast, at social Flights, we intend for the players to game the game.  This is the fundamental backdrop of The Value Game. – it’s a game of derivatives not unlike many types of financial derivatives, except in an alternate currency.

This does not mean that we’ll fly blind and vulnerable.  It means that the value of Social Flights will be a direct reflection of the value that people create in communities organizing themselves around Social Flights.  This is a different type of business method and a stark contrast to the way that market capitalism holds people in boxes, surveys their private information, and places roadblock in their path trying to influence there every turn.

Try that with your battleship.

Knowledge Failure Is Business Failure

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

Top 10 reasons why businesses fail

1. Lack of an adequate, viable business plan
.

2. Insufficient sales to sustain business

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

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

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

6. Lack of experience and knowledge

7. Lack of managerial focus/commitment

8. Poor customer service

9. Inadequate human resource management

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

No excuses:

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

The financial system is not the only problem;

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

So where is the knowledge?

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

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

Tangibility of Knowledge

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

A Community of Knowledge Assets

A Community of Knowledge AssetsOur 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”.

A Community of Knowledge Assets

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.

A Community of Knowledge Assets

Good Blogging is Good Business

Bankers do not care about money, they care about the rate of change in money – Interest Rates, ROI, and CAPM make the world go around.

Static web presence is getting squashed by dynamic content.  The best party has the best conversation.  It’s not the quality of life, it’s the quality of living. Countless expressions in business and culture reflect this idea.

I would like to thank John Ryan for this analysis:

***

More proof that blogging is smart business. Just make sure that whoever is blogging is a good writer and is committed to being consistent.

Otherwise, it will be a waste of time. You can either have your developers include a blog in your web experience or use free tools like WordPress to link to your website.
From Hubspot:

If you blog, you know that it’s good for your business.

But how — and how much?

To answer to those questions, I looked at data from 1,531 HubSpot customers (mostly small- and medium-sized businesses). 795 of the businesses in my sample blogged, 736 didn’t.

The data was crystal clear: Companies that blog have far better marketing results. Specifically, the average company that blogs has:

* 55% more visitors

* 97% more inbound links

* 434% more indexed pages

Why are website visitors important? Because more visitors mean more people to convert to leads and sales.

Why are inbound links important? Because they signal authority to search engines, thus increasing your chances of getting found in those search engines.

Why are indexed pages important? The more pages you have on your site, the more chances you have of getting found in search engines.

****

Thanks again John.  The value of any innovation is in the transformation.  Starbucks transforms 25 cents worth of milk, beans, and water into a 2 dollar cup of coffee = 800% return.  The laws of leveraging conversation applies equally effectively in conversation as in finance where astonishing returns are not uncommon.  We really need to start thinking about Conversation like a financial instrument capable of all the capitalistic magic that derivatives, bonds, options, and securitization methods offer. 

UA:F [1.6.1_878]

Humility R Us

Many companies are flocking to Social Media as the great new tool for pitching products.  The results have been mixed; there are winners and there are losers.  At first, there was no clear path toward certain success but now the differences are becoming increasingly clear. Humility is rewarded and arrogance is punished.

If “Nice guys finish last,” is the mantra of the old world, then “The last will be first,” is the motto of the new.  To understand why humility works in social media, we need to understand what humility is.

Cashing the Reality Check

Humility does not mean looking down on oneself or thinking ill of oneself.  It really means not thinking of oneself very much at all.  The humble are free to forget themselves because they are secure.  So when they mess up, the humble don’t have to cover up.  They have nothing to hide.

All this is simply a way of saying that the humble are in touch with reality.  If the definition of insanity is being out of touch with reality, then in the old world, “nice guys finish last” illusion is clearly insane.

Strength in numbers

Since the humble are secure, they are strong.  And since they have nothing to prove, they don’t have to flaunt their strength or use it to dominate others.  Humility leads to meekness.  And meekness is not weakness.  Rather, it is strength under control, power used to build up rather than tear down.

You can’t buy happiness

Back in the early 90’s, I worked on an ad campaign in Hollywood.  The producer told everyone; “The objective of this commercial was to steal the thing that people love about their self, and sell it back to them for the price of the product”.

The marketing message has been for many years much along those lines.  Make people believe that they need something that they don’t.  Make people believe that they can buy happiness, love, and community.  Make people believe that reality is something that can be escaped.

Rising Tides float all ships

The great brand messages, the successful blogs, and the viral communications in social media all have one thing in common.  They provide true and real value to the most people.  They produce correct and practical insight for the most people. They empower the most people to help their selves.  They amplify the priorities of the most communities. They help the most people to be successful in their clear and present reality.

Soul Searching

Ironically, it will take great introspection in the hearts of many corporate brands that follow the old rules of marketing.  These corporations need to look backwards into their own corporate philosophy and business plan to re-identify what they represent and how they represent it.  This new identity must reach into R&D to define what innovations are developed and what features they provide.  This cannot and will not be easy for most.

Since the humble are secure, they are strong.  Likewise, when Brands are humble, they too are strong and they don’t have to flaunt their strength or use it to dominate others.  The power of social media is to build up rather than tear down.

The Competition is Competition Itself

In quantum physics, the Heisenberg uncertainty principle states that certain pairs of physical properties, like position and momentum, cannot both be known. That is, the more precisely one property is known, the less precisely the other can be known.

A practical analogy is the modern corporation.  It is difficult for a corporation to truly innovate because people behave as a function of the corporation’s interaction with them.  Heisenberg’s uncertainty principle suggests that the more we know about competition, the less we may know about cooperation.

Is competition is good for innovation?

A corporation is a closed loop that feeds on internalization.  External influence is traditionally shunned because of the great promise of the competitive economic system.  We compete with other companies, with our own legal system, with Unions, and with each other.  We hold and protect trade secrets; spend millions on patents that never get used.  We make our “intangible Human Assets” sign “tangible” contracts of secrecy and non-competition.

How do we define cooperation?

We often think of cooperation as teamwork. However, we define cooperation as the alternative to working separately in competition.  The definition of cooperation is derived from competition; the assumption that there is an opponent.  There needs to be a war against something in order to accomplish something together.  If you are not with us, you are against us.

Who exactly is the opponent?

Competition is a deeply ingrained part of our culture.  The business world is filled with sports analogies like; “knock them dead”, “carry the ball”, “we need a home run”, “great save!”  We see that national sports franchises command the highest pay and best ratings.  Reality TV is all about kicking people off islands, backstabbing one’s fellow apprentice.  We have even turned the pursuit of love and happiness into a competition.  The object is to decimate the competition. We define ourselves with slogans like: “may the best man win”; “the survival of the fittest”; “winner takes all”.  Destruction sells.

Beating a dead horse:

So what happens when we compete with each other?  What are the consequences when we decimate each other?  What happens when one departments competes with another department in the same company?  What happens when one person competes with another for a salary and bonuses?  What happens when society competes with Wall Street for their 401K?  What happens when the competition is already lost – do we continue competing or do we then cooperate?

The unwinnable war

After a while, societies and communities becomes a closed loop much like the corporations that they interface with.  They have no idea who the friend is or who the enemy is.  When people are in a game that they cannot win, they feel alone. Loneliness is the war that cannot be fought.

Social Media Cooperation; A closed loop system:

Social Media is emerging as an astonishing force in cooperation by uniting communities and people of diverse and complementary interests, affinities, and actions.  Social media works in a new dimension:  It is a “cultural dimensions” where the opponent is opposition itself.

Social media teaches cooperation. The more we know about cooperation, the less we know about competition.

The Culture of Buying

My wife and I visited Istanbul a few years ago and met a very nice person who offered to take our photo in front of an ancient building.  Afterward, he gave us a history lesson about the area we were visiting.  He then invited us to his shop to look at some carpets.

Before we knew it, he was entertaining us with stories about the history of carpet making as a young boy pulled down stacks of carpets and displayed them one by one as we sat in comfortable chairs.  The shopkeeper identified attributes, color combination and traditional design patterns with an enchanting story for each one.

After a while, the shopkeeper from next door walks in with a tray of hot tea as we continued learning about the carpets.  A bit later, we all went across the street for a traditional Turkish snack and more tea. Then back to the shop for more carpet viewing.

Hey buddy, not so fast.

My wife and I decided to make a purchase but instead of taking our money, he took us back across the street to smoke the Hookah, sip real Turkish coffee and listen to live traditional musicians.

The whole process took many hours but it was like traveling in time.  Istanbul has been the crossroads of commerce between two continents for thousands of years.  We ended up paying too much money for the carpets – but to this day they are among our fondest memories and most prized possessions.  They represent an indescribable experience in an exotic and comfortable setting.  Now they look beautiful in our home.

Human Nature

It is human nature to trade.  People want to do it.  People want to meet other people.  People want to learn.  They want to share. People want to buy things and people want to sell things.  They want to congregate.  They want to travel.  People want new experiences.  They want to laugh, smile, sip tea, and listen to music. They want fond memories and beautiful carpets.

So why is monetizing social media so complicated?  What is the big secret?

The transaction of conversation, relationship, and knowledge:

With social media, people are invited by friends, family, or associates to walk through an electronic door and into their inventory of relationships.  Few people realize that this is a profound act of friendship, kindness, and trust.  Think about it, people trust you with their relationships. How do we manage that?

However, neither party is fully aware of the conditions upon which the relationships present their self.  The cultural infrastructure of introducing people, assisting in the exchange of conversation, and transaction of knowledge in social media is not established.  The idea that a transaction can and should take place is not fully recognized.  The introduction of the people to each other does not have a process, taxonomy, a location factor, or a time function.

Then again, social media has not been around for thousands of years

No buyer, no seller:

•    If social media develops a culture of sales – it will fail.

•    If social media develops a culture of buying – it will thrive for thousands of years.

The Global Financial Crisis; The End Game

The year is 2024, no burning cities, no mass hysteria, no bread lines; the economy is on an exponential growth curve.  It took a while, but the financial crisis of ended in an anticlimactic sort of way.  Sure, lots of hedge fund bankers became unemployed, some went to jail, and many companies once deemed titans of industry have disappeared, but nobody seemed to notice much anymore.

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 Network applications such as Facebook, Linkedin, G+, and many more, developed a clever way to make knowledge tangible outside the construct of Wall Street and the traditional corporations and people began trading knowledge like currency.

When inflation hit, the dollar started to fall in value, people began trading a different currency called the rallod (dollar spelled backwards).  The rallod was backed by future productivity resulting from innovation rather than future productivity supporting debt.  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 open sourced self-regulating communities; i.e., society in general.  The vicious cycle of debt economics was reversed just in time.  It’s still hard to believe what happened.

Today the engines of economic growth are tens of thousands of hot new start-ups that exist in the form of “Value Games” 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 asset today.

About 15 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.  An API standard was created to represent knowledge assets like packets of code that are processed by a community algorithm. The CV/resume is an old bar joke now. Thanks to a visionary government, 1st amendment protections were built into this inventory with anonymity laws and privatized TOU; creators own what they create.

An open source percentile search engine was created to enable entrepreneurs to build unique collections of knowledge assets and predict the probability that various combinations of these assets could successfully execute a business plan.  High diversification induced hyper-innovation around technologies and the resulting innovations are spun out 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 “integrated” circuits.  Wealth creation is intense.

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.

Instead of having jobs, many people in a geographic area are pinged by the 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 collect 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 over their lifetime. 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.  Unlike a decade ago, pyramid schemes in innovation economics are sustainable and generate astonishing profits.  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.

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 by cooperating among each other.  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!

Even the poorest areas of the planet are getting into the action because, by definition, the parts of an economy with the highest potential for technological change correspond to opportunities 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 trying to stop water; it flowed between the cracks and simply eroded the barriers.  The most incredible outcome is that innovation now reflects long term social priorities instead of short term Wall Street priorities.

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 15 years prior to 2009.  Did I mention, we’re finally sending a multinational expedition to Mars…

Out of Cache; Will Work For Bandwidth

We can measure the time in minutes, we can measure distance in miles, and we can measure mass in grams – so how do we measure Innovation?  Am I missing something or is this possibly the most stunning omission in the history of civilization?  Who is keeping score? Where’s the referee? This is serious business, folks – the fact, factors, and factories of innovation should be in laser sharp focus to everyone right now, here is why:

The total US liability is estimated at 53 trillion dollars. Every US citizen must become more productive by $175,000 each to cover the invisible mortgage.   Government and corporations are not going to fix this problem – they will leave it to the kids to figure out how to make, mix, and measure innovation.

Natural Resources of Bandwidth

It is official; the United States has run out of bandwidth and we need to create more. The only way to accomplish this is an extraordinary expansion in the breadth, depth, and scale of innovation. This is a situation that cannot be rationalized by any conventional school of thought – starting with our definition for innovation.

The accepted definition for innovation is “something novel and useful”. I hope that I am not insulting any B-school professors or innovation guru’s but “something novel and useful” is already bankrupt as a definition for the only thing that can pull us out of this flaming tailspin of debt economics.

So let’s try something that the kids can do well (because they get to pick up the tab):

Innovation = Bandwidth Created / Bandwidth Expended

So there it is: a simple, clean, and effective:  If the number is greater than 1 we have a creation of wealth. If the number is equal to 1 we have a transfer of wealth, if the number is less than 1 we have the creation of more debt.

It should not matter how one defines bandwidth as long as the top number and the bottom number are measured the same way. If the kids can increase the top number, or lower the bottom number for anything anywhere by using their social, creative, or intellectual ability, alone or in groups, then they can become successful innovators.

Business case

There is a clear and rational business case for bandwidth – people will pay for it at a price relative to their own available bandwidth. Let’s give the kids a game they can win.  Let’s give them a score that they can keep. Let’s show them how entrepreneurs work, think, and play.

For the same amount of bandwidth expended, they can create more bandwidth for 10 rich people or more bandwidth for 1000 poor people. Let the kids decide. If they give some people more bandwidth at the expense of the bandwidth of others, they lose.  If they find synergies that act as a bandwidth multiplier, they win. Let the kids figure it out.

All we need to do is help develop standards to measure bandwidth.

It’s the least that our old people can do and a much simpler problem for our feeble minds to solve.  The Ingenesist Project specifies 3 web applications which if deployed to social media will allow social capital, creative capital, and intellectual capital to become tangible outside the construct of the traditional corporation – we believe that this may do the trick.  There may be others working on the problem too, we don’t care – at the end of the day, we all work for bandwidth.

INGENESIST PROJECT: Submission to the 10^100

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

A Few Predictions for the Innovation Economy

Here are a A Few Predictions for the Innovation Economy

Social Network will become the corporate structure of the future. They will spit out start-ups at an astonishing rate.

The “resume system” will be banished forever possibly earning the title of the cruelest human invention since the lobotomy.

The University System will be challenged – the relevance of the college degree will be questioned in an economy that favors unique combination of knowledge assets rather than everyone having the same “degree”.

Everyone will have visibility of supply and demand for knowledge assets meaning that employers and employees will have equal information about cost, availability, and demand.

Creative knowledge workers will earn micro-royalties for their participation in thousands of brainstorming sessions and product development discussions. Earnings will be shared openly and the percentile Search Engine.

The new Patent will be the “Secret Sauces” – the algorithm that entrepreneurs will develop to select their knowledge assets when producing specific innovation.

Teachers will forego salary in favor of an equity position in their students. The best teachers will make the most money. Universities will forego tuition in favor of an equity position in students; the best students attract the best mentors and universities. Apprenticeship will become commonplace.

The knowledge inventory and Percentile Search Engine system rewards people for doing what they are most passionate about. The dominant strategy for all players in an Innovation Economy (that which produces the most revenue) is for participants to pursue what they are naturally good at and passionate for – as long as there is a market for it.

Innovation bonds will return 80% interest or more with near-zero risk. Institutional investors, insurance reserves, and foreign investors will flood the market with venture capital.

Knowledge workers will outsource management.

The Fed will peg the dollar to productivity, not gold or silver – interest on deposits will track productivity increases due to innovation.

Social priorities will impact what gets invented or what stays on the shelf; Global Warming, Alternative Energy, Sustainable environments will have net positive business cases.

The flaw in market economics will be reversed. Technological change will precede economic growth eliminating the economics of debt (ref video). The financial system will be restored to a sustainable condition.

We know that innovation is the engine of all wealth creation and it will live in an integrated system. Knowledge will be reformatted to emulate a financial instrument.

A good article from business week

A great Blog: Jay Deragon and the relationship economy

The Capitalization of Knowledge – Innovation Bonds

With a computer readable knowledge inventory, local communities of practice, a percentile search engine algorithm, and the virtuous circle of finance, then future innovation cash flows can be predicted much more accurately and with far lower risk than with, say, the venture capitalists acting alone.

Were risk is predictable, cash flows are predictable and the portfolio of innovations can be diversified so if one business fails there is an equal chance that another will succeed and the risks cancel each other out. The cash flow of all the innovation enterprises can be combined into a single large steady cash flow. Just like companies do to raise money for expansion, the innovation bank can issue innovation bonds on the open market. The revenue from selling Innovation Bonds can return to the community to finance innovation and fund wealth creation at very low interest rates compared with venture capital today.

With a lower cost of venture capital and a system that supports open source innovation an astonishing amount of innovation will be unleashed in society.

The Capitalization of Knowledge – The Virtuous Circle

We have set up a new game for entrepreneurs to play called Innovation Economics. We have defined a currency and an inventory where knowledge is visible outside the construct of the corporation – and resident in social networks. We have also described a way for entrepreneurs to visualize the knowledge asset and the supply and the demand for knowledge assets. We have given them a tool for matching assets for profit. We have described how social networks will keep the game fair. We have outlined the structure of new business plans; the brain storming session, product development cycle, the neural network, and the multiplier effect. Future businesses will be built upon combination of these four structures and whatever else entrepreneurs can dream up.

We have described all of the pieces needed to form a new economy. Now we need to connect with the financial markets so that knowledge is readily convertible to other currencies.

For review;

With the financial bank, the entrepreneur assumes that they have the knowledge to execute a business plan and then they look for the money. The risk is that the entrepreneur does not in fact have enough knowledge.

With the Innovation Bank, we assume that we have the money, and we go to the bank to search for the knowledge. The risk is not having enough money to purchase sufficient expertise.

With both banks acting together – the risks cancel each other out and the innovation economy tends toward a ‘risk free’ cycle; the more knowledge you can assemble, the more money you can borrow. The more money you can assemble, the more knowledge you can assemble.

Now we have a virtuous circle. The more knowledge you have, the more money you can borrow; and the more money you have, the more knowledge you can borrow.

There is no shortage of money circling the globe – only a shortage of risk free places to put the money. The innovation economy is an environment of very high return for a very low risk and will attract a great deal of money to fund innovation enterprise.

Earlier we demonstrated that money represents human productivity. It follows that the places that have the greatest potential for increasing human productivity can create the greatest amount of wealth. Therefore, poor areas and marginalized economies with under utilized knowledge inventories or the injection of specific knowledge inventories, become the highest ROI centers in a risk-free system; a condition the explicitly favors the wealth equalization rather than wealth disparity.

Powered by WordPress & Theme by Anders Norén

css.php