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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.

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

The 3 Steps To Social Profits

I have been approached by many brilliant social entrepreneurs in recent weeks.  They each have several things in common. Each has an incredibly creative idea and a strong passion linked to a deep seated observation that social currency has value.  As nebulous as that may sound, it is very real, specific, and clear in the minds of those who I’ll call, The New Entrepreneur.

Nothing Economic can happen until two or more people get together to build something.  Likewise, when two or more people get together to build something, economic things happen. The objective of this post is to demonstrate the 3 underlying actions of a new class of business plans that will become dominant in the next economic paradigm.

Our recipe is simple:

Step one: convert financial currency into social currency

Step two: Create value denominated in social currency

Step three: Convert new social currency back into financial currency – if needed

This simple recipe forms the basis of the business plans for several start-ups including Social Flights and The Social Value Network as well as numerous other projects that we consult to in the US, Greece, Brazil, Australia, China, and Mexico.

So here is how it works

The Old Business Model:  Suppose you buy a truck and you use it to haul stuff for your own personal and business interests. After 5 years, you can sell the truck for about 1/2 what you paid for it.

The New Business Model: Suppose that you buy a truck to hauls stuff for your own personal or business interests.  Suppose that you also let The Boy Scout troop leader borrow it to pick up christmas trees for sale.  Suppose you let the Kiwanis use it to pick up supplies for their annual salmon bake.  Suppose you let the YWCA haul donated furniture to their satellite facility.  Suppose you help your neighbor use it for a home improvement project.  After 5 years, you sell the truck for about 1/2 of what you paid for it.

The difference is that now your community is engaged with your personal interests.  You have converted financial capital into social capital and created new value denominated in social currency.  One notable example includes Neighborgoods, but there will undoubtedly be thousands of variations of this leveraging every conceivable physical asset.

Now, how do you transform this back social capital into financial capital?   Well, that’s what the emerging science of Social Capitalism is all about.  Social Profit is like a fungible option with a face value.  If structured correctly, an option can have a face value equal to the difference between discount and full price. That face value can be traded like money.  When you are engaged in a community, people know who you are, they trust you and they share with you.  People are trading options – the right without the obligation to exercise a financial position in the future.

Options have real value as an asset if you have them or as a liability if you don’t

The Invisible Hand of Social Capitalism

Living to work, or working to live?

Everyone knows what money is supposed to be – it is supposed to be a representation of human productivity, otherwise nobody would “work” for it, right?

It is also fairly obvious that money is not the only thing that represents human productivity. People work for family, community, reputation, love, recreation, art, music, etc.   These values are denominated in social currencies.

Working for Social Currency

Market Capitalism has deftly turned social currencies into consumption verticals.  People consume recreation products, family products, community products, reputation products, etc. The irony is that people are  foregoing all those things to drive off to work in order to earn the money so that they can buy back their family, recreation, and community. People are “working” for social currencies denominated in dollars.  The Mantra of Madison Avenue is to “Steal the thing that people love about themselves and sell it back for the price of the product”

Influence Peddling

Well known internet celebrities are getting sponsorships from some well known corporations – but not all.  The reason is clear – these people have the ability to influence the opinions and interactions of their community.  However, if the sponsor has a terrible product, that same influence can turn against the brand and the influencer in an amplified manner.  It is clearly in the brand’s best interest to match the product with the message of the influencer and vice versa.

Everyone is an influencer within their own knowledge inventory

A mechanical engineer can influence the professional community of engineers.  A math teacher can influence students.  A police officer can influence citizens.  A patriarch can influence an extended family. A big brother can influence a little sister.  Taken together and segmented across a hugely diverse knowledge inventory of human civilization, everyone is an influencer of everyone else.

Printing Social Currency

So instead of going to work to to earn money, people could just as easily go into their community to earn influence.  Brands can sponsor people based on their knowledge inventory to use, share, organize, and improve communities and products.   The most successful product will be those that help people to improve their communities. As such, brands and products will likewise benefit from stronger and unified communities.  Products that weaken, marginalize, oppress, or isolate people from their communities will fail.

The Invisible Hands of Social Capitalism

Nothing economic can happen until people get together to build something.  Strong linked communities will get together to build “economic” things. What they choose to build will become the value generation mechanisms of the future economy that will transform social value back into financial value.  Like Adam Smith’s invisible hand of Market Capitalism, the Invisible Hands of Social Capitalism will reward people for organizing themselves to make what they enjoy most and are naturally talented in producing.  We’ll call them “Recorporations“.

Reverse Economics And True Value Social Games

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

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

Trading coupons for coupons

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

The Dollar as a black market Currency

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

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

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

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

Lose the friction, improve efficiency

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

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

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

References:

Sepp Hasslberger The Future of Money

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

America’s Uncivil War

I am deeply concerned with the Liberal / Conservative flame wars. Countless Facebook discussions start with a casual reference to one position or the other, then quickly devolve into deeply divisive language. I see it in forums, Chats, Comments on blogs, news articles and YouTube Videos.

It’s getting worse – people can no longer agree to disagree.

I do not believe in big government. On the other hand, I do not believe that corporations should be the sole protectors for safeguarding the social charter. Call me an idealist, but I truly believe that given the right incentives, people can govern themselves to a very large degree.

Weapon of Mass Reconstruction

We have at our disposal the most powerful tool ever created for the potential benefit of humanity. Societies since the beginning of our time would have envied us beyond words – as their villages were pillaged, as the plague spread, or as the hurricane hit shore – if they had a system that could unify and organize people as we can do today with social media.

My fear, is that we will use this tool to divide instead of unify. Traditional media and the advertising industry are in deep trouble as people go online to self-select their news and content.

Trust me, I’m your friend

Unfortunately, traditional media (TV, print, and Radio) are under extraordinary pressure not just to maintain ratings, but to increase ratings to subsidize less successful areas of the enterprise. As a result, the content must become more and more sensational in order to keep people watching commercials. If I earned one dollar for every minute of YOUR time that I could waste, would you trust me? Yet people do.

The Terrorist Within

I am terrorized by the notion that Americans will turn against Americans. The problems facing this nation are so complex, so controversial, and so far reaching into the past and the future that it is unlikely that any intelligent person is more qualified than any other intelligent person to hold the highest office. Barrack, Hillary, Sarah, John, would all have the same pressures pushing back on every move leading them down 95% similar paths. None could be better and none could be worse – we’re officially in this together.

So until the super-star with extra-human discernment rides out of the clouds, People should really really be looking for a third way through this. Pure Communism is a Failure, Pure Socialism is a failure, and we are quickly learning that Pure Capitalism also runs out of track.

America’s Uncivil War

The Next Great American Civil War will be a battle against ourselves – all of the artifacts of past generations that pull at our subconsciousness; the reactionary fight or flight instinct of our ancestors. We are being called to something new. Let’s get on with business and find out where this road leads – together.

The Capitalization of Silence

"Silence" by Horst Schmier

Coupon Madness

The business concept of rewards coupons is not new. S&H Green Stamps were among the original applications of the concepts. The fact that coupon cutting is now going on-line is not surprising to anyone. A second major trend is in the area of data collection. Supermarkets have learned that it is valuable for them to “pay” the customer in exchange for data that makes stocking and distribution more efficient. When combined, coupon + data is a tremendously valuable marketing and logistics tool.

The next development of coupon + data model is the notion that if a person likes a product, so too will their friends. This is the coupon + data + association model. Not surprisingly, the marketing value of the combination of these linked data increases almost exponentially.

To Pay Dearly

Brands are now willing to pay dearly for information about the transaction as well as the social networks associated with a transaction. With the ability to track several layers of transaction and association, vendors can paint an extraordinarily accurate predictive model that can be used in their favor – and in competition against market challengers.

The half-life of noise

The hype is brisk and often short lived as most companies eventually run up against the proverbial viral backlash. Someone somewhere can just as easily elevate their own influence by challenging a big influencer. Privacy issues, fair trade issues, corporate responsibility issues are all fair game. Social media forces transparency in an organization too as controlled data can quickly become uncontrollable data.

The battlefield is strewn with the corpses of marketing campaigns gone horribly wrong. Even Groupon, once touted as the champion of mom and pop shops across the land is now accused of dumping economic “sugar calories” into a zero sum game where size does matter – a lot. Groupon is now used by competitors against each other thereby wrecking havoc on Mom and Pop Shops across the land.

Help, I need a Guru

Social Media Gurus continuously pound home the message that they must find their customers grazing in their own pasture and engage them in order to be truly accepted into the herd.  Now the Gurus have all the vendors looking like wolves in sheep’s clothing – nothing could be more obvious or look more ridiculous.

The inherent flaw is that companies are designing and delivering products predicted to interact with people in their own setting. Instead, they must develop a set of products and services that are designed to facilitate human interaction with each other in their own setting – and as a consequence, filter out all the noise that wastes valuable social time.

Coupon + knowledge inventory + anonymity

Learning what people know does not mean that they need to give up their identity.   Joining people who have complimentary knowledge is a superior value creation mechanism than harvesting relationships already played out. The ability to protect and empower the customer in their home setting is the greatest branding opportunity on Earth. The ability to filter out the noise is the single greatest competitive advantage that any marketing campaign can ever enjoy. The ability to bring communities of people together to solve the problems of their own choosing is far more powerful than trying to convince people that they have a problem for which only you have the solution.

This is the capitalization of silence

Image by Horst Schmier

Tattle-Tale Economics

Editorialized Economics

Social media used to be so cool – a way to bypass the mediated reality of editorialized content. Real people coming back with real ideas and real opportunities from the crystal clear waters of cooperative community. Then legacy media and their ad-rev departments started to wonder “Hey, where did everyone go?” Marketer started saying, “Hey, these CPM numbers are F***ed – something is cutting into our pie ?!?!?”

Then came the Social Media Gurus

like the tattle-tale kid brother intent on spoiling a perfectly good game of hide and seek, screeching: “There they are, there they are!!!….Can you see ’em?…see, see, your customers are hiding in the shadows… there, in the shadows….quick!!! Can you see ’em now?.  By the way, pay my fee, buy my book, and did I mention my latest ‘keynote’ yet?”

Next, the Gurus went mainstream as legacy media analysts!! Legacy media picked up the ball on the run-away ad spend. They glossed poetic on the “effects” but not the “causes” of social media. And, OH Gawd, what a nuisance all those pesky bloggers are to the dignified art and science of professional journalism.

A Monster was Born

Facebook declared that people really want to share their personal details with the world, and a monster was born. So now we are stuck with Corporate Media on steroids.  Your data are scraped so they can find you. Images are reproduced infinitely. Lies and deception grow legs half way around the world before the truth can even be awakened from it’s slumber. Say one thing wrong and it haunts you forever.

Casualty or Causality

Social Media has become another casualty of the broken financial system where people fight for artificial scarcity.  It is no longer a means to empower and enlighten, it is becoming another means to exploit and oppress.   Special recognition goes out to all the so-called social media gurus. I can’t blame them though, everyone has the right to make an honest living.

Call it tattle-tale economics

Of Anxiety and Optimism

Keep it Simple

I’ll keep this simple because it is simple.  Most people know exactly what I am talking about.  Most people feel that a huge change is underway.  Most people feel deep in their hearts that whatever we are doing today will be different tomorrow.  Most people feel a strange combination of anxiety and optimism.

It’s Time to Change

No, it’s not just a political change or an economic change or even a social change.  All of these, in their simplicity, would not do justice to the magnitude of what is really about to happen.  The forces now in play will resolve to the equivalent difference between the hunter gatherer civilization, and the Renaissance.   The next economic paradigm will be as different as the abacus is from the computer itself.  Yet, the process by which this is happening is so simple, that the mind is repelled.

Factors of Production

In the Industrial revolution, a machine would make widgets.  It did not matter whether you or I ran the machine, the same widget would emerge.

Today, the machine is a computer.  Your interaction with the computer is entirely different than my interaction with the computer.  In fact, you could swap out the computers and our individual output would remain unchanged.

A HUGE difference

Factors of production are no longer the land, labor, and financial capital of Classical Economic theory.  The factors of production are social, creative, and intellectual capital of  people and their communities.

Classical economic theory is breaking down.  There is a huge change on the horizon. The new economic paradigm is in the process of siphoning off the old economic paradigm.  We’re approaching mid-span; both tanks are half empty or half full, depending on how you look at it.

Confidence is a mixture of anxiety and optimism

I can say with great confidence that anxiety and optimism are the correct emotions to be experiencing today.  So go ahead and tell the children in your life that everything will be OK.

Outsourcing Fail

Gambling with Jobs

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

Modern Globalization is a system

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

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

Focus on Core competency – what core?

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

Rate Of Change is Innovation

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

The Innovation Banker

Future of Banking

When I use the term “Innovation Bank”, people conjure up the image of a cheery place where anticipation reigns as starry eyed depositors arrange their intellectual property in neat cubby boxes, Patents fly like cash register receipts and companies troll the halls looking for a cure for their bottom line blues.

This is not exactly what we have in mind, nor is it too far off either. An innovation Bank is simply a knowledge inventory that contains knowledge assets that exists in the format of a financial instrument and can be deployed for the purposes of increasing productivity.  In the process, it makes 10X more of itself every time it is deployed.  It mints its own money.

The Innovation Banker

This is not much different than a financial bank. In fact, in the financial bank, everyone assumes the borrower has the knowledge to execute the business plan and the bank lends the money. Oh, by the way, the money makes more of itself  10X over (fractional reserve system) every time it is deployed.

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

A Virtuous Circle

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

Ingenesist.com

Music by Phil Felicia

Calculus for Dummies and Capitalists

Mathematics Dysfunction Disorder

I am continuously astonished at the reactions I get from people every time I make a reference to mathematics, especially Calculus. Most people politely glaze their eyes over and stare at an inanimate object somewhere behind my head. Others launch into a diatribe of how the linear thinkers destroyed the world in the first place. Others will simply say, “I have [insert Deficit Dysfunction Disorder here]”

Puzzled by Limits?  Perplexed by derivatives?

The truth of the matter is that everyone already knows Calculus, they solve differential equations all day long – they just don’t know that they already know what I’m talking about.  If you take away all the strange terms, squiggly lines, and alphabet soup notation,….

Calculus is astonishingly simple


  • The Banker does not care about money, he cares about the rate of change of money.
  • The Stock Market does not care about risk, it cares about the rate of change of risk
  • The Politician does not care about votes, they care about the rate of change in votes
  • The Meteorologist does not care about weather, she cares about the rate of change in weather
  • The Pilot does not care about lift, they care about the rate of change of lift
  • The Gymnast does not care about motion, she cares about the rate of change of motion
  • The Artist does not care about color, he cares about the rate of change of color
  • The Doctor does not care about your health, she cares about the rate of change in your health
  • The Baker does not care about dough, they care about the rate of change of dough
  • The Farmer does not care about crops, he cares about the rate of change of crops
  • The Scientists does not care about data, they care about the rate of change of data
  • Google does not care about information, it cares about the rate of change of information
  • Entrepreneurs do not care about knowledge, they care about the rate of change of knowledge
  • Markets do not care about innovation, they care about the rate of change of innovation
  • Our children do not care about our wisdom, they care about our rate of change of wisdom

When people can learn how to understand what they are really doing in instead of what they think they are doing, then and only then, will we be able to see, and subsequently, build the next economic paradigm.  That is why I use mathematics and that is when Social Media Becomes a Science

The Capitalist does not care about value, they care about the rate of change of value

How Knowledge Assets Live In Community

Our culture organizes itself around winners and losers. Corporations reflect this competitive nature to the core of their Capitalist doctrine. Sports analogies abound across the enterprise straight through to the HR department always on the lookout for the most amount of superstar for the least amount of money.

Social media has every industry trying to understand the concept of community.  Nature and our environment continues to demonstrate to humanity that there is far more cooperation going on than competition. There is tragedy looming at both ends of our political spectrum and some people are realizing that we are all in this together.

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

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

Sell-ebrity Sects

Waiting in the grocery store checkout line, there is never a shortage of glossy media about the sex lives of Celebrities. The stories are always the same, only the Celebrities change.

There are no glossy tabloids in the DIY check-out line where the objective is to check you out as fast as possible in order to meet a competitive “service quota”. In either case, however, the consumer is being extorted of value.

A sect is a group with distinctive religious, political or philosophical beliefs. In modern culture the term can refer to any organization that breaks away from a larger one to follow a different set of rules and principles. A sellebrity is someone who sells distraction for a living – they may talk about something that sounds like productivity, but it is really a distraction designed to maintain a status quo.

When marketers want you to do the same thing over and over again, you get Sellebrity Sects.  When marketers want you to change your behavior, they remove the Sellebrity sects.  The absence of sellebrities is equally interesting, and somewhat counter intuitive.   Yet, consumers think it is the exact opposite.  In either case, the consumer is extorted of value.

Sellebrity Sects refers to a set of rules or principles set out as different from the rest and used for the specific purpose of liberating you from your values; your time value, social values, financial values, even your family values.

Social media is introducing a host of new Sellebrities peddling some object designed to fortify their credibility, usually a book tour, keynote address, “Reputation”, social currency, or an A-list client. The ‘pitchman’ preoccupies the consumer into standing still long enough to create an arbitrage position for those who can exploit the TIME that you are not acting – either for branding or automating. When the arbitrage position collapses, a new sect is formed and the game continues.

Keep in mind that “Value” exists in many different forms, the game is intense, Time is the currency, and the story never changes. Look at the sellebrities all around you. Ask yourself why they are there. Try to identify the sects. Guard your social capital, creative capital, and intellectual capital very carefully – use it to increase your productivity alone.  Most of all, be different – they will either ignor you or pay you.

The True Value Calculation

COAL-articleLargeIn case anyone is wondering if Social media can drive Social Priorities  against Wall Street Priorities, they need not look any further than the cover of the New York Times. Here is a story from the August 31st edition about banks that step away from no-brainer money making business venture because of the social risks to their reputations and therefore, their bottom line.

It is obvious that new sources of energy will be hugely lucrative in the future – except when blowing up pristine Appalachian mountain tops or releasing vast CO2 emissions cracking oil from Canadian sands – both perfectly legal enterprises.

In the past, the struggle between those in favor and those opposed to, say, a coal extraction project played out largely in private and was heavily biased toward those with the deepest pockets. In the past, the developers had an advantage of vast money reserves to wage legal battles, political wrangling, and public relations campaigns against the lowly community action members. Now, this fountain of money may dry up in the future if banks step away, politicians become wary, and the public becomes increasingly informed of the true value of all alternatives.

“We’re taking a much closer look at a much broader variety of issues, not all of which are captured under state and local laws,” said Stephanie Rico, a spokeswoman for the environmental affairs group at Wells Fargo.

These dynamics are converging on something called a “True Value” Calculation. The True Value Calculation is the expanded ROI of a business venture which includes the positive and negative impacts on a much wider body of stakeholders in the sum total of viability. In the very near future, we may find that the True Value Calculation will become the rational basis of our democracy as social media aspires to the role of social vetting mechanism and politicians become increasingly irrelevant to anyone but each other.

An IPO For Humanity

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

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

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

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

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

In the Age of Social Media

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

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

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

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

We’ll hold an IPO for Humanity

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

The only thing missing is a system that can articulate social capital, creative capital, and intellectual capital instead of land labor and financial capital.  This system can be built today.

The Last Mile: Social Media Battleground

Sure Bro…Facebook, Twitter, and Linkedin are great for broadcasting across the Ocean, but how good are they for meeting your neighbors? As wonderful as all this global chatter appears, nothing tangible happens until the rubber meets the road.

Don’t Worry, Be Neighborly…

Nothing “Economic” can happen is Social Media until real people get together to build things. Sure, Marketers are trying their hardest to penetrate the last mile, but communities are trying to defend it too. This is the final battleground of Social Media. The end game must be as follows: Social priorities must ultimately drive Wall Street priorities – not the other way around. That is the only sustainable thesis for the next millennium.

The following video describes how the components of the next economic paradigm must act locally, but share globally. For anyone wondering what to do next or where the great opportunities are, think about building out the Last mile of Social Media.

Social Capitalism; The Scarce Resource is Time.

The difference between market Capitalism and Social Capitalism is that factors of production are reversed.  In Social Capitalism, creative capital, intellectual capital, and social capital are the “tangibles” while land, labor, capital become the “intangibles”.

But the currency for social capitalism must still represent productivity – otherwise nobody would “work” for it.   Productivity is defined as “all the stuff we can make within a certain period of time“.  Market capitalism is built on “stuff” while Social Capital is built on “Time”.   Waste stuff and you’ll lose money.  Waste time and you’ll lose social currency.  Every living person is allocated a certain amount of time on Earth.  Time is impossible to forge, debase, or otherwise counterfeit – unless stolen from someone else – as such, Time makes an excellent currency.

What is the ROI on Land, Labor, and Capital in Social Capitalism?  ROI is wholly dependent on the knowledge assets deployed upon that Land, Labor, or Capital.

So what exactly is the underlying asset that supports Social Currency?

WIKiD Tools introduced the idea that everything we produce will ultimately come as a result of transforming data into information, or transforming information into knowledge, or transforming knowledge into innovation, or transforming innovation into wisdom.  We can articulate a very powerful Equation to model productivity in Social Capitalism.  This equation can be translated as follows:

Wisdom is proportional to the rate of change of innovation with respect to time.  Innovation is proportional to the rate of change of knowledge with respect to time.  Knowledge is proportional to the rate of change of information with respect to time.  And Information is proportional to the rate of change of data with respect to time.

Note that in each case, the “rate of change” (hence, time) is the underlying asset.

The creation of Social Currency:

Sounds complicated?  Well, it happens every day in every city where a person sees an important issue and convenes a conference where they invite relevant speakers and guests into the discussion.  It happens when a manager notices people talking about something important to them and incorporates it into their job description.  It happens when a teacher helps a student to the next level.  It happens when someone spends some of their time so that you can enjoy more of yours.  It happens with stay at home moms.  It happens with volunteerism.  It’s created by mentors, parents, neighbors, civil servants, and everyday citizens. It is created in Communities, not factories.  It is created by time.

***

Please Vote for The Ingenesist Project to present at SXSW 2011

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

War Is A Social Agreement

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

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

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

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

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

Stock Harmony; Exchange of Social Value

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

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

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

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

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

Raising Money

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

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

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

Currency must act as a proxy for human productivity;

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

It will all come down to structure.

Independence Is A State of Mind

Independence is a state of mind. Americans have always chosen independence – and they will continue to do so. It is often convenient to let ourselves trust elected leaders and the esteemed business titans to do what is in our best interest. Don’t be fooled, this is “trust”, not dependence.

It is likewise unwise to underestimate the independence movement – independence from corrupt currency, independence from fossil fuel, independence from corporate greed, independence from divisive politics, independence from endless war. Just when everyone thinks that Americans are up against the ropes, they come up with an idea so radical, so creative, and so astonishingly consciousness-altering, the rest of the world just shakes their heads in collective disbelief.

That is where we are today. Something extraordinary is about to happen in the way Americans organize themselves. Nothing is sacred, no one is immune. The next economic paradigm will alter the course of civilization.

All stages of human development were derived from the prior stage of human development by integrating the tools of that prior stage. For example, the agrarians integrated the tools of the hunter-gather such as using the chopping rock to till a field for planting – and so forth. Likewise, the industrial revolution integrated the tools of the scientific revolution; mathematics, chemistry, and engineering. Earlier this century, the computer age integrated the tools of the industrial revolution, etc.

The next economic paradigm will be derived from the Knowledge economy by integrating the tools of the knowledge economy; these are The Internet, Social Media, mobile communications technology, etc…

Americans will chose Independence every time.

Will Social Capitalism Replace Market Capitalism? (Parts 1&2)

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

Part 1

Part 2:

Tangential Innovation Communities

In an earlier article (Cluster Funk) I argued that Industrial clusters can lead to stagnation, vulnerability to external shocks, and the erosion of social capital. Since I’m not one to complain without also providing an alternative, this article argues that the future will favor technology clusters rather than industrial clusters.

Make it up as you go along

Technology clusters serve what we call the tangential innovation market – or diversity innovation dynamics. Don’t worry if you have not heard of these things, I’m making this up as I go along.

For example; composite materials technology is very useful in many applications like aircraft, medical devices, transportation, recreation, and even musical instruments. The airplane company has no intention of building cellos and the automobile company has no intention of building snow boards.

Why compete when you can collude?

As non-competing industries, they can readily share technology and people. The system is naturally diversified and inoculated against stagnation, shocks and silos; if one industry encounters hardship, people and capacity can shift easily to another industry preserving knowledge and expanding social networking benefit while the damaged industry heals or dies off. Corporations may not like this idea, but social networks should.

The Ingenesist Project goes a step further by modeling the business structure of tangential innovation markets as an integrated financial system. Suppose and Originator Company has a promising new composite technology idea but is unable to meet the ROI requirements of their stockholders? Today, such innovation would be shelved. In an innovation economy, tangential markets are factored into the business case.

New applications of social media will identify other industries that would be most worthy borrowers of your technology, if developed. The Innovation Bank can estimate the return on investment that can be expected through the tangential market as if it were another customer. The additional revenue projection would allow the originator to meet the ROI requirement prior to committing development funds.

Intellectual Property can be managed with contracts enforced through social network vetting. The originator can hold an option to see further development conducted by tangential users effectively multiplying their R&D reach and further adding to the expected return.

Then something magical will happen. At some point, the value of the tangential innovation market would exceed the value of the origination market. The originator will begin to specialize in pure innovation as a primary product and airplane applications as the secondary product. As all industries in the technology cluster begin sharing technology among each other, R&D costs and risks are effectively spread across industries. As risk is diversified away, the cost of venture capital approaches single digit rates.

Then, another magical thing will happen. As the mixing of people and ideas accelerates, the definition of corporate boundaries will become more fluid. Ownership will exist in the form of contracts among entrepreneurs now defined by social networks, options, and derivatives in a diverse innovation enterprise.

While the boom bust cycle of Industrial Clusters has brought us a great distance in economic development, technology clusters in an Innovation Economy supported by social networks may turn out to be vastly more efficient at economic growth without the perils of Cluster Funk.

Cluster Funk

I recently attended another one of those economic development summits where a bunch of people with long titles gets a chance to speak on a panel touting the mysterious benefits of a mysterious innovation clusters that create mysterious wealth that can only be realized if their mysterious department is funded.

Nearly every speaker concluded with the following paraphrase: “if only government would fund this or that, everything will be fine”, or, “if only corporations would fund this or that, then we’ll all be better off”

Uhmmm…sorry to break the news, it ain’t gunna happen.

Innovation clusters are all the rage in regional economic development circles. Actually, they are “industrial clusters” because several companies in similar industries collocate in the same geographical area. The industrial cluster then attracts supporting industry and often causes the migration of educated and motivated people to the prospect of jobs. I suspect the ‘innovation’ moniker comes from the notion that new ideas will somehow result from similarity of ideals and purpose.

Group Think Tanks

There are, however, a few drawbacks to industry clusters; they are vulnerable to stagnation, silos, and external shocks. As companies become organized and technologies mature, patents and trade secrets take hold. As they ‘go public’, SEC regulation effectively places a gag order on everyone and sharing slows while stagnation sets in.

Soon after, dozens of nimble companies consolidate into a single giant to achieve economies of scale. Finally, silos form under the weight of multiple layers of management while jobs are mechanized or outsourced.

Then, something somewhere happens to shock the cluster; the end of the cold war leveled the So Cal aerospace cluster. 9/11 busted the Seattle Aerospace cluster. The dot.com bomb stunted Seattle, Silicon Valley, and Route 128. Hurricanes and environmental disasters hit the petroleum cluster, stem cell and genetic engineering legislation stalled biotechnology, and corruption continues to shock financial institutions. At the end of the cycle, companies divest, people defect and a new planet starts to form someplace else.

Remember “scrubbing bubbles”?

While occasional cleansing, in a Schumpeterian sense, is good for industries, the extreme volatility takes a horrendous toll on that invisible turbine of the economic engine – social fabric. Families, friendships, professional networks are strained or collapse and those who dedicate their life to a career path – the pure innovator themselves – can be left marginalized by obsolescence.

The term “Innovation Clusters” makes for a good soundbite for politicians because it fits on the “Jobs R Us” banner they can stand in front of (thumbs up) for the next election cycle.   The term keeps funds flowing to organizations to publish studies that conclude that more studies are needed. Maybe these summits ought to be renamed to Cluster Funks because that is largely what they actually promote.

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