Think Bigger. Aim Higher. Go Further.

Tag: economic growth

Social Media as a Vetting Mechanism

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Where the vetting mechanism fails, the system fails. This has happened in countless instances from the current financial crisis to nearly every product, market, environmental calamity, or political failure in recorded history – the referees who were supposed to keep their eye on the ball, did not. Likewise, where a vetting mechanism is effective, the system is efficient.

EBay does little more than defend the vetting mechanism (feedback system) and entrepreneurs do the rest. The credit score allows companies and people to capitalize and securitize assets. The US legal system keeps the game of commerce as fair as practical. Police officers and school boards keep our society safe and smart. We often overlook the importance of vetting in our communities.

Today, we find severe problems in finance and government and people are investing their knowledge assets in social media as the place to “store and exchange” their present and future productivity – instead of debt. As such, social vetting is taking many different forms to validate, qualify, and quantify those assets.

While the progression may not be noticeable, there will be a tipping point where the medium has built enough trust that it can support a currency. This new currency needs to be only a little bit more “trustworthy” than the currency it will replace. This is the point where knowledge becomes tangible.

Gross National Happiness

Continuing our series on the Search for the Next Economic Paradigm, we feature an unlikely authority on Economic development. The Gross National Happiness Metric hails from the Himalayan country of Bhutan listed by the UN as a “Least Developed Country”.

The linked presentation below reports on the GNH (Gross National Happiness) conference. Yes, people are getting together for an annual GNH conference just like the famed GNP (Gross Domestic Product) conferences elsewhere.

Hypothesis: Paradigm shift related to global societal development

• ‘Economic growth’ as the dominating paradigm of ‘progress’ is increasingly under challenge
• Growth of GDP is unsustainable and does not lead to more happiness
• We are in a process of Redefining Progress and Global Transformation
• Needed: Multi-stakeholder, multi-cultural and intradisciplinary as well as participatory public support networks for an emerging new development paradigm

The Production of Happiness

A Definition for Innovation Economics

unimotocycleInnovation economics is an economic doctrine that reformulates the traditional model of economic growth so that knowledge, technology, entrepreneurship, and innovation are positioned at the center of the model rather than seen as independent forces that are largely unaffected by policy.

Innovation economics is based on two fundamental tenets. One is that the central goal of economic policy should be to spur higher productivity and greater innovation. Second, markets relying on price signals alone will not always be as effective as smart public-private partnerships in spurring higher productivity and greater innovation. This is in contrast to the two other conventional economic doctrines, neoclassical economics and Keynesian economics.

A Definition for Innovation Economics

Building a Better Entrepreneur; Google 10^100

Google 10^100 award voting is Launched.  There are two sectors that we believe would have the greatest impact on the greatest amount of people; building a better banking system and funding social entrepreneurs.  You can’t have one without the other – if Google funds these two sectors in concert, the outcome would be incredible.

Build A Better Bank

In the old banking system we assume that we have the knowledge to execute a business plan and we go to the bank to borrow the money.  In the new banking system, we will assume we have the money and we go off in search of the knowledge.  Social Media is an excellent “public accounting system” for knowledge assets.

Our current banking system has gotten it backwards.

Technological change must always precede economic growth. The supranational currency may be backed by productivity and not debt.  Social media provides an excellent platform upon which to design such a banking system. People trade “social currency” at a tremendous rate.  This is evidenced by the amount of destructive innovation is occurring in many legacy sectors due to social media.

Better Banking Tools for everyone

“Partner with banks and technology companies to increase the reach of financial services across the world. Users submitted numerous ideas that seek to improve the quality of people’s lives by offering new, more convenient and more sophisticated banking services. Specific suggestions include inexpensive village-based banking kiosks for developing countries; an SMS solution geared toward mobile networks; and ideas for implementing banking services into school curriculums”.

Suggestions that inspired this idea

1.    Enable prepaid cell phone bank accounts for millions of people working in the informal economy
2.    Create a community-level electronic banking system for rural areas
3.    Build IT-enabled kiosks which provide access to financial services
4.    Create a single world bank or supra-national currency, uniform rules and transparent public accounting

Fund Social Entrepreneurs

Venture Capital is ridiculously expensive. Corporate innovation serves shareholders value over social priorities.  Some say that the financial risk of funding innovation is too high. The top ten reasons why start-ups fail are due to knowledge deficits, not money deficits.  A new banking system that trades knowledge as currency would solve this problem.

The key is to match most worthy knowledge surplus to most worthy knowledge deficit.  Google is perfectly able to build a search app for knowledge assets if there were an inventory of knowledge assets.  With the most worthy match, Risk can be reduced and new financial instruments can be developed such as the innovation bond, innovation insurance, tangential innovation markets, and destructive innovation transition contingency options, etc.

Help social entrepreneurs drive change

Create a fund to support social entrepreneurship. This idea was inspired by a number of user proposals focused on “social entrepreneurs” — individuals and organizations who use entrepreneurial techniques to build ventures focused on attacking social problems and fomenting change. Specific relevant ideas include establishing schools that teach entrepreneurial skills in rural areas; supporting entrepreneurs in underdeveloped communities; and creating an entity to provide capital and training to help entrepreneurs build viable businesses and catalyze sustained community change.

Suggestions that inspired this idea

1.    Provide targeted capital and business training to help young entrepreneurs build viable businesses and catalyze sustained community change
2.    Create a non-profit, venture capital-like revolving fund to invest in high-impact local entrepreneurs
3.    Send young American entrepreneurs to underdeveloped communities to help create small businesses that would economically benefit those communities
4.    Create schools in rural areas to teach local people how to become entrepreneurs
5.    Create a private equity fund to help immigrants in developed countries finance business development in their countries of origin

Listening For What People are Listening For

Communities organize themselves:

Most people do not listen completely in conversations because they are too busy planning their response to what they think the other person is going to say.   Often what seems like astute response is a template that may fit a moment but can kill a conversation.  The successful conversation occurs when all participants speak to what the others are listening for. Not an easy trick.

I Heard the Ocean

When I first got into this social media stuff, I had a lot to say.  Then I figured out that nobody was listening; I learned a lot since then. As soon as I started to listen, people started listening back.   Today these people are my heroes, I hang on their every word, their generosity is roughly 70% of my social media world – where did they come from and where can I find more people like them?

Well, that’s all I have to say about that, so let’s listen to Janet Fouts. Part of her quote is a product pitch, but that illustrates an important point in Innovation Economics; conversation is currency and this currency has value:

“Before you dive into social media for any reason, listening should be your first step. What are people talking about and where are they doing it? Is there buzz out there about you or your product that you didn’t know about? Who should you be connecting to? Has there been a recent event you want to find out more about?

Setting up listening tools from free to paid versions can give you a tremendous amount of information and help you find even more things to talk about. I’ll give working examples of listening tools, outline a strategy for effective listening and give you some ideas to use this information in a real world setting.

This short 30 minute session will include links to both free and paid listening tools and creative scenarios for use.

You will learn how to:

  • Set up a set of listening tools to cover multiple platforms
  • Identify the right listening tools for your own needs
  • Identify the best networks for you to participate on
  • Evaluate what you find
  • Creative ways to engage and communicate your message
  • Find new topics to populate your blog and online discussions
  • Evaluate how effective your social media campaign is

Thanks Janet, Now here is a hint at the product pitch at Conversational Currency:

“In a few months, events such as Janet’s may need not  be funded by the participant.  Rather, our sponsors will support events for those most worthy of  participating.  Why would sponsors do such a thing?  Maybe they too are learning to listen, after all, roughly 70% of the US economy is consumer spending.  Will roughly 70% of ad budget be allocated on listening?”

What does all this mean?  keep listening!

How Does Social Media Affect GDP?

Gross domestic product (GDP) is a basic measure of an economy’s economic performance.  GDP is the market value of all final goods and services made within the borders of a nation in a year measured in Dollars.  Globally, GDP is equal to the total monetary income generated by production of goods and services in a country.

Gross Domestic Product does not take into account many important variables accelerated by Social Media and growing exponentially in economic influence.

GDP counts only industrial output, but…

Industrial output is becoming increasingly dependent on social networks and social innovation.  GDP does not take into account such non-market transactions such as open source development, crowd sourced innovation, conversational currency, social capital, creative capital, or intellectual capital exchanged between people in diverse social networks

GDP reflects Wall Street Priorities, but…

Wall Street Priorities are increasingly challenged by social priorities. GDP does not account for sustainable business practices, heroism, mentorship, activism, volunteerism, social networking, uncompensated innovation, and community involvement.  GDP does not account for quality improvements and social multipliers such as aggregation of social media, increasingly powerful computers, acceleration of conversations, online etiquette, multi-media, and social editorial services.

All of the above exclusions are valuable, because…

These exclusions add value, they store value, they create value, they distribute value, and they exchange value.  If we called it a financial instrument that is highly convertible, extremely liquid, and easily transported it would describe a currency by any definition of the word.  For the purpose of this discussion, call this currency the “Rallod” – or Dollar spelled backwards.  The Rallod is the currency of the new American economic and production paradigm.

The Invisible Currency

For Example; Twitter is doing in Iran what America has been trying to do in Iraq for 8 years.  Face book, LinkedIn, and the entirety of social media space is producing many times the effectiveness of the $200 Billion U.S. advertising industry in terms of driving people to specific action. Social vetting platforms such as blogs, commentaries, groups, and content aggregation have increased the efficiency of markets by vastly reducing arbitrage opportunities while also identifying scams and corruption.  Human productivity is being converted to Rallods and there is no politician, executive, or white collar criminal anywhere in the world who is not deeply concerned about this invisible currency.

The Best is Yet to Come:

The “Last Mile of Social Media” is analogous to the last mile of broadband Internet – the marginal cost of reaching every person in every household and tightening social networks to extremely high resolution, is diminishing rapidly.   The Last Mile will bring communities together to vet local politicians, corporations, products, and policies.  The Last Mile will formulate a knowledge inventory combines with close proximity of knowledge assets and a percentile search engine to predict outcomes.  The Last Mile of Social Media will duplicate every function that exists in a corporation except it will be built upon the social media operating system; aggregated, amalgamated, sustainable, and reflecting social priorities.

So what happens to GDP?

GDP by current measure will reflect only the value of the “dollar”, not necessarily the value of the human productivity.  Perhaps it already does.

Social Media; The Engine of New Economic Growth

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Business Models of the Future:

The great new social media business models of the future will be in the areas of “The Last Mile of social media” and “Social Vetting mechanisms”.   I have written about these two elements in the past.  However, this article will attempt to focus on how the future engine of economic growth can use social media platforms to power social capitalism.

The Last Mile:

The Last Mile of social media is where the rubber meets the road.  I can chat with people all over the world on Twitter and Facebook, but nothing happens until I walk out of the house and meet real people in real time to create a real business that really increases real human productivity.  If I can accomplish that, monetization is simple matter.

If everyone is harvesting ideas from all over the world, Last Mile technology is the key to bringing these ideas to the ground.  The new social enterprises will develop, support, enable, and service the structure for innovation in neighborhoods and communities.

Feel the Burn:

To understand the power of this paradigm; there is little doubt that the leader of the free world was elected by the Last Mile.  That is huge.  Now, when the Last Mile is in trouble with mounting layoffs, foreclosures, and wealth destruction, eyebrows are raised, headlines make the first page, and everyone is wondering what will happen in to the Last Mile.  In 1992, this author saw Los Angeles burn over a whole lot less than what’s coming down the pipes today.  This is not a game, this is very serious stuff.

Social Vetting:

Social Vetting, on the other hand, is less understood, but like a tornado there is nothing subtle about the forces that it can impart against the darkness of secrecy.  All markets become more efficient in the presence of an effective vetting mechanism, as such, monetization is a simple matter.  Conversely, the absence of vetting is the root of all corruption – as we are now painfully aware.

Begging for Mercy:

To understand the power of this paradigm; Facebook was recently brought to its knees by Social Vetting.  First, a social watchdog group noticed the change in the terms of service and set the dials on “viral”.  Facebook users organized immediately and lay siege to the core validity of a 3.5 billion dollar new media titan.  Within hours, Facebook was backpedaling. The 300 billion dollar marketing industry, ravenous for viewer impressions, was sent back to the drawing boardroom.  Meanwhile, legacy media spin took pot shots at Facebook’s inability to monetize the value it claims to create.  Again, this is not a game, this is serious business.

Role play

In each of these examples social media responded effectively to an existing injustice.  This presents the dire question:  If the Last Mile and Social Vetting can have such a profound effect in the REACTIVE role, what would be the underlying dynamic if applied in the PROACTIVE role ?

The Engine of Economic Growth:

Consider this: Social media has no problem scaling up, rather, it has a problem scaling down.  The Last Mile and Social Vetting represents the compression cycle of the new economic engine.  The spark of innovation ignites the secret sauce to scale upward.  With a repeatable cycle, we can literally create an engine of economic growth cycling from down-scaling to up-scaling, and back to down-scaling, and so forth, forever.  Each combustion cycle literally pumps value into an economic system.

Master of Puppets:

I’ll let the reader now ponder the cause and effect sequences of this proposition.  But I will leave one hint: Wall Street becomes the servant, not the master.  As such, monetization becomes a simple matter.

The US Financial System – Tail Wagging Dog

The financial system is not the problem.  The Innovation System is the problem – or did you notice that we do not have an “innovation system”?  Finance and Innovation in the US has engaged in the dangerous dance of tail wagging dog.  Innovation is as Wall Street does; not the other way around.  This is wrong, this is very wrong.

Doers, not shakers

[Our economic strength is derived from the doers, the makers of things, the innovators who create and expand enterprises, the workers who provide life to companies and, with their earnings, support families and invest in their future… This is what drives economic growth.] – Barack Obama

These are sobering words.  It make one wonder how everyone else makes a living; the brokers, the agents, the middlemen, the gatekeepers, the spinners, the flippers, the money managers, and everyone else in the game with their hands “in the flow of money” dragging the system into a tailspin.  Many of these people publicly criticize the working class, who have finally run out of steam, for gumming up their game.

It is also amazing that the engineers, educators, technologists, medical professionals, and public servants could produce so much for so long; enough to feed everyone else – except, as of recently, themselves.

[The financial system is central to this process, transforming the earnings and savings of American workers into the loans that finance a first home, a new car or a college education, the credit necessary to build a company around a new idea.] – Tim Geithner

Meet the Master:

The financial system is supposed to be the servant, not the master.  Innovation takes time, effort and resources before the payback can be realized.  For this reason only, the financial system bridges that time gap to allow for increased future productivity to generate new wealth for use by all.  That is the only reason why the financial system should exists.  But somehow we have gotten it backwards.

We got it backwards:

Technological change must precede economic growth.  We are going about the process of globalization as if economic growth can precede technological change.  The invention of the wheel, wedge and the pulley came before the invention of the Collateralized Debt Obligation (CDO) – there is no excuse for this oversight. This is clearly unsustainable and the process must be reversed.

An easy fix, almost:

The Ingenesist project specifies 3 web applications that will allow social capital, creative capital, and intellectual capital to become tangible outside of the bloated and failing financial system.  These applications will make innovation success predictable.  If success is predictable, then cash flows are predictable.  Using the same calculus as Wall Street, the cash flows can be combined, diversified, and split up into innovation bonds with superior returns that can be issued to fund new and sustainable innovation enterprise. Problem solved.

3 steps away from a quantum leap:

This can be done today playing by the rules and using existing technology – 3 simple applications.  That is how close we are to achieving the most important evolutionary step in human history.  The Government needs to empower the people to release themselves from the shackles of debt created by those who create little else.  For this reason, Obama is on the only correct path – buying time so that this important social media technology can mature.

The Ingenesist Project

The Ingenesist Project; Putting an End to Debt Economics

The U.S. National Debt is over 10 trillion dollars. Assuming deficit spending stops today, every man, woman, and child in the US is responsible for $33,500.00.

This means that $33,500.00 of every person’s productivity has already been spent. Obviously, the only way to pay the debt is to increase every person’s productivity by exactly $33,500.00.

The only sustainably way to increase human productivity is innovation. The Ingenesist Project is an open source economic development program that will meet this challenge head-on by inducing an Innovation Economy.

The Innovation Economy:

The Ingenesist Project has identified three relatively simple web applications which, when applied to Social Networks, will allow human intellect, social capital, and creativity to become tangible outside the construct of Wall Street, Corporations, and Government.

The Ingenesist Project will build a mirror economy trading rallods (‘dollar’ spelled backwards) in an innovation economy. Rallods will be backed by “innovation” whereas dollars are backed by “debt”, hence, a mirror economy.

The Ingenesist Project has a Patent Pending for an Innovation Banking System and will release all rights to the public domain. By definition, The Ingenesist Project holds 10 Trillion rallods – and counting – to spend on development.

The Ingenesist Project will generously award rallods on a reputation scale for posts to The Ingenesist Project public forum toward the design, development, and improvement of the three web application (did I mention TIP has 10 million million rallods to blow?).

The New ‘Stock’ Market

Countless “new-to-the-world” business plans and patentable methods, systems, and devices will result from the The Ingenesist Project.

Entrepreneurs are encouraged to patent, protect, or contain all intellectual property that they develop and become as wealthy as they possibly can under the condition that they pay royalties, equity, or options to their knowledge inventory.

The entrepreneur’s “Secret-Sauce”, however, must be shared with The Ingenesist Project in order to improve the Percentile Search Engine Algorithm for the benefit of the public domain.

Participants eventually be able to trade services among each other in Rallods.

Objective:

Deficit spending is unsustainable. The existing financial system has exceeded its ability to pay back the debt and is being consumed by the interest on this debt.

As the dollar crashes, society will need an alternate economy to trade upon – one whose currency is backed by something tangible – our own productivity!

The dollar may eventually peg at some exchange rate to the Rallod.

More Information:

Please review www.Ingenesist.com
Please review Articles in Sequence (18 short articles explain the concept)
Please review Patent Pending

<a href=”http://technorati.com/claim/qy3cxbstqg” rel=”me”>Technorati Profile</a>

Economics of Innovation

Every time humans invent better ways of doing things, the economy gets a little bigger. This is a simple idea. The cave dwellers discovered that they did not have to travel as much hunting and gathering if they could sharpen a rock enough to chop a tree down for firewood or for spearing animals.  That same tool helped them to dig holes to plant seeds.  By growing food and domestication animals, they could stay in one place and conserve energy.  By living in cities, the division of labor led to more efficiency as the farmer, metal smith and rancher bartered their services.  Enough surpluses were created so that a leisure class was free to develop philosophical thought leading to early scientific principals.

After a while, the invention of the printing press greatly advanced the availability of formal education.  In the Early 1800’s, Eli Whitney stunned the world first with the cotton gin and then with his concept of “interchangeable parts” where he disassembled ten working muskets, scramble the parts and reassembled ten working muskets.  What seems trivial today lead to great advances in the industrial revolution, becoming further refined in the manufacturing economy.  Computers then ushered in the Era of Information followed by the knowledge economy that we live in today.

At each stage, there was a quantum leap in human productivity and financial wealth.  Obviously the two are related.

If we look at this history from the big picture, we notice that each level of human development was derived from the prior level by integrating the tools of that prior level.  As such, the knowledge economy was derived from the information era by integrating the computer tools leading to the Internet.  The agrarian economy was derived from the hunter-gatherer tribes by integrating the wheel, wedge, and lever into agriculture and livestock.  The industrial revolution integrated scientific principles from the Renaissance. This is fairly consistent.

If we look at this history from a microscopic view, we see that no single idea drove human development, rather, billions upon billions of little ideas from many diverse sources combined in unique ways to form larger ideas which then combined to form even larger advances eventually leading to those big innovations that we see as the milestones above.

Also, we notice that the over time, rate of change at which these ideas have been combining is getting faster and faster.  The hunter-gatherer phase lasted 2 million years, The agrarian age lasted about 40,000 years. The scientific revolution lasted 1500 years.  The knowledge economy is barely a single generation in play.

These are important concepts because later, when we build a mathematical model for the next economic paradigm, we will use a few tricks of calculus called the “derivative” and the “integral” to describe how things change over time so that we can measure and analyze productivity and wealth creation in the new economy.

Finally, we ask, what comes after the knowledge economy?  There are two things that we can be certain of.  The next great leap in economic development will be derived from the knowledge economy by integrating the tools that we developed in this knowledge economy.  I strongly suspect that computer enabled society – or social networking will have something to do with it.

Welcome to the Innovation economy.

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