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Definition Of Innovation

Figure it out as you go along.
Image by David Mark from Pixabay

It is not as easy as it may seem to find a working definition of innovation. There are as many definitions as there are experts claiming to hold the secrets of innovation. The simplest definition of innovation that I could summarize based on top sources is as follows:

Definition of Innovation 1: A new idea resulting in an economic outcome.

The problem with this definition is that you cannot solve solve one equation with two or more unknowns. What is new? What is an idea?, and What constitutes an economic outcome? Finally, How can we identify innovation before it happens? These are significant barriers. I spoke with one VC about this problem and his response was:

Definition of Innovation 2: “I know it when I see it”

A definition is supposed to be distinct and precise. One should be able to predict, identify, or anticipate the object based on its definition. It appears that innovation can only be defined after the fact and not before, by most accounts. As a result, we treat innovation as if it were random or accidental or so unique that only a gifted few possess the ability to achieve it. This is important because innovation is the single most important determinant of achieving a sustainable economic environment.

Economics is the science of incentives. Calculus is the science of change.

When I was about 6 years old I got my first bicycle. It was a single data point sitting under the Christmas Tree. It came with a little pamphlet with lots of information on how to use it. My first attempt started just like the pamphlet described, until I crashed. The promise of stylish and speedy mobility was a strong incentive. Each time I crashed, my knowledge of bike riding increased at a very rapid pace as I developed new ideas about balance, coordination, and impact. I frantically innovated solutions to my problems until I was successful. As I progressed to bigger bikes and various motorcycles, I developed the ability to anticipate reactions to future obstacles based on a so called wealth of past experiences. I had developed Wisdom.

Toddlers can be readily observed innovating ways to carefully descend the stairs backwards on their tummy. This thought sequence repeats itself continuously throughout their formative years and into adulthood. A wise person is generally witnessed a great many outcomes and always seems to know what to do, when to do it, and why it should be done.

Hang on as this is going to get a little bit wonky:

Most engineers and scientists would recognize the following as a differential equation. The relationship between data, information, knowledge innovation, and wisdom are classic derivatives:

  • The value of information is derived from the value of the data
  • The value of knowledge is derived from the value of the information
  • The value of innovation is derived from the value of the knowledge
  • The value of wisdom is derived from the value of the innovation

This is the basis of the WIKiD Tools algorithm (Wisdom, Innovation, Knowledge, information, Data) developed by The Innovation Bank

Definition of Innovation 3: Innovation is proportional to the rate of change of knowledge with respect to time.

I certainly don’t expect a call from Merriam-Webster or widespread agreement from the innovation consultants any time soon. What is important is that this definition does not contradict any of the other definitions. And, it can be easily expressed as an algorithm suitable for machine learning, with data points that can be identified, measured, and validated.

We can now go about he business of creating conditions where knowledge is allowed to increases at a very high rate. Innovation cannot happen in a vacuum.

The Holy Grail of Finance

Predicting the fact of Innovation before it happens is the holy grail of finance. While many corporations and venture capitalists are somewhat successful at identifying a single product that will produce an economic outcome, they do it at the expense of foregoing the ecosystem from which that product arose. As such, predicting the Return on Investment (ROI) may be easily skewed by ignoring the broader social consequences of the product. Deficiencies in data, information, knowledge, and wisdom are the leading factors in start-up failures, not innovation.

Using a sports analogy, competition is a good way at arriving at the best solution to a specific objective. But in order to arrive at a single winner, you must first manufacture 10 times more losers. While conflict and competition is indeed entertaining, this is a very expensive and inefficient way to go about meeting the needs of consumers, let alone a crowded planet.

Intrinsic Value

Innovation is ubiquitous, interconnected, and interdependent on a sequence of factors shared across diverse people and places. Innovation is the intrinsic characteristic of our species and wholly responsible for the advancement of civilization itself. Everyone groans about how money is losing its intrinsic value because of inflation, corruption, or runaway national debt. As a result, cryptocurrencies conveniently drop the idea of intrinsic value altogether. People look to government, charismatic leaders, academia, and industry to solve staggering systemic risk and environmental collapse – to no avail.

Yet, all along, there may just be an extremely simple and inexpensive way to represent the intrinsic nature of innovation as the basis of value that we can quite literally pay for our own preservation. The following chapters describe this method. Please join us at The Ingenesist Project

The Highest and Best Use for Blockchain Technology

earthshot2The hallmark of a great society is the ability to capitalize it’s needs, not it’s arbitrage opportunities.  The Highest and Best Use for Blockchain Technology must be to reduce the cost of capital by decentralizing risk, not necessarily money…yet

Blockchain technology carries a promise of great opportunity, efficiency, and fairness in business operations and governance for an entire struggling planet. If that is true, then Blockchain technology should be integrated broadly and uniformly across society and within as many existing institutions as possible. If that is true, then Blockchain development should not be the exclusive domain of a single sector, such as banking. Nor should Blockchain development reflect priorities of highest ROI from VC start-ups. Likewise, purely Decentralized Autonomous Organizations (DAOs) may carry the risk of operating in an extralegal sector without legal recourse, thereby increasing net volatility, not decreasing it.

A different track is required.

The primary objective of Blockchain technology must be to reduce the cost of capital by decentralizing risk, not necessarily money. The highest and best use for blockchain technology is therefore insurance, not necessarily banking. In doing so, blockchain innovation can then be applied broadly, evenly, and intentionally across the economy. This makes sense because when building anything complex or important, one logical piece needs to go in front of the next logical piece regardless of it’s individual ROI, because the collective ROI is the true basis of valuation. If people tried to build an airplane in the same manner we are now trying to build decentralized economics, a few may benefit, but an air transportation system, as a whole, would be tragically constrained.

We have seen this before.

Many of the issues currently propping up the narrative to the Blockchain phenomenon were also present during the time of this author’s participation in the NAFTA negotiations. Anyone who was around in the early 1990’s may remember the mantra of modern globalization was that decentralized markets were good and centralized markets were bad. The mathematics supporting the efficiency of free trade models such as the Theory of Comparative Advantage were, and still are, bullet proof. So what happened?

Unfortunately, decentralized markets were administered unevenly, disproportionately, and only partially insurable, at best. The act of trying to control a decentralized market eliminated many of the benefits of having one. Today, we face a similar peril, except we are playing with a far more powerful technology promising exponential efficiency, or exponential deficiency. Don’t let the pundits fool you. It can go either way.

The difference today is that we also have the knowledge, foresight, a technological tool kit, and profound responsibility to get it right this time.

Let’s begin.

The place to start developing blockchain technology is through a consortium of Insurance and Professional Engineering institutions for the creation of relevant infrastructure and the physical derivatives upon which everyone utterly depends. This includes renewable energy, clean air, safe water, transportation systems, health and welfare, housing, building systems, computer networks, etc. After all, bitcoins aren’t worth a whole lot when the power goes down.

Infrastructure projects, and all their beneficiary derivatives, require financial institutions that can bridge the capitalization gap between the inception of a project and revenue from the project. This period of time is rife with peril because the “money and title” precedes the delivery of the physical asset. The cost of capital is directly proportional to the risk associated with project delivery. Wherever the insurance industry is capable of pooling project risks, the cost of capital will fall precipitously. The insurance industry is therefore an imperative component to this objective. Banking is relatively simple, accounts can be cleared with a placeholder currency; a token, if you will.

Herein lie both the challenge and the opportunity facing Insurance and Engineering institutions related to Blockchain Technology:

First, as with all new technology, we need to recognize that society will reorganize itself around Blockchain Technology. We need to provide hundreds of millions of entrepreneurs and citizens the support systems with which to do so.

Second, if each component part of the blockchain system is insurable, so too should the entire system. We need to insure and reinsure each individual components of a blockchain business system(s) in order to lower its cost of capital.

Finally, once insurable, each component part of the new economy will have the same cost of capital as any other part. The relative value of an investment will therefore be ordered in time — the most important and valuable piece is the one that goes next in the critical path. This is how things get built.

Taken together, Insurance and Engineering are sufficiently disintermediated from short-term objectives and are ideally suited for the long game. Together, they can bridge the capitalization gap upon which everyone can then cross. They provide outcomes in the physical world that are essential to everyone. Together, they can deliver the projects that are most important — the ones that come next as we navigate our critical path into the future.

Decentralized CRM With Curiosumé

Photo credit: New York Times

(Photo: New York Times)

Modern CRM (Customer Relationship Management) emerged from the boiler rooms of corporate sales departments. They needed a way to keep track of contacts, leads, calls, and ping schedules.  Soon they added client information like DOB, Spouses name, neighborhood news, etc.  The customer responded remarkably well, in fact, perhaps too well – they started asking for things like better service, warranty claims, and “can I get that in purple”.

Salespersons, being so closely tied to the revenue, began telling the service department that they are choking revenue,  and telling the warranty department when customers are defecting, and telling engineering to introduce new features.  They got away with it because they had management support as a revenue driver.  Pretty soon CRM systems began migrating across the enterprise evolving along the way. Ironically, CRM now finds itself losing touch with the customer despite the ever increasing amount of data that now populates the hit sheets.

Recently, we were asked to consider scenarios for Curiosumé applications in a CRM role in the financial industry. There are several important features of Curiosumé that can reconnect the customer to the enterprise.

Top level ontology in the commons
Instead of controlling people’s information, set it free and watch where the client leads you.  When all market channels pull their information from the same network of nodes and branches, they can always be current and synchronized. When the client adds information to the commons, this becomes available to the vendor outside of a firewall eliminating many security issues.  You don’t necessarily need (or want) to know the ID of the client in order to serve them better.

Anonymity layer / autonomous matching:
AUPOT (Anonymous Until Point of Transaction) allows clients to deploy anonymous personas so that they will be more willing to;

  • reveal true intentions to the commons,
  • perform their own pre-analysis in the commons
  • increase their insights and contribute that to the commons.

Customer Controls Their Data:
Help the client own and control their own engagement data.  Give them the same tools and opportunities to experiment as researchers as the Big Data wonks have.  Allow them to delete, save, edit or have as many different personas as they want. Let them deploy and retract personas as a way of finding you.  A better and more efficient relationship will emerge between both sides of a transaction.

User interface layer:
Instead of leading your client like cattle through an arbitrary ontology tree, show them photographs that corresponds to nodes in the common ontology.  These can then be matched algorithmically to advisors, products, or different departments in the firm, in real time.   In essence, you can create a multi-agent algorithmic game in a user interface that could be fun, engaging, and sticky as heck.

Advisor interface:
When a client chooses to engage the advisor or a product or a transaction,  they can submit their persona into the algorithm to select specialized advisors or a team of advisors. Only at the point of mutual acceptance, both players cross the firewall and engage in honest, trusting commerce. Layers and layers of bureaucracy, vetting, and security breaches can be eliminated until the actual exchange is made.

(Photo: The Philadelphia Orchestra)

Powerful Feature:
One of the most powerful and least recognized features of Curiosumé is the ability to constrain a “score” to a number or a range. One reason for this is to create imbalance around the mean – when the system is not balanced, it can never be static and will always have some movement (regression toward the mean).  It will become largely self-managing, self centering, and even a little joyous.

For example: if we constrain the client to having a Curiosumé score of zero; that means that for the total of all (+) sigmas, they must also accumulate an equal and opposite total of  (-) sigmas such that their net total is zero, in order to pass “go”. When we lay this back on to the top level ontology (Wikipedia), we can find a series of paths that unite the (+) sigmas to the (-) sigmas.  This path tells us a GREAT deal about where the client wants to go.  Likewise an older client may prefer a net (+) portfolio where a younger client may prefer a net (-) portfolio.  Decentralized CRM with Curiosumé can also be applied to risk pooling in the same manner. The deviation s from the mean and resulting movements are precisely how we would price the derivatives of intangibles, i.e. tangibles.

Outcome:
Decentralized CRM with Curiosumé is readily ready to happen. We know that people, advisors, and products can be brought together in personal and emotional engagement when they intersect paths of common interest. This is the weakness of both the barter system AND modern technological Capitalism  If we can envision interests flowing dynamically along vectors, we will have the ability to align human incentives and the markets that depend on them.

Introduction To Curiosumé

(Editors note:  We are publishing the documentation and tutorial for the Curiosumé application for review and comment)9233187-large

Introduction To Curiosumé

Curiosumé is an open source specification for the analog-to-digital conversion of knowledge asset objects.  Designed as a system to replace the résumé as a means for describing the interests, skills, and abilities of people, things, and ideas —  it functions as a personal digital API for the trade and exchange of actionable knowledge.

Since semantic knowledge assets are machine-readable, they generate matches, proximity measurements, relevance and importance rankings, and predicted probabilities of various outcomes.  As such, the economics of “intangibles” becomes computable and meaningful.

By activating knowledge assets within an economic system, social entrepreneurs may readily trade and exchange intangible assets much as they do with tangible assets.   Curiosumé facilitates trade of intangibles through a unique distributed network of objects and assigned attributes.

  • Ownership of one’s Personal API
  • Anonymity until point of transaction
  • Deploying multiple personas
  • Combining multiple personae
  • Imaginary personae
  • Measuring proxies for economic output, matching, assessing, scenario testing
  • Anonymity and privacy

Use Cases:

The use cases for Curiosumé will be a numerous as the number of entrepreneurs who can articulate the protocol in a market.  Since Curiosumé eliminates “Competition” from the onset,  there is little or no economic incentive to lie, deceive, or cheat.  This allows the market an opportunity to defer vetting mechanisms to downstream applications that can compare (for example) a submitted persona against a control personal as a cryptographic key to unlock a transaction or block chain, etc.  In essence, making cheating too expensive to sustain.

  • Individuals may overlay their own persona on any dataset to visualize and discover adjacencies, paths, and connections.
  • Individuals may interact with the web using a Personal API
  • Protegé and Mentors may find each other in close proximity in community or within an organization.
  • People with special skills can find worthy and productive collaborations in communities or within the organization.
  • Trade in knowledge assets is facilitated through “anonymous until point of transaction” protocol.  People will provide better data knowing that they have complete control over their personal identities.
  • Build Social Currency; multiple personas may combine Curiosumés to establish the knowledge inventory for a team or to discover the probability that a group of friends may produce any mutual affinity efficiently together.
  • Any product or service may be described in Curiosumé format and compared to a community listing to discover customers, partners, and employees.
  • Curiosume data is pre-normalized allowing any user to make predictive assessments about any collection of personas relative to a project, product, event, itinerary,  or interaction with any physical asset.
  • Cryptographic; a personal API may be used as a private key in unlocking smart contracts on the block chain protocol
  • Toll Booth on Big Data; marketers, employers, or data aggregators would pay individuals for access to their persona.
  • Instead of advertising to a demographic, marketers may identify specific knowledge assets and may offset prices based on the social values or proclivities of the persona.
  • Economic development agencies can take a knowledge asset survey of a region to identify what institutions or industries they have a strategic advantage.  Or, they may retrain or import specific knowledge assets in order to grow into new industries – with great precision.
  • Philanthropic  institutions can assess need and impact prior to committing to directed giving by assembling strategic knowledge assets around a specific philanthropic goal.
  • Corporations may assess their ability to enter a develop a new products or enter a new market based on a Curiosumé survey
  • Competitors may assess the ability, and cost to defend against their competition disrupting a new product initiative.
  • Corporations can better tailor their products to what customers actually want to buy rather than trying to “market” what the company already knows how to produce.
  • Corporations can make hiring vs training decisions with better clarity based on a Curiosumé survey.
  • The college “degree” system may evolve in favor of boutique personas designed for innovation in an industry.
  • The financial industry (from the NYSE, Banks to VC) can determine the probability that a company may be able to execute a business plan given their Curiosumé survey
  • The Insurance industry can mitigate risk exposures by assuring that the right collection of knowledge assets are deployed to, say, a construction project.

The Hack-plications That will Change Everything

Zertify, Gamidox, and Exoquant (ZGE) are NOT the applications that will change everything.  Rather, the hack-applications that follow on the ZGE data suites will, in fact, challenge the idea that periodic economic collapse and hard-fought restructuring is a necessary inevitability of the human condition.

The current financial system is vulnerable to disruption.

One reason is that it is becoming unstable.  However, by far the more important reason is that it is very inefficient.  The underlying notion that competition alone can determine a winner is wasteful because the time, energy, and resources required to battle, kill off, and dispose of an opponent may exceed, many times over, the value of a win.

What exactly is the nature of winning and losing?

Can truly winning only happen when the opponent is truly dead?  Can a student win by learning even if they can obviously be vanquished by their teacher?  Does a teacher win by living among productive citizens, as they themselves become vulnerable elders?  Can such an exchange form without there necessarily being a financial, or even governmental, intermediaries.  Today, quite the opposite is happening in companies and communities facing both knowledge gap and layoffs.

How Stable are The Stabilizers?

The legal system is very expensive to maintain.  Global military projection is certainly not cost free nor are the subsequent defenses.  Even the so-called competitive “college degree” and “intellectual property” are outliving their accessibility, and therefore, usefulness. Ironically, it will be the financial system itself that is undermined by the scarcity of the lifeblood money.  People will adapt to new forms of enterprise as they have for millions of years.  This is what Zertify accellerates.

What are the alternatives?

It would be vastly unfortunate for civilization if the financial system were to become ineffective prior to  human’s natural evolution to a high order of economics.  In fact, it seems that the failure of society to evolve is the only thing keeping the current financial system in play – there is no other game in town.  Think about it; if money does not represent your productivity, why would you work in exchange for it?  When you can no longer “harvest” your own productivity, why would you sow that field?  People would sow a different field. This is what Gamidox provides. 

Let’s Measure Ourselves Into Existence

History shows that the darkest depths of re-organization preceded prior leaps of human civilization.  But is that ultimate, inevitable competition and sacrifice actually necessary, except to measure the old system out of existence.  People are already quite organized, why do they need to be re-organized except to fit within a measurement system that has outlived it’s usefulness, applicability and relevence.  Exoquant allows the new humanity be measured into a new existence. 

Let’s get it right this time

The ZGE applications provide the intermediate step that never existed at any other time in history.  ZGE are built and structured upon trust networks and Internet connectivity.  Why not start rebuilding now while we still have a chance to get it right, very right.

The Wall Street Hack

In the first post of this series, we identified the 5 components of a financial system and suggested that Zertify, Gamidox, and Exoquant would serve to simulate their functions in a parallel economy before ultimately being adopted completely.

In this post we will identify the hack on the Wall Street Financial instrument regime.  Although exoquant is a bit technical, the basic hack is quite simple:

  • Everyone knows that money is created through the creation of debt.
  • Everyone also knows that debt is a promise to produce something more in the future.
Likewise:
  • Everyone also knows that innovations increase human productivity.
  • Everyone also knows that innovation is a promise to produce something more in the future.

Here’s the hack:

Therefore, a currency backed by debt and a currency backed by innovation are both backed by future productivity.  As such, two currencies backed by the same underlying asset are fully convertible with each other.  Water dissolves water and innovation dissolves debt.

Here is how the Wall Street algorithm works: 

  • People produce stuff in exchange for money
  • Bankers do not care about money, they care about the rate of change of money over time.  This is called the “interest” rate.
  • Stockholders do not care about interest rate, they care about the rate of change of interest rate over time, this is called growth rate.
  • Hedge fund managers do not care about growth rate, they care about the rate of change of growth rate over time, this is the margin on their bets; options, and derivatives, etc.
  • CDOs and other financial exotica become increasingly divorced from the fact that people produce stuff for money.

The Exoquant Analogy:

  • The value of information is derived from the rate of change of data over time
  • The value of knowledge is derived from the rate of change of information over time
  • The value of innovation is derived from the rate of change of knowledge over time
  • The value of wisdom is derived from the value of innovation over time.
In order to “see” innovation before it happens, all we need to do is identify and measure rates of change of information in communities…and so on. Technically, this is a derivative, i.e., something whose value is derived from the value of something else.   All of these metrics can be seen quite readily in the Zertify, Gamidox data sets.  Each is a “derivative” backed by the stuff that people produce rather than the fiction of debt.  The ability to predict future productivity is superior with an innovation backed currency and therefore superior to debt forced productivity – often compared to slavery.

The Silver Bullet

Innovation is a magic word.  The hack is true to the Wall Street math as well as American culture.  Anyone running for public office would not attack the proposition of an innovation backed currency.  Therefore, the hack will not trigger an antigen.
 The next and final post, The Currency Hack, will formulate this innovation currency in more detail.

Hacking the Financial System

Hacking The Financial System is not about some doomsday scenario for the end times, it represents the natural ability for humans to adapt to constraints in their environment.  Right now, the financial system is vulnerable to many new systems and technologies that are reorganizing society. This series hopes to describe the meta dynamics behind these trends and offer ways for all people and institutions to adapt.

The financial System is made up of 5 components; they act as a system.  If any of these components falters or is corrupted, the whole system becomes unstable.

These 5 components are:

  • Markets (demand)
  • Entrepreneurs (supply)
  • Accounting System (inventory)
  • Institutions (to keep the game fair)
  • Currency (storage and exchange of value)

For example:

The dot.com crash was a problem with the accounting system failure. The 2008 crisis was a vetting mechanism failure. Devaluations across the globe are currency failures. Poverty is a market failure.  Corruption is an entrepreneurial failure.   All of these forces are interrelated and any one will have an impact on all of the others.

Curiosumé, The Value Game, and The WIKiD Tools Algorithm are specifically designed to replicate major functions of these 5 components – but in a different way.  Since Finance and Economics are mathematical, and natural systems are also mathematical, we cannot escape the math – our hack needs to be true to the math. For this reason, the work may seem fairly technical.

On the other hand, we have an incredible opportunity to correct many flaws of the old economy.  Anything that has no direct impact on the math also has no impact on performance and function of the 5 components – and can be easily designed OUT of the system.

For example:

  • We have an opportunity to swap out competition for collaboration
  • We have an opportunity to swap out scarcity for abundance
  • We have an opportunity to swap out mass consumption for mass sustainability
  • We also have the opportunity to eliminate a wide range of biases such as gender bias, racial bias, physical bias, social class bias, political bias, and many many more factors that may be irrelevant.

Where’s the Hack?

Every time there is an economic instability of any magnitude, black market currencies tend to form.  We have all heard stories of Levis, cigarettes, or even tulip bulbs being used as currency.  Black market currencies can also be quite subtle, yet no less tradable.

With 21st Century technology and social media, we are witnessing the emergence of what we can only now call “social currency”; such as reputation, referrals, vouches, influence, SEO, community, groups, and various other domains.  These are all black market currencies because they are used for the storage and exchange of the value that people create…what they lack is the rest of the “system”.

The difference now – and perhaps this is the first time in human history – should the so-called black market currency become systemized to the same extent and actually perform better than the currency that it hedges,  “a flip” will occur and the old system will fail to re-boot back to it’s current form as it has after every preceding economic crisis.

That’s the hack.

Gambling With New Value

What if the origin of political division in this country could be traced to a simple glitch of the generally accepted accounting practices?  Let me explain:

The Economist magazine recently wrote an article in favor of airlines unbundling fees; Ancillaries; You Know They Make Sense

“By charging fees, once neglected baggage service departments have become star revenue performers for airlines. Department managers can now justify new technology and equipment. Where before, baggage service only represented a cost, it now provides millions in revenue”.

In other words, charging money for baggage essentially transfers this service from the liability column to the asset column of the accounting statement. As a liability, it can only atrophy under the weight of austerity measures.

And Then The Carousel Starts Spinning

What happens next is quite remarkable.  The airline PR machine twists this into a veiled statement of American individuality, claiming “freedom is about having choices” and touting themselves as the protector of all that is good and great in America.  Then, they BLAME the traveler for expecting that mustachioed Soviet-era entitlement to unlimited [baggage] service.

Just give it a French name 

Passengers will continue to complain about being nickel-and-dimed, but it may be that they are making false comparisons … “When a la carte shopping is successfully implemented, it’s not an evil method. Quite to the contrary, it’s the ultimate compliment to the consumer—it acknowledges their right to choose.”

Roll in the legislators

The resemblance to political discourse about a whole myriad of issues is uncanny and would make anyone suspect a larger conspiracy.  But what if the problems are real simple? What if the genus of political division in this country could be traced to a simple but widespread accounting anomaly?  There is no accounting system for human values.

For example; consider the fact that Motherhood does not count in American Gross Domestic Product, but Day Care services do.  So in order to stimulate economic growth, legislators subsidize day care so a parent can go to work while in the same breath witholding services if the mother “fails” to work. Don’t forget to always blame the customer when things don’t go right.

Gambling With New Value

Similar paradox never seems too far from key social issues such as education, health care, Internet privacy, Immigration, International Trade,  Homeland Security, even Banking and Finance Reform:

From Fox News coverage of the JPO Morgan 2 Billion dollar loss:

The basic problem is that regulators have been working for the last two years to define the difference between hedging and gambling, and can’t. Either the rules would be too severe and shut down banking, or would permit reckless risk taking that could take down a huge bank, and potentially put the taxpayer on the hook to pay off depositors through the FDIC.

A hedge acts on both sides of the accounting balance sheet while a gamble does not.  What if that’s what it’s all about; all the fighting, and slander, and division, and prejudice, and injustice, and violence, etc., caused by a simple accounting system problem.

When we do not have an accounting system for human values, we can only gamble with them.  To hedge, New Value must be must be tangible.  The problem is simple; it is a failure in the accounting system for New Value Movements.

The New Economy Movement

The following 7 minute talk was presented at the Innotribe Sessions at SIBOS 2011 conference in Toronto Canada.

Here I identify a serious omission in our form of economics which may  inhibit the ability for currency to represent the things that people do and make. I also introduce how a new class of financial instruments could re-connect currency with productivity thereby reintroducing vast amounts of value into the tradable asset (currency) pool.

What if the solution to the great complexity of economic collapse is actually fairly simple – and we don’t find it?  What if the new economy is going to happen whether we want it to or not – and we are not prepared?  What if the tipping point to the New Economy is already past – and we are not in the game?

The only ones to blame would be ourselves for not building the obvious.

The Game and The Counter-Game

The term “Gamification” is pretty cool, except that it is meaningless.  Anyone who has ever worked a day in his or her life knows that the World is already gamed.  Anyone who follows politics and world events sees the game playing out constantly.  Everyone, including the winners, know that the game is stacked.  The last thing anyone needs is another game layer.

If you are like the majority of people on Earth, you are given a game that you can’t win playing by the rules.  If you are like the majority of people on Earth, you would do anything for a chance to play a game that you CAN win.  Imagine the value of an IPO for a gaming company with that prospectus.

What is a Counter Game?

Wikileaks – love them or hate them – is a Counter Game because they turned the lights on a game that was being played in the dark.  Bloggers play a Counter Game because media was editorialized by powerful interests.  Twitter is a Counter Game because it drives the narrative instead of being driven by it. In fact, any place where there is a broker – someone or something that benefits from you NOT having complete information – is an opportunity to introduce a Counter Game.

An astonishing array of Counter Games is forming in social media and the brokers are falling out of the sky like hailstones.  Power brokers, mortgage brokers, energy brokers, media brokers, even Google is gamed by Counter Gamers.  The better they get at hiding information; the better the Counter Gamers gets at rooting it out.  The harder they try to control a message, the better the Counter Gamers gets at disclosing the truth behind the message.

The game creates the Counter Game.

Likewise, to kill the game is to kill the Counter Game. As such, the only way to kill the counter-game is to kill the game. Think about that for a bit…Do we really want to do that?

The Holy Grail of the Counter Game is the global monetary system. Money is supposed to represent human productivity; otherwise people would not go to work to make things that everyone else needs.  The Game has caused Money to become increasingly divorced from actual productivity.  People who produce the most value are exploited while those who produce the least are most grandly rewarded.  The Game is stacked with money.

The Holy Grail of The Counter Game is to replace monetary currency with a True Value Currency.

The financial system stands on 5 pillars: currency, inventory, vetting institutions, entrepreneurs, and value arbitrage. All of these are slowly being replicated, mimicked, or duplicated in Social Media.  When the 5 pillars integrate in social media systems, a new currency will emerge.  People will use it to store and exchange the value that they create through their work. It will be a no-brainer

The Value Game

The Value Game is outlined in this short video using the now proverbial “Corporate Jet” as the turning point in the global economic paradigm.  The Value Game does not kill the Financial Game, rather, it challenges, corrects, and improves it.  The Value game has reached a critical milestone – it has been funded in dollars by investors.

This is not insignificant.

Model For The Mobility of Engineering Professionals Under NAFTA

I published the following paper in 1996 as part of my participation in the negotiations for mutual recognition of Engineering Professionals under NAFTA.  We had just completed a program that ultimately sent close to 200 Mexican Engineers to the U.S. NCEES Engineering Board Exams with the support of CETYS Universidad and The State of California BOPELS.  In short, the performance of Mexican Engineers on this exam was extraordinary.  Their pass ratio was comparable in every way (especially when language disparity was removed), to US engineers who took the same exams.

Model For The Mobility of Engineering Professionals Under NAFTA – Please follow this link for PDF: INCNE596

This work is highly significant because it represents original research toward what was likely one of the first modern attempts to trade ‘human knowledge’ like a financial instrument.  The idea was that Mexican, American, and Canadian Engineers would be allowed to practice engineering in the exchange of services across all three borders.  The hope was that the financial structure that supported the American and Canadian engineering profession as a vetting mechanism [for the technical risks details associated with major infrastructure projects] would transfer into Mexico.

Comparative Education

It is also significant because this may be one of the largest comparative education projects between the Mexican Education system in Engineering and the US engineering education system as measured by an established standard examination.  For example, data clearly showed an advantage in Mathematics for the Mexican engineers but a disadvantage in physics and chemistry – likely correlating to the cost of producing such education (labs and equipment) between the two systems.

Relative States of Development

It is abundantly conclusive that Mexican Engineers, and therefore the Country of Mexico, is highly capable of development and technology enterprise based on the education criteria in which America measures itself.    So when looking at the relative states of development between the two countries, the question arises; if the difference is not in the quality of engineers, then where is it? Of course, the answer does not surprise us when we see political turmoil as the source of most wealth disparity metrics.

Language Disparity

Finally, on a relatively minor discovery, this research measured a language disparity of approximately 15% in the speed that the engineer from Northern Mexico can accurately interpret an engineering problem expressed in technical English.  This is useful when planning timed exercises such as examinations where language differences are difficult to remove from the sample set.

Epic Value Game FAIL

As it turned out, the Mexican Negotiators did not accept the author’s recommendations presented here in stead adopting an MRD strategy that was highly restrictive to both the mobility of engineers and the vetting requirements of financial institutions. America literally handed Mexico the Knowledge Economy on a silver platter and Mexico refused.

This author argued in 1996 that Mexico would compete in the future with emerging economies such as China and Vietnam in the the low-value labor market rather than competing with, say, India for the highly valued knowledge market.   It is unfortunate that they chose the former.  I’ll leave my opinions as to why, for a future post.

Model For The Mobility of Engineering Professionals Under NAFTA

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

Social Vetting Makes Knowledge Tangible

The term “Vetting” comes from the sport of horse racing where the animal is “vetted” by a veterinarian to determine if the animal is in suitable condition to race.  Today, there are many vetting mechanisms acting in society and communities.  Think of it as the referee that keeps the game fair.  This is important because if the game is not fair, people will stop playing.

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.

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 deploying money or debt. As such, social vetting is taking many different forms to validate, qualify, and quantify knowledge assets in communities.

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.

Innovation Suicide

The following question appeared on a Linkedin Forum that I follow:

Complete this sentence: The ONE factor that is MOST important to innovation is… and here’s why…

I have said this in a few blog posts and I’ll say it again here: The current definition for “innovation” may be the single most disastrous eliminator of innovation.

Innovation Suicide:

Yeah, it kills itself. Really, look it up – it’s a horrible cacophony of buzz bits and weasel speak that amount to nothing more than “Ya know it when ya see it”.

Any definition is supposed to give the reader enough information to duplicate, recognize, and identify instances of the subject – Preferably before the event has ended. Think about it – if the definition for Innovation were clear, nobody would be asking this question.

I am always amazed at how simple the answers to complex questions – and how complex the answer to simple questions – can often be.

Question: THE ONE: Complete this sentence: The ONE factor that is MOST important to innovation is… and here’s why…

My Answer: The Definition of Innovation

Here is why:

Information, knowledge, and innovation are obviously related to each other.

1. You can’t have one without the other two.
2. If you cannot measure one, you cannot measure the other two.
3. where all three are integrated, the system becomes efficient.

Yet, the definitions of each term do not include the other two. Therefore, the current definition of innovation is insufficient to describe the condition. That is why this is the ONE most important factor.

Let me prescribe the following analogy; distance, velocity, and acceleration are obviously related.

1. You cannot have one without the other two.
2. If you cannot measure one, you cannot measure the other two.
3. where all three are integrated, the system is efficient.

This is because distance is the point between two facts, velocity is the rate at which the distance between two points changes. Acceleration is the rate at which the velocity of travel between two points changes.

Therefore let’s re-define innovation as follows:

Information are facts and data. Knowledge is defined by rate of change of information. Finally, innovation is defined by the rate of change of knowledge in a community.

If we can accept this definition, everything changes. Seriously, everything changes.

Now, that’s Innovation!!!

* note: If you are familiar with differential Calculus you may see how a new economic paradigm may arise from this algorithm.

The Brain-Picking Economy

brainI come across an increasing amount of posts and discussions related to alternate currencies, social currencies, and knowledge as a tangible asset, etc.  It is as if people are grappling with something that they don’t quite understand or can’t quite grasp – but, soon will.  Really, don’t lose heart – they are definitely on to something.

Sandy Jones Kaminski of Bella Domain provideds a well developed argument against letting people pick your brain by proposing the “no brain picking list”.   While somewhat tongue-in-cheek, the article portrays a common frustration felt by specially qualified people who get too many requests for “brain picking” and not enough turkey sandwiches to justify the time-value of the exchange.

[People who ask to pick your brain are either asking you to work for free or they are trying to bypass the very hard work required to build a social network by asking for your referrals]. While not quite a reason to end brain-picking, it certainly indicates a hugely inefficient market.

Taking some clues from the banking industry

A bank seeks to match most worthy money surplus  (rich people who will not pull their deposits abruptly) with most worthy money deficit (employed people with good credit history).  In order to accomplish this, the financial system has 5 essential components: a currency, an accounting system, a vetting mechanism, entrepreneurs, and business plans.

Now suppose we transpose the rules of finance on the rules of brain picking.

Currency

A currency is defined as a vessle that stores and allows for the exchange of value.  So it’s natural to expect that relationships, networks, “contacts”, “followers” and all the other accoutrements of social mediation are means by which we store value.  We invest time in developing our own knowledge assets and we invest those assets in our relationships.

Accounting System

The balance sheet needs to, well, balance.  The first assumption I make is that every single living breathing person on Earth holds value. It’s only a matter of whether they have a surplus in knowledge assets in that which I have a deficit and vice-versa. Since my deficits far exceed my surplus in the vast majority of human knowledge, I am always looking for a fat juicy brain to pick as well.

Vetting Mechanism

If the game isn’t fair, nobody will play.  Social media provides the most critical element of brain-picking economics.  Any time someone asks to pick my brain, I’ll do a Google search or conduct a social media profile on them. What I find will quickly determine what the initial contact will involve a courtesy email or a 3 hour golf game.

Business Plan:

Buy low sell high.  That’s the mantra of capitalism, but it remains “unspoken” in social media.  If a person is very successful at picking brains, there is an inherent quality in that which may be useful to me. I will study them. If other important people have allowed this person to pick their brain, why not me? If I’m getting a lot of pickers from a certain demographic, maybe that represents a business opportunity, seminar market, or speaking engagement.

An entrepreneur is as an entrepreneur does

Entrepreneurs do nothing more than identify assets and elevate them from a low level of productivity to a higher level of productivity.  I ask my brain picker who they have also discussed the matter with. I also ask them places and dates of those interactions.  I ask them about people in their social network, rumors, concerns, projections.  I ask them their goals an objectives in talking with me – exactly as I would do for any client….

…well before you know it, I’m picking their brain.

Culture: When Engagement Is Not Optional

pLASMA bALLToday we see Social Media duplicating many of the functions of earlier society by storing community wisdom, applying social vetting, and deploying social currencies.

It takes a Community

Here is an article is about a a person who learned through social media profiling that her fiance was active in hobbies that conflicted with her moral constitution – before the wedding instead of after.  In the old days, the community would also profile each individual based on the social record of their behavior.

Social Capitalism

Here is a video article that discusses how social media is  duplicating many functions of the corporation outside the construct of the corporation. Factors of production increasingly enter the org chart as a social media application.  We now question whether the corporation itself is the sole vehicle of wealth creation.

Social Currency

We see social media duplicating many of the functions of the financial system where currency, credit scores, banks, land, labor, and capital are being replaced by social currency, social vetting, social capital, creative capital, and social entrepreneurs.

Macro vs. Micro

We see divisions of scale from the long-winded one-sided content of the static web presence to the micro blogging applications that more closely resemble a conversation.  Time factors are accelerated to the point where real-time is not fast enough.

Local vs. Global

We see an emerging segmentation between Local Social and Global Social. At first global leverage was the awarded the small entrepreneur with something to offer to the world.  Now ‘Local Social’ enjoys substantial leverage over global corporations by reorganizing the way people prioritize and experience each other and their community.

Everyone is a node

Taking an analogy from the physics of electricity, the term “potential” means the difference in energy between two nodes.  The greater the difference, the bigger the spark and the greater the impact.   The local energy at each node influences the direction and size of sparks between nodes.  As people accumulate ‘Social Current’, their position relative to those around them changes. Likewise, their potential also changes relative to the ‘Social Current’ of others. Everyone has some potential relative to every other node.

Integration has arrived

Much like the knowledge economy integrated, but did not replace, the agrarian economy, Social Media will not replace the corporation, the financial system, dissertation, conversations, localization or globalization.  Rather, everyone becomes a corporation, everyone prints their own social currency, everyone publishes their intentions, everyone has local and global leverage.  That’s what Integration is all about.

A ‘culture of one’ is moot.

It is not surprising then that our culture itself is now being defined in terms of social media with effective aggregation of  social norms, storage of social wisdom, and medium of exchange for community ideals.  The true test of “culture status” is when engagement is no longer an optional.  Without engagement, there is no culture.


Gowalla and Foursquare: Money is as Money Does

manhattanMoney happens because people happen, not the other way around.

Wall Street has no idea what’s knocking at their door with the emergence of a new class of Social Media Applications that incorporate geolocation strategy.

Money is as money does.

Hanging out in bars and buying silly tokens does not define a sustainable economy any more than borrowing money from yourself with interest in order to keep it sufficiently “scarce”. However, the strategic combination of social capital, creative capital, and intellectual capital does define a sustainable economy.

Social Productivity can be loosely defined as “what you make with your time”. All of us have a limited number of hours on Earth.  “Don’t waste my time” is the new Tax on Tea. The Last Mile of Social Media is a critical step that will complete the Internet as a system of social organization, and as a result, financial reorganization.

The 5 components of a financial system

A financial system must have 5 components acting in a system in order to sustain itself:  1. a means to store and exchange value (currency). 2. inventory 3. vetting  4. entrepreneurs, 5. A business model.  If any of these components is missing or becomes corrupted, the whole system fails.  Where all of these components are intact, however primitive, an economy will flourish.

1. Currency is a social agreement and the Dollar is no exception.  The “social agreement” is the presumption that the currency is scarce and therefore valuable.  In reality, time is scarce.  Geolocation is important because traveling is a quantity and guessing is a quality that are both time consuming.

2. The knowledge inventory is emerging where people establish themselves as experts through blogging, community organization, and development of creative content.  The new class of social media applications like Gowalla, Foursquare (and those not yet created) will eventually evolve to highly organized and finely granulated knowledge inventories in and about communities.

3. The vetting mechanism will form as people with common knowledge assets aggregate around cooperative activity rather than competitive activity.  High integrity will be rewarded and low integrity will be punished. Gowalla and Foursquare are still easy to cheat, but that will get worked out.

4. Entrepreneurs. As information becomes infinite, time becomes more scarce, thereby forming the basis of this new economy. Entrepreneurs will identify knowledge assets and elevate them from low levels of productivity to higher levels of productivity. Gowalla and Foursquare provide visibility to some rudimentary knowledge assets – it will only get better.

The New Class of entrepreneurs will begin by aggregating strategic combinations of vendors.  Then they will aggregate strategic combinations of knowledge assets and match them to strategic vendors in infinite combinations. They will manufacture “time”.

5. The business plan is simple: A. transform data to information, B. transform information to knowledge, C. transform knowledge to innovation, D. transform innovation to data.  Each transformation produces “time”.

In fact, this is all that Gowalla and Foursquare accomplish.   Each transforms data into information and people transform information into knowledge.  People are drawn to the possibility of  increasing the value of their time in their community.

If people can make their own currency more efficiently than a corporation or government can do it for them, they will. Don’t worry, a currency will find a way to represent them – after all, money is as money does.

When Social Media Becomes a Science

UncertaintyCartoonJay Deragon posted a series of articles recently on his Relationship Economy blog which I found especially exciting. As usual, Jay is bringing forward some very important ideas related to social media components and outcomes, but what really sets this new mindset apart is the fact that Jay is asking the same questions that have been plaguing scientists for 100 years.

In Jay’s posting “The Social Moment is Gone” He describes how organizational decisions are driven by metrics that no longer exist.

In another post: ”Measuring Social Moments”, Jay suggests that if things are in a dynamic state then measuring, a moment becomes irrelevant to what is happening the next moment.

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

Scientists figured out that in order to study a sub-atomic particle, they had to stop it from moving. As soon as they did that, the nature of the particle changed. Scientists could only study their interaction with the particle, not the particle itself.

Jay is saying something similar: “How can you measure social media if it is responding as a function of your interaction with it? All you are doing is looking at yourself in a mirror – so stop it”. He‘s right.

Status Quanta

Keep in mind that this comes in a time when the chorus of social media gurus are still trumpeting the C-Suite Concerto called “ROI or Die”. Maybe someone should remind them that the value of the Corporation that they so fungibly defend is in fact an approximation based on things that cannot be measured. Let me explain:

It is not surprising, therefore, that Wall Street hires Quantum physicists (affectionately known as Quants) to manage money and investments in markets and to “Innovate” new financial instruments.

The Calculus of Social Media…on Wall Street?

Heisenberg’s uncertainty principle lead to the development of a new branch of probabilistic mathematics for approximating both the position and the momentum of subatomic particles. In fact, the science of Quantum physics is entirely contained in probabilities that events will or have occurred and not necessarily based on direct observation – and so are the Wall Street Valuations.

Wall Street uses the same calculus to estimate the probabilities that financial particles will have a specific location and momentum without having to actually witness them. The result is a host of exotic financial instruments that make, bet, hedge, and securitize such approximations for the benefit of stockholders…..

Getting Back to Jay

Markets are conversations. People make products, invent things, design stuff, hold stock, buy, sell and trade everything. Those Quantum Physicists on Wall Street are estimating the position and momentum of people.

All Jay is saying is that now you can do it too.

Breaking The Monopoly on Money

Hundreds of community currencies are forming across the globe. Gaming currencies are jumping back into reality. Europeans communities are calling for the authority to print their own money arguing that the fractional reserve system is like trying to recover from a war by waging more war (a novel thought).

Many people doubt that the dollar has more than a decade or so of steam left as the interest on debts mythically exceeds the total amount of money on Earth (at least in my world). Yet banks march on, heading straight for the cliff.

Governments are polarized against themselves (and in cooperation with other governments) to solve the problem – except by reducing services to the people. But isn’t this why Governments exists in the first place? Are they suggesting their own elimination? Of course not, so they issue press releases worth about as much as the photons they are printed with.

Meanwhile, corporate media is trying to dominate (and subdue) social media….ultimately, the end game will be the other way around. This short video invites the status quo to look at what people are “doing and saying with their productivity”

Video: America; A Next Developed Country

Industrial Revolution cartoonAmerica is stuck in the Industrial Revolution. A loose paraphrase from Seth Godin points out “our entire education system is designed to prepare people to work in factories, consume stuff, and believe this makes us happy”

Now that the factories are gone and the rest of the World has copied all of our tricks (while not copying our mistakes) it is time to move on. What is that next watershed economic paradigm? Who is going to figure this one out? The one who does will define the new meaning of “A Most Developed Country”

Dollar vs Rallod-A Mirror Image Economy

The problem with the American Dollar is that it is backed by future productivity in the form of debt – that is, our “promise” to pay off the debt. We know this because if America signaled that it was not willing or able to pay it’s debt, the dollar would cease to be used as Dollar vs Rallod-A Mirror Image Economya trading mechanism.

Innovation is also a promise backed by future productivity. By innovating in a new processes, method, system, or product today you are making a promise to increase productivity tomorrow.

Therefore, debt and innovation are blood brothers or mirror images of the other – they are both “currencies” (means of storing value) backed by future productivity. We can build a new economy around this concept which effectively weeds out the bad parts and keeps the good parts of the institutions and infrastructure that are already in place.  After all, two currencies backed by the same underlying asset  would be fully convertable

After all, the definition of a crook is someone who steals someone else’s productivity. May the best currency win.

Dollar vs Rallod-A Mirror Image Economy

Update: 03/2015  I recently stumbled upon this definition in a Gamification Wiki concerning the Rallod.  Thanks for the shout out!!

Rallod (Dollar spelt backwards) is concept developed by Dan Robles as a social capital currency which is based on the future productivity of innovation. He uses the Bizarro world featured in DC superman comics to provide an explanation of how his concept works. He distinguishes between normal economics revolving around Land, Labour and Capital and social capital which revolves around intellectual, social and creative capital. What is tangible in the normal world is intangible in the Bizarro world and vice versa. Robles believs the two worlds are mirror images of each other.

Visit www.badgeville.com to learn about the global gamification leader

Video: Intellectual Property in the Social Media Cloud

social_media_cloudThe Patent system is slow, static, and expensive. Sure it’s great for corporations and wealthy institutions, but what about the rest of us? How do we get paid for our intellectual property? We make rapid fire decisions every day that can make or break markets – who’s got time to patent?

Or maybe the last thing that Wall Street wants is for Engineers, Architects, designers, and creative people to get “royalties” on their work. That is What Wall Street does, they collect the royalties of the creative people in America….until now. Social media is a social contract, IP is our currency.

Image credit

Video: Tangible Knowledge; The Holy Grail of Social Media

Accounting Balance sheets have tangible assets and intangible assets. Unfortunately, intangible often means invisible and those on the dark side of the moon wind up in the unemployment line.

What if knowledge assets were tangible? What if you owned your knowledge like a company owns a structure or specialized machinery? What if it could be quantified and qualified so that it resembles all other tangible assets? Easy answer…entrepreneurs will trade it, like money.

Calculating The ROI of Social Media

This video introduces a new way of looking at social media valuation. People find value in social media otherwise they would not do it. How is that value expressed as a financial instrument? If you engage your clients in the same currency that they are trading among themselves, the greater the likelihood you will realize the value of the new media phenomenon.

Conversational Perjury

As brands get social, they enter the new media performing their best interpretation of a conversation. Face it, they are still going for the kill – like a wolf in sheep’s clothing – the dance of the pitch is just getting more sophisticated. Social media is powerful followed closely by the of abuse .

The danger is that the more it resembles buddy talk, the more likely it will be mistaken for buddy talk. The sales pitch is being elevated to an art form. Now social media can be as much as a social cure as a social anomaly.

The 4 Big Lies of Marketing:

The integration lie; Ingratiation efforts are manipulative and calculating but serve as a very subtle way of obtaining increased power over another person. Appearing to be similar to the target the ingratiator appraises the target person’s attitudes, opinions, and interests and modifies his/her statements to match the perceived beliefs of the other conforming to the target’s wishes.

Major Brand: The key principles underlying [company] decisions and actions in social media are: Listening, Learning and Engaging in conversations with our customers where they are…while hiding where we are.

The foot-in the door lie: To increase the likelihood of a prospect saying yes to a moderate request, a person may ask for a smaller request first. By saying yes to the first, small request, the person may agree to the second request to maintain consistency with self perception.

Major brand: we recently launched an on-line quiz with a widget component exclusively through social media and it has been a great success just in terms of the number of people taking the quiz and then word of mouth as a result. This goes back to us showing people can engage with [company name] not yet buying the product.

The ‘Istanbul bazaar’ Lie: The initial request is very large – large enough that no one could be expected to comply with it. It is then followed by a smaller, more reasonable request. This technique relies on the norm of reciprocity. The norm of reciprocity states if a person does something for you, you should do something in return for that person.

From a famous social media marketing evangelist: Extrapolate the potential points of touch between your customers and your organization, by showing them what full engagement looks like but then asking for a smaller subscription, enables participation in some of your processes, in some way.

Even a penny will help Lie: This technique is based on the tendency for people to want to make themselves “look good.” Since everyone has a penny, one would look foolish to say no to the request. The target cannot simply give a penny without looking foolish. The target tends to give whatever is appropriate for the situation.

From a Social Media Marketing Guru: FB Friending, Twitter, and even Linkedin are brilliant in delivering mutual follow mentality to marketing – people want to feel good for having followers and will often put up with constant, yet fleeting marketing messages. Tweet meme is another way for people to feel good about thier self for a tiny investment of a single click.

Inherent in all 4 techniques is the attempt by an influencer to manipulate another by engaging in subtle subterfuge. The only way to undo the lie is with a simple truth: knowledge and understanding that the influencer is always lying.

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