“Luke, use the Force”

Creativity is a mystery to many – like an invisible force that drives the universe but can only be seen in retrospect.  If so, then Hollywood is the master of retrospect.

Most movie viewers think that the credits at the end of a movie are for their benefit.  Then they get frustrated when the print is so small and scrolling impossibly fast.  Actually, the credits are for the benefit of Hollywood. This is their knowledge management system.  They know how to communicate the Force.

“Toto, I’ve got a feeling we’re not in Kansas any more”

Being listed in movie credits is by no means an easy task. Every creative job from lead actor to hairdresser has a category. It often takes many years, serious peer review, and marketable success.  However, once listed in the credits you become a managing partner, shareholder, and a currency in the Hollywood creative capital inventory.  This inventory is captured and categorized in the Internet Movie Database (IMDb).  This is their resume system.

As a credited creative worker, you are forever on public display; a good movie credit reflects well on your credits and a bad movie may reflect poorly.  You need to be somewhat selective over what projects to work on.  Likewise, everyone will check the credits of others that are working on the project.  Everyone cooperates fully and in the best interest of the production.  It is in everyone’s best interest to be correctly allocated in the creative capital pool.

“Here’s lookin’ at you, kid”

It’s all about who knows you. The Producers proactively seek and test the “secret sauce” for communicating drama, comedy, action, etc.  They reflect on past projects then attempt to capture strategic combinations of creative capital assets for future projects.  The project becomes the people. The people celebrate each other on award nights and through tangential media. They adopt technology, share ideas, and diversify readily.  As a result, creativity and innovation are quite predictable.

“You’re going to need a bigger boat”

Contrast this to the traditional American Corporation – the ones that we expect to float us out of this financial meltdown through vast new wisdom, creativity, and innovation.  Most are top-down command and control operations with many layers of management that all have the power to say “no”, but not the power to say “yes”.  Instead of arriving at the best decisions, they often arrive at the least-worst decisions.

“Theater is like a box of chocolates”

Now, reflect on this nascent social media industry unfolding all around us.  Readers harvest new ideas on public display from all over the world and apply them to local products.   Such products, by definition, reflect the goals, aspiration, talents, and interests of the people who create them.  The content improves information shared by many sources.  Content of merit with enough credits can elevate the author to the status of “thought leader”.  But something is still missing.

“What we’ve got here is a failure to communicate”

Social media needs a definite product that the whole industry can rally around – that product is ‘communication’.  Social media must produce, improve, and deliver communication. Very few problems are created by communication but many problems are solved with communication.  Communication improves information, knowledge and innovation.  Solved problems are defined as innovations. It is a simple matter of how we organize ourselves;  as a creative industry or as a control industry.


Star Wars

Wizard of Oz




Cool Hand Luke

The opportunity for America reminds me of the elephant that is convinced since birth that the slender rope tying him to the fence post is stronger than he.  When the elephant grows up, he still believes the rope is stronger even though the elephant now has gained the strength to pull the whole building down.  Americans are the 8000 pound elephant in the middle of the room.  The question on everyone’s mind is: what will the elephant do next?

Throughout history, economists have determined the structure of business, enterprise, and commerce and wisely the government complies.  With remarkable success over the last 150 years,  corporations had been the source of most innovation sufficient to support the value of a currency.  Fortunately, the corporation had become the center of economic policy while the knowledge inventory within them have been fenced inside the accounting term: “intangible assets”.  Unfortunately, our corporations can no longer innovate efficiently enough to support the debt. Witnessing GM facing up to this very question, while the government manufactures money like taffy, seems a lot like feeding sugar calories to an elephant that is too big to fit out the door, dead or alive.

What the economists and many of the great visionaries of out time do not anticipate is the emergence of computer enabled society and the tangibility of knowledge outside the corporate structure through developments of social media.  Web 3.0 is supposed to bring us a semantic web – a computer program will be able to read the elephant story above and determine whether it is about education, zoology, macramé, Interior decorating, taxidermy, building demolition, or cliché old business metaphors.   Perhaps this is our little rope tied to the post as we wait for Mother Corpora to provide solutions.  Get a grip, the only computer that can read, classify, and extract a thousand words for any photograph is between our collective big floppy ears.  Web 3.0 will be semantic alright, except by the integration and capitalization of human knowledge through social media.

We spend billions on a human genome project to inventory our DNA, but nothing to inventory the knowledge as it exists naturally in society.  We will build statistical models to forecast weather, elections, click-throughs, insurance, demographics, and mortgage risk; but nothing to predict the value of various combination of social capital, creative capital, and intellectual capital in society.  We have search engines that match most worthy blog to most worthy keyword, but little to match most worthy mentor to most worthy apprentice.  The top reasons why start-ups, businesses, innovations, and markets fail are due to the wrong knowledge in the wrong place at the wrong time. It seems that if we solve the knowledge inventory problem, then we can solve the innovation risk problem.  That, in turn, will solve the money problem which solves the elephant problem.  We need to release the great “intangible asset” into the wild world of tangibility and trust that it knows where to go.

Sometimes it just takes someone to give us permission to do things differently.  So here I go: human knowledge is the most perfect, predictable, flexible, and valuable capital asset in our world.  Knowledge can become far more tangible than anyone could have ever imagined. Information, knowledge, and innovation are profoundly related – separated they are useless, integrated they are wisdom.  Everyone on earth innovates every day, period. The vast majority of people will do the right thing given the right incentives.  With the next development of the Internet, we will have the tools to organize ourselves in a far more efficient manner than the command and control structure of a traditional corporation.  Management can be outsourced too. Corporations respond to corporate priorities, social networks respond to social priorities.  Which one sounds like a business case to curb global warming?

The Ingenesist Project specifies three web applications which if developed and deployed to social media will allow social capital, creative capital, and intellectual capital to become tangible outside the construct of the traditional corporation and inside social networks.  Just because people have never organized themselves in an open sourced innovation economy before, does not mean that they never will.  But once they do, well, let’s just say that an elephant never forgets.

Innovation: The rate of change in knowledge with respect to time 

[In earlier post we identified the 5 essential elements of a market economy. What would be the currency of an innovation economy? Currency is anything that serves as a medium of exchange, a stored value, and a standard of value. Basically we are asking; What are those things that people are out in the World trading among each other today?]

Today, innovation is repeatedly cited as the only thing that can get us out of the financial/environmental/sustainability conditions that find our ourselves in, yet the most common definitions for this term are deeply and tragically flawed.

Most definitions for innovation boil down to: “a new idea introduced that has an economic outcome” or “something new that is useful”. While these definitions match some observations, they are reflective and “You know it when you see it”. As such, there is little to define innovation before it happens or to make more of it from this definition.  It is like defining “Art” as the thing that people stare at.  Unfortunately, this is just the beginning of our troubles.

“Innovation is a new idea introduced that has an economic outcome” is impossible.

This definition defines one unknown quantity (innovation) with four other unknown quantities: what is new; what is an idea; what constitutes “introduced”; and what is an economic outcome?  From High School Algebra we know that you cannot solve one equation with two unknowns – let alone four.  There is little that you, I or anyone else can do to satisfy this definition.  Therefore, it is not useful.

Granted, this definition sells plenty of ad copy as the guru of the week wax-poetic over those four pesky unknown thingies.  I found one consultant who claims that innovation has 51 variables and only he can solve that matrix – for a price.

What is the truth about the phenomenon of Innovation?

A useful definition must clarify the subject in a manner that is repeatable and measurable.

If we look at history we know that economic “benefit” and innovation are mutually dependent – you can’t have one without the other.  Wealth has been created by increasing human productivity through innovation in agriculture, manufacturing, computers, etc.

Next, we observe that information, knowledge and innovation are also mutually dependent – you cannot have one without the other two.  Wealth is created by integrating information, knowledge and innovation.

Next; look at our society; everywhere we turn, people are collecting information from each other, building their knowledge, and innovating together, i.e., coming up with better ways to do things. All of these little exchanges obviously add up to something because things like IPods and Airplanes get built and lots of stuff rolls off assembly lines.

Innovation is anything that increases human productivity

Next we can say that information, knowledge and innovation can be related as follows:

  • Information is defined as facts and data

This should not surprise anyone.

  • Knowledge is proportional to the rate of change of information (facts and data) over time.

This is a little trickier to grasp. But any good teacher knows that information must be introduced in a certain order and at a certain speed before the information can become knowledge – this is called learning. Learning is a mental process for turning information from a book, a lecture, or personal experience into knowledge that can be used later.  Therefore, knowledge is proportional to the rate of change of information and can only exist inside a person’s head.

  • Innovation is proportional to the rate of change of knowledge over time

trickier still, but for example; everyone has had an ‘Ah-Ha!’ moment during a brainstorming session, some incredible event that we witness, or even after some real bad mistake that we made. The Ah-Ha moment is a spike in our knowledge that happens in a very short period of time. Innovation is related to this high rate of change of knowledge.  Then we blurt it out, or write it down, or make a sketch, give a lecture, in the form of information, etc.

Definition of Innovation:

a. Innovation is anything that increasing human productivity.
b. Innovation is proportional to the rate of change of knowledge and information.

Admittedly, not as sexy in the sound bite but this definition does include all conversations, sketches, dreams, and ideas of all people on Earth and allows them to combine with the sketches, dreams, ideas, of all people on Earth to become designs, methods, and processes which further combine to become products, systems, and institutions, etc.

Let entrepreneurs worry about the economic outcome

Since innovation can be difficult to observe directly. Our new definition allows us to use a proxy that is easier for entrepreneurs to see. For example; if you want to identify innovation as it is happening, simply look for high rates of change of knowledge in a community. If you want to create innovation, do things that create high rates of change of knowledge. Likewise, if you want to identify knowledge, look for high rates of change of information.  If you want to create knowledge, do things that create high rates of change of information.

We need to give the entrepreneur a game they can win. The key is that everyone must be included in the game. This is a definition that can be used by anyone and everyone, in fact, it already is.


[Anyone familiar with differential Calculus can see an equation forming where Innovation is the derivative of knowledge and knowledge is the derivative of information. Calculus is the study of change like geometry is the study of space. Since the mathematics is beyond the scope of this article, I’ll finish with the following analogy for defining information, knowledge, and innovation more intuitively: “Information is to knowledge is to innovation what distance is to velocity is to acceleration”]

In order to restructure our financial system; we first need to restructure our innovation system.  ALL of the top ten reasons for business failure are due to a lack of knowledge, not a lack of money.

Top 10 reasons why businesses fail:

1.    Lack of an adequate, viable business plan
2.    Insufficient sales to sustain business
3.    Poor marketing plan: unappealing product, poor customer identification, incorrect pricing and lackluster promotion
4.    Inadequate capital, misuse of capital and poor cost control
5.    Poor management skills: lack of delegation, leadership and/or control
6.    Lack of experience and knowledge
7.    Lack of managerial focus/commitment
8.    Poor customer service
9.    Inadequate human resource management
10.    Failure to properly use professional advice: i.e. accounting, legal, financial, etc.

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

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

So where is the knowledge? Unfortunately, there is no public knowledge inventory – people do not know what each other knows.  There is no website where that people can go search for all 90th percentile social media experts living in zip code 06776, let alone build a dedicated local management team.  There is no way that anyone can assemble the knowledge needed to execute a business plan with a known probability of success given the information available.  As such, there is no way to finance public innovation.

Insurance companies can tell you the probability that you will die exactly on your 80th birthday, but we cannot estimate the probability that a business will be successful.  Nothing has more variables that human physiology, yet it is predictable and business success probability is not.  Why can’t this be fixed?

If we could identify, integrate, and predict public information, knowledge and innovation, we could diversify risk exposures away.  With risk exposures managed, we could insure start-ups risks.  With start-up risk eliminated, we can sell innovation bonds at, say, 6% to fund the extraordinary rate of public innovation that we need to support our debt and pressing social liabilities.   If the innovation bond returns a modest 20%, human productivity, by definition, has increased by 20%.  A 20% growth in human productivity is a 20% growth in an economy.  Again, financial system is not the only problem; the innovation system – or lack of an innovation system – is the problem.  Perhaps oversimplified, but this is an astonishing omission from the national dialog on the financial crisis.

The emergence of Social Media technology presents an extraordinary opportunity to organize a knowledge inventory outside the construct of a corporation and marry it to the financial system, much like a corporation.  Knowledge tangibility must be the most important “innovation” in the pipeline today if we expect to meet the crushing challenges that await us.  Just because we cannot predict innovation does not mean it cannot be done – it just means that we do not know how… yet. This is not about inventing a new currency, it is about the public taking control of the old one. We, the people, don’t deserve to lose this game; join The Ingenesist Project and help build a sustainable Innovation Economy.

Suppose we used the Dewey Decimal System to write a resume. A person could be described as a series of numbers instead of words and computers can search the numbers as they do key words today.

For example: 302, 307, 330, 607, 17, 500, 519

This person has experience in social interactions, communities, economics, educational research, ethics, natural sciences, statistical analysis

While memories of high school librarians may make us cringe, the computer loves numbers and classifications in this format. This will be important especially where knowledge is very specific. However, this simple list of numbers does not capture the knowledge of a person any better than the flawed “key word” search system that we are trying to replace. So we need to do something more.

If your mind were a library and you attempted to map it all out, one would see that everything is related in some way – intuitively, this is what defines you. If we looked at your brain, we would discover a huge network of experiences, relationships, books read, lessons learned, and people encountered. We would find a system of knowledge rather than random facts. Your likes and dislikes would be reflected in what you do and do not want to do. Everyone is different – nobody is the same. Everyone innovates, everyone has knowledge, and everyone shares information.

Somehow we need to reflect this on our computer readable resume.

The Universal Decimal Classification (UDC) System was built on top of Dewey for precisely this reason, to catalog complex and dynamic knowledge. The UDC system uses symbols to connect and relate the categories.

• Addition (+) allows for a string of subjects to be listed together.

• Forward slash (/) defines a range – or a “system” of subjects matter.

• Colon (:) identifies categories that are related like; sports and medicine, ethics and law; innovation and economics.

• We can even employ Boolean Operations such as IF, AND, OR, NOT statements. For example; we can say Polo IF Horses NOT water OR trade marks

• In a Global Economy, we can employ language and culture assets as well.

Now, we have a system of numbers and symbols represent the knowledge of the person.

For example: {20,12};[302+307], (330):[607+17]+[500/519]

Now we see that a computer language is emerging for human knowledge. This “resume” is for a specialist in Social systems and communities of practice. Knowledgeable in economics related to educational research, ethics, and natural sciences. They also employ statistical analysis in their work and can do it all in either English and Spanish

This is starting to demonstrate several key advantages:

1. It is Infinite and expandable to any field of knowledge
2. Paints a picture of knowledge not simply a list of information about a person.
3. Machine programmable and machine readable.
4. knowledge of several people can be combined to represent the knowledge inventory of a team, group, or company

We are getting closer to the elusive true “Knowledge Asset”. Part 3 will demonstrate how knowledge can be made to look like a buck, walk like a buck, and quack like a buck.

We identified the 5 essential elements of a market economy. Then, we discussed the currency of the Innovation Economy; people trade information and turn it into knowledge and new ideas using factors of production; Intellectual Capital Creative Capital and Social Capital. Now we’ll discuss the inventory strategy for knowledge assets.

Most companies have an inventory of every nut, rivet, or panel that they need to build something of value. Innovation Economics will be no different – we need an inventory of knowledge in our community so that we can build things with it.

Google and Wikipedia offer us a huge inventory of information – we read that information and turn it into knowledge through a mental process. Since knowledge can only exist inside people, we need a catalog of what people know. Our Knowledge inventory must be able to catalog and classify all human knowledge from the past, present, and future. It must account for Intellectual Capital, Social Capital, and Creative Capital. If done correctly, our knowledge inventory will begin to take on the characteristics of assets – knowledge will look like money.

Suppose that we say your resume is like a book about you. This isn’t too strange since every book that you have read has become part of your knowledge inventory. Every conversation with another person has become part of your inventory. Every new idea that you have tried, successful of failed, is part of your inventory. The things that you like to do, things that you do not like to do, and things that you do not know are part of this inventory as well.

The Dewey Decimal System is a way to catalog information. Even though Dewey is somewhat archaic, it provides a good example of how a knowledge inventory should be structured. Entrepreneurs will improve it if needed – so let’s just understand the concept for now.

For a quick review, the body of written information is divided into 10 main categories. Each main category is divided into 10 more categories and each of those are divided into 10 categories – and this can go on forever. For example, the term 519 identifies a piece of information. The main category is 5 = natural sciences, sub category is 1 = mathematics, and the next sub category is 9 = probabilities. So to have the number 519 on your resume says that you have knowledge and can solve problems related to probability and statistics.

You will also notice that some Dewey categories favor Social Capital, some favor Creative Capital, and some favor intellectual capital. While a knowledge inventory may sound daunting, computers and modern Internet applications can now do much of the work for us – in fact, they already are doing this work.