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Tag: Innovation Economics Page 1 of 6

People Are Corporations Too

Wow what a week. I though that I heard it all until Mitt Romney said “Corporations Are people”. Actually, I admire Mr. Romney but I do struggle with this interpretation for his sake and those who he represents – and possibly an opportunity lost to rise above the noise.

In a way, Mitt provides us with a looking glass into the fundamental differences between the rich and the poor. The rich see themselves as the proxy for the prosperity of the poor. Meanwhile, the poor see themselves as the proxy for the prosperity of the rich. Neither side admits that they need each other, but I won’t pretend that I can solve this argument any time soon.  However, allow me to suggest that the winner of the debate will be the one that can evolve above the paradox.

The following video discusses how many components of a corporation – and government – are being duplicated in Social Media. The beauty of is that this great social innovation is available to anyone including the rich, the poor, the corporations, and the government. Oh, but wait – if the UK shuts down social media, they will effectively shut themselves out of the paradox, not evolve from it…Ooops. Be careful, Mitt.

So here is a video I made last year which, in a way, validates much of what we see playing out before us in politics, business, and social media.

The Innovation Banker

Future of Banking

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

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

The Innovation Banker

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

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

A Virtuous Circle

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

Ingenesist.com

Music by Phil Felicia

Calculus for Dummies and Capitalists

Mathematics Dysfunction Disorder

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

Puzzled by Limits?  Perplexed by derivatives?

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

Calculus is astonishingly simple


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

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

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

What’s Your Cut of the $5 Trillion Knowledge Economy?

People accumulate a wealth of knowledge in their lives as they pass from project to project and industry to industry.  Each of our social, creative, and intellectual pursuits and exposures combines to form the person who we are and the contribution to society that we represent.

Your knowledge and experience also helps others predict what preferences you may have and what decisions you may make. Corporations, advertisers, banks, insurance companies, and politicians all want to know this and they will go to extreme and expensive measures to get it – why not just sell it to them?

Peace sells, but who’s buying?

Management of companies, little league teams, Rotary Clubs, even raising a family, is extremely valuable knowledge to a wide variety of situations. Civic service, spirituality, military service, and philanthropy provide a basis for a host of knowledge attributes.  Academic accomplishment, physical achievement, artistic expression, manual dexterity, and whole body coordination provides great insight to the application of all knowledge.  Physical challenges, grief, personal struggles, and the experience of injustice further add to the wealth of knowledge one accumulates in a lifetime.

Every person is unique with a different set of knowledge than any other; therefore, everyone has something to offer to someone else.   Each person’s combination of formal and informal education is valuable in it’s uniqueness.  With the proper system and incentives in place, trillions of dollars are on the table to bid for access to your knowledge.

The Den of Thieves:

The resumes that we post on Monster.com are woefully inadequate and so heavily gamed that predictive utility related to your future decisions and innovative capacity is severely compromised.

The credit score also measures past behavior by tracking negative events; many of which are outside the control of the subject such as a layoff, fraud, medical emergencies, etc.  Again, the credit score is quite useless as a predictor of future decisions and innovative capacity.

Now we have Social Media and the mad scramble to be visible in social media space.  The scourge of marketers, spammers, and fraudsters are close behind chasing your information that they are all too happy to sell to the aforementioned “clients”.

Take a Step Back … and get a grip

We are talking about your information that describes your knowledge attributes which predicts your preferences, your future decisions, and your innovation.  Yet complete industries exist to collect it from you for free, organize it, and sell it to others for a great deal of money.  There are 5000 job boards collecting resumes, 300 Million credit scores being securitized by Wall Street, and 12,000 social media sites aggregating your creative content, relationships, and knowledge attributes.

Join The Ingenesist Project:

The Ingenesist Project specifies a system where your knowledge attributes are expressed in a packet of code that you control, distribute, regulate, withhold and track as you wish.

The result is that you will be paid to learn, to know, to practice, and to participate in life as you wish.  It becomes in your best economic interest to produce exactly what you are best at, and have a talent for producing.  It will be in the best interest of corporations, marketers, Wall Street, insurance companies, and Politicians to support you in these pursuits so they can “farm” the knowledge today that will buy their products tomorrow.

An IPO For Humanity

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

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

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

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

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

In the Age of Social Media

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

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

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

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

We’ll hold an IPO for Humanity

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

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

The Last Mile: Social Media Battleground

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

Don’t Worry, Be Neighborly…

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

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

Google CEO Warns of Information Armageddon

In an interview with the Wall Street Journal, Google CEO Eric Schmidt warns of the future consequences of social media and networks, and the vast amount of personal data that users put out there on the Web.

The article goes on to describe how Google is looking for what is next – that is, a world where the Google Icon no longer dominates the center of our lives.  He warns future societies about creating a “future” by documenting the past.  A future president, CEO, or just a job hunter can be haunted forever by the words and images that are becoming indelible in social media today.  Mr. Schmidt insists that information is social currency.

Actually, I do not believe this to be true.  I believe that is more likely than not a severe disruption is on the horizon which will deeply impact social media, Google, and Facebook, etc.  This disruption will alter the course of the future that Google predicts.

All it would take is for humans to step up one more rung on the evolution ladder.

Think of it like this:  a dollar is used to store and exchange value yet it is completely anonymous – you don’t know very much about it’s past or future – you do not need to know much about the exchange device in order to carry out the transaction.

Google is an information company, not a knowledge company. The next economic paradigm will be based on the creation, storage , and exchange of knowledge – not necessarily information.  Knowledge exists only between the ears and once it is made tangible, I will not need to know where in the past that knowledge was excecuted – college keg parties included.

Neither Google or Facebook have indicated that they realize how value can be created, stored, and exchanged while maintaining anonymity if the public knowledge inventory were properly coded. Likewise, billions of people who use Social Media are dismally unaware that nobody else needs to posess any of their personal information to execute a knowledge transaction – seriously, noone.  In fact, not only is relative anonymity a possibility, it is an imperative to market efficiency in Social Capitalism.

The “next Google” will, in fact, filter out irrelevant “information” as a means of creating time. Time is the real currency. For more on this please see http://ingenesist.com/introduction.

Google needs to figure out how to get the most worthy knowledge surplus connected to the most worthy knowledge deficit in the shortest amount of time.  Information brokering alone can’t do this, so it’s Armageddon for whom?

***

Please Vote for The Ingenesist Project to present at SXSW 2011

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

Please Vote for The Ingenesist Project; SXSW

TagCloudPhotoThe Ingenesist Project has submitted the following presentation to the South By Southwest Conference in Austin Texas on March 2011. We sincerely encourage our readers to vote for this presentation. It promises to be hugely compelling, deeply controversial, and boldly disruptive. This is for a 60 minute solo presentation to the Advanced Technical Track – the competition is impressive. Voting ends Friday August 27, 2010

Please select the following link to vote

Thank you very much for your support

The Ingenesist Project

Description:

Today, we have one of the most extraordinary opportunities in human history playing out before our eyes. Social Capitalism is no longer merely a band-aid for an amoral Market Capitalism, it is a new form of Capitalism in it’s own right.

In the age of social media, many entrepreneurs no longer allocate land, labor, and financial capital as a primary means of production. Rather, they deploy social capital, creative capital, and intellectual capital to the production of a vast amount of “value” that is stored and exchanged in communities. The objective of The Ingenesist Project is to make this value tangible outside the constructs of government and corporate interaction.

This presentation identifies the five essential components of Market Capitalism and demonstrates similar elements emerging in social media. It then specifies how these elements can be integrated to perform the essential analogous functions of financial institutions. Next, we specify three relatively simple social media applications that may create a new class of business plans enabling millions of social entrepreneurs worldwide. Finally, a new financial instrument is described which can be capitalized and securitized to form the basis of a fungible social currency to hedge the dollar.

The net result could create a condition where Wall Street priorities are subservient to social priorities rather than social priorities being subservient to Wall Street priorities.

Questions Answered


What can replace market capitalism when it finally runs out of steam?
What exactly are people producing when they engage in Social Media and why does it create value?
What characteristics must a social currency have in order to be fully convertible or even a replacement for the dollar?
What is a knowledge inventory, how should it be formed, and why should every community have one?
What would be a powerful strategic plan for the Internet in the absence of one today?


[Level Advanced Category Entrepreneurism / Monetization Tags monetization, Social Capitalism, Social Currency Type Solo Event Interactive 2011]

The presentation will mirror some content found in the following video series

Photo credit:


The Secret Weapon of Social Capitalism

It should be fairly obvious that there are some extreme financial anomalies on the Global Horizon.  That legendary, but long-in-the-tooth social system affectionately known as Market Capitalism, is up against the ropes as the debt monster gobbles up everything in it’s path faster than any austerity measures can ever keep pace.  Take note that debt can reach infinity but austerity measures can only reach zero … you can do the math on a postage stamp.  If there ever was a need for a secret weapon, it is now.

The following 4-minute story-board video is part 3 to the series called “Will Social Capitalism Replace Market Capitalism?“.  The video introduces an important futures methodology and algorithm called WIKiD Tools for the management of Social Capitalism.   The next few videos will define WIKiD tools more fully while introducing a segment called “The Knowledge Inventory”.   Next, the SC>MC series will lay out scenarios for the capitalization and securitization of knowledge assets. Finally, we’ll revisit the Airplane Game to wrap it all up.   In other words, within the next few weeks, I should have published a fairly explicit set of functional specification for the next economic paradigm answering the question “What comes after Market Capitalism?”

Hold on to your hats and thank you for joining us on this wild ride.

Social Capital Trolls

A Troll is a member of a race of fearsome creatures from Norse mythology. Troll mythology is, in fact fairly complex but seems to resolve to common images of Neanderthal type people living under bridges who extort money from passersby, steal babies, and fear God.

In Internet slang, a troll is someone who posts inflammatory, extraneous, or off-topic messages in an online community, such as an online discussion forum, chat room, or blog, with the primary intent of provoking other users into a desired emotional response or of otherwise disrupting normal on-topic discussion [Wikipedia].

In the Intellectual Property world, a troll is an individual or business that holds patent or copyrights with no intention of developing the IP and every intention to enforce against infringement by those who do develop ideas.

Naturally, we seek to anticipate the future usage of the term Troll in a context of Social Capitalism. We can say that someone who was in a position to constrain Social Capitalism has the potential to engage in troll behavior.

The troll does benefit from the eventual success of traveler passing through the constraint; however, they create an unnecessary or non productive friction in a market. This can kill many business plans as troll fees and uncertainties need to be factored into the risks of doing business.

I am reminded of a legal system that facilitates litigation over education, negotiation, and cooperation. Social media has an inherent self-policing aspect that may threaten “regulators” in law and government who seek to hold exclusive vetting privilege over a social market.

I am reminded of advertisers who put lipstick on the pig by pretending to play up the whuffie, trust agent or engagement vibe, but instead lay Astroturf and buy up social media outlets. Spam is spam is spam.

I am reminded of Internet service providers that purposely slow down a connection and charge for speed that costs them less to keep open than to slow down. I am reminded of the demise of unlimited data packages for mobile Internet – now that the user is an addict, pull back the dosing in exchange for compliance.

In short, a social capital troll is any person or organization that seeks to CHANGE the online behavior of an individual and their community rather than EMPOWER the individual and their community to do what they would have done in the absence of the troll.

Fell free to add more for future posts on this subject……..

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

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

Part 1

Part 2:

Tangential Innovation Communities

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

Make it up as you go along

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

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

Why compete when you can collude?

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

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

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

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

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

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

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

Crowdsourcing The New Exploitation

The cadence of modern globalization has been set by the steady drive to lower labor costs across the world. Not surprisingly, the greatest threat to the global economy is social instability. As usual, political boundaries are drawn to keep people isolated from each other. The new twist is that Social Media arises because people are trying to reorganize themselves. Now, Crowdsourcing moves the eternal struggle to a new battle field.

There are two ways that the tools of the knowledge economy can integrate. 1. People are successful at reorganizing so that when the financial system does collapse, they can deploy a social currency to trade among each other. Or, 2. Social Media will become the new substrate of exploitation. Let me explain:

Turking is a phenomenon of crowdsourcing where people perform simple tasks on-line for money.  Highly intellectual tasks are broken down into small components easily managed by a simple human decision. Each of these simple human decisions are sent out to humans to perform. The results are then re-combined to become a high value knowledge economy product.

Even companies that perform this service for major corporations are astonished that people would work for so little money.  Academic studies declare that people are motivated by something other than money. Somehow Turking provides people with hope, self, validation, and all sorts of great personal benefit – otherwise they would not be doing it. This is good, right?

Wrong….people are desperate and turking is the last treadmill on the rat race to the bottom.

The idea that someone would work for free in order to gain “reputation” is built on the assumption that some “brand” is backing the reputation.  Brands don’t exist – they are fictitious.  Brands are what marketers say the are. Turking lets brands monetize their story line with cheap, invisible, and powerless labor force scattered around the world.

All the asset with none of the liability – and they call it a social miracle?

Most “turking” does not pay enough to cover the cost of the education required to complete the task. It costs a society countless thousands of dollars to teach and nurture a child to read and make good decision. Yet, the net payback is under 1.00 dollar per hour for the simplest turking tasks and net  5-10 dollars per hour for higher orders of analysis requiring specific and proficient skills.  If the turk work is rejected or they lose the “contest” they are not paid and their IP is stolen – no recourse, no rebuttal.

Worse yet, turkers from impoverished countries are valued relative to the disfunction of their economy, not their inherent intellect and creativity. This sets up a tragic dynamic where it becomes, again, in the best interest of some enterprise that the poor countries remain poor and dysfunctional. As such, the inherent intellectual and creative value of their people can be efficiently transferred to the shareholders.

There are social media alternatives under development by The Ingenesist Project and others that allow people to organize and sell their own information.  Applications are being devised that allow people to self organize into productive communities and to reward the nurturing and sharing of knowledge assets in community economic system. Dynamic business systems are under development that reward high integrity and punish low integrity.

The great question of our time is: Who will win, financial currency or social currency?

Photo source

WIKiD Tools; A Futures Methodology

The forecasting methods that we are developing at the Ingenesist Project have become sufficiently vetted and organized that I have decided to formalize them for review by others. The “WIKiD Tools” method is fairly simple to describe and demonstrate, but be assured, it is a powerful method for predicting futures outcomes.

WIKiD stands for:

Wisdom > Innovation > Knowledge > Information > Data

All five of these elements are related to each other – in fact, each is derived from the prior element by integrating the tools of that medium.  For example information is derived from data by integrating the tools of the data medium. Knowledge is derived from information by integrating the tools of information medium, innovation is derived from knowledge by integrating the tools of the knowledge medium, etc.

Likewise, if I want to predict innovation, I look for high rates of change of knowledge in it’s medium….and so on for all five elements as needed.

The chart below helps demonstrate the WIKiD Tools methodology.

Slide05

The Hunter-Gatherer

About 50,000 years ago humans sustained themselves in a hunter gather economy. They would wander for food to eat and fuel to stay warm. Eventually they invented tools to trap their game and chop down trees so they no longer needed to expend as much energy and could remain relatively stationary.

The Agrarian

This led to the agrarian economy, the formation of towns, and the division of labor. A leisure class emerged to engage in philosophy and explore nature. New ideas were explored and the “scientific method” of observation and experimentation was invented

The Data Economy

With the invention of interchangeable parts in manufacturing, the industrial revolution became the dominant era of economic activity. The idea of industrialization separated production from assembly of parts. This allowed for greater efficiency and precision.

The Information Economy

The Industrial revolution generated a lot of Data and the invention of the integrated circuit turned these data into information – we now look back at the 60’s and 70s as the information age.

The Knowledge Economy

Widespread use of computers allowed humans to process the information in creative and unique ways – we now call this the knowledge economy.

Since there were many eras prior to this, we can expect that there shall be many eras following this – so we ask the question “what comes after the knowledge economy?

When we apply the WIKiD Tools Methodology:

We can say that each new era was derived from the prior era by integrating the tools developed during the prior era. We have seen the data economy in the industrial revolution, we have seen the information economy with Invention of the Integrated Circuit, We are in the midst of the knowledge economy with the advent of the Internet.

The next economic paradigm:

Now the tools of the Computer, software, and Internet connectivity are integrating around social media. From this we predict that an innovation economy will emerge by integrating the tools of the knowledge economy, specifically social media, mobile devices, software, hardware, and the internet.

The Wisdom Economy

Looking far far into the future, we can predict that the wisdom economy will emerge from an integration of tools developed in the innovation economy. The wisdom economy – with or without the current financial system – will have the greatest likelihood of achieving a sustainable human presence on Earth. Consequently, failure to achieve the wisdom economy presents an equally predictable outcome.

Let’s Argue About the Definition of Productivity Instead

Many arguments rage because of poor definitions to terms. If people cannot agree on a definition, they will not agree on much else. A definition should be definitive – here I will tackle 5 of the most elusive definitions that are at the center of much, if not all, global controversy: Data, Information, knowledge, innovation, wisdom

To state the obvious

It should be obvious that data, information, knowledge, innovation and wisdom are related. The test is simple: if you corrupt one of them, all the others become corrupted. The question becomes; how are they related?

Consider the following definitions

Allow me to provide the following 4 relationships:

1. Information is derived from the productivity of data

2. Knowledge is derived from the productivity of information

3. Innovation is derived from the productivity of knowledge

4. Wisdom is derived from the productivity of innovation

These relationships are very useful.

1. They include everyone, they exclude no one.

2. They are personal enough to reflect individual value system yet discrete enough to not contradicting the value system of another.

The question now resides in how we define productivity, that is a much simpler, more efficient, and far wiser problem to be arguing about. Besides, a singles solution solves 4 problems.

Cory Doctorow In Seattle

Activist, Science fiction writer, and blogger Cory Doctorow spoke at in Seattle to a full house at the Sunset Tavern in Ballard. He performed a reading from his latest book, “For The Win”. Cory has an interesting sense of abstraction. He’ll spot a trend – or collection of trends – and extrapolates them into the future dutifully revealing all the complexities of the human condition.

For The Win

His reading centered on the “exploitation” of young adults who are hired to play online games where they work to achieve levels, rewards, virtual currency, and game status which is then sold to rich Western players. Some players become highly valued for their knowledge inventory of game world monsters, strategies, power points, and the uncanny ability to assess the knowledge inventory of their opponents who’ll get suckered into a virtual dual with predictable consequences. The kids literally “mine gold”. As always, gold corrupts the most innocent hearts resulting in situations and behaviors at least as strange as the game itself.

The Activist

Cory has long been an activist for digital publication rights and rules. Not surprisingly, the Q&A was dominated by privacy, security, and exploitation of information issues. Cory recently closed his Facebook Account which caused quite a stir in the blogsphere. Ironically, every big name in world-class privacy violation had recently been in the news for Mr. Doctorow to eloquently spit roast on an open flame. It was quite entertaining.

There is a reason that it’s called Monetization

While Mr. Doctorow did not specifically mention this, what struck me most was hearing him talk around this emerging battle for control of people’s information. While this idea is not new, the reasons behind it may be new. As Money is losing it’s capacity to store and control value, human knowledge is increasing it’s capacity to store and control value – this is hugely accelerated by social media. The desperate attempt to control people’s information is really a proxy for the desperate attempt to control knowledge, therefore to re-control the value that money once represented.

Unfortunately, controlling information also destroys value.

People actively participate and share on social media to achieve levels, rewards, and status which is then sold to corporations in the form of predictive marketing by third party aggregators like Facebook. Some people become highly valued for their knowledge inventory of real-world game perils, influencers, and social mavens and become celebrities of the craft. Many develop the uncanny ability to assess the knowledge inventory of their opponents who get suckered into a virtual dual with predictable results.

Suddenly the News started sounding like one of Cory’s Science Fiction Novels…

Event Sponsored by: The Stranger

Enterprise Prediction Markets Summit

(Editor: I’ll be speaking at the following event on June 4th. If you are in the area or blogging issues in this genre of ideas, let me know and drop by. Look up the other speakers and you’ll find an extraordinary group of visionaries preparing to make this PM Cluster Summit a truly enlightening event.)

Enterprise Prediction Markets Summit:
Leading Enterprise Prediction Markets

Friday, June 4 2010 8:00am – 5:00pm

EVENT LOCATION: The Boeing Company: Integrated Aircraft Systems Lab Building 2-122, Conference Room #102L2 (Conference Center) 7701-14th Avenue South Seattle, Washington 98108 USA

EVENT REGION: US –Pacific Northwest


EVENT PURPOSE: This summit is for executives, directors, mangers, users and practitioners having immediate needs to apply collective intelligence networks and enterprise prediction market mechanisms to advance business outcomes through mastery of collective wisdom.


EVENT SPEAKERS: Dennis P. O’Donoghue (Boeing), Sharon Chiarella (Amazon.com), Arik Johnson (Aurora WDC), Dan Robles (The Ingenesist Project), Dr. Richard O. Zerbe, Jr. (Evans School of Public Affairs), Christel Alvarez, ConsensusPoint, George Neumann, George Daly Research Professor of Economics, (Iowa), Olav Opedal (Microsoft, Internet Security)


EVENT COST: $99

EVENT WEBSITE: http://pmclusters.com/Prediction%20Markets/SEA10.htm


EVENT CONTACT NAME: Jennifer Hulett

EVENT CONTACT PHONE: 714-784-0754

CONTACT EMAIL: Jennifer.Hulett@pmclusters.com


MUST ONE RSVP: Yes! No on-site registration

ATTIRE: Business Casual

BUSINESS CARDS: YES – Bring Business Cards


EVENT NOTES: The conference sessions are focused, practical and conversational. They are for executives, directors, mangers, users and practitioners having immediate needs to apply collective intelligence networks and market mechanisms to advance business outcomes through mastery of collective wisdom.


ORGANIZATION NOTES: The Prediction Market Clusters, founded in 2004, are the global industry commons and open community for prediction markets and collective intelligence networks worldwide. The open, agnostic network is a focused collaboration of vendors, academia, traders, users, developers, markets, regulators and stakeholders. The goal is to provide awareness, diffusion, adoption and pull-through for enterprise and consumer prediction markets. The Prediction Markets Cluster is the worldwide Next Practices network for collective intelligence networks practices, tools and theories.

PM Clusters

Prediction Market Clusters
http://www.pmclusters.com

Trading Money in for Value

Money is a convenient way to store and exchange value. Unless the world enters into a free trade agreement with Martians, Earth is the physical boundary of all existing value.

No matter what a monetary currency is called or how it behaves in the financial system, by definition, it can never represent any more than the value that exists on Earth.

Value is reflected by  “Market Capitalization” of corporation, Roads, Bridges, infrastructure, armies, education, food, real estate, and all so-called tangible things. Intangibles such as human resources, public assets, and shared natural resources are only valuable to the extent that people depend on those resources for survival. Not surprisingly, “tangible” means all things that can be controlled and “intangible” means everything else.

However, if you look at how all value is created, it all eventually boils down to human knowledge.  All control and influence over human knowledge boils down to the individual. All Value on Earth is stored between our collective ears.  In order to fully assess the global financial system, there must be a corresponding global inventory of human knowledge.  There is no body of any influence in the world proposing this as a means of defining solvency.

Meanwhile, the social media revolution is slowly introducing a global knowledge inventory to financial markets with effects that are becoming increasingly profound. In case you have not noticed, money no longer represents value, it represents the control of value.  Social media is disrupting who, what, when, where, and how all the value can or cannot be controlled.

With every new exotic financial maneuver, the monetary currency becomes increasingly divorced from the value of human productivity.  With every new advancement in social media applications, human productivity is becoming less controlled by money.  Watch the news – the battle fields are all about who what when where and how someone can control what is between your ears.

Not surprisingly, governments, marketers, advertisers and even academia are the first and most public victims of losing control of their message.  Their message is being re-written by forces outside their control.

This is serious – Don’t let anyone try to convince you that the value of social currency is not hedging the value of financial currency.

Today, we are on the cusp of the greatest revolution that the world has ever known. The control of money may go to the banks but the control of value will not.  It will happen when people decide it will happen.  Perhaps they already have…2012 anyone?

To Accelerate Serendipity, The Whuffie Factor

Tara Hunt; Future of Money and Technology Summit 2010

Tara Hunt; Future of Money and Technology Summit 2010

In 1999, Cluetrain Manifesto flipped everything we knew about online behavior on it’s head. The integration of information being published on the Internet reached a tipping point indelibly articulated for all time by Doc Searles: Markets are Conversations”

The Whuffie

In 2003, Cory Doctorow published Down and Out In The Magic Kingdom where he introduced the concept of Whuffie as a form of reputation currency that accounts for social value in a fictional future society. In Cory’s thesis, people who produce things that represent social value were awarded Whuffie. People who produce anti-social value were punished Whuffie. The twist was that everyone has equal say as to who is awarded Whuffie and who is punished Whuffie. In retrospect, the concept of Whuffie, stands today an important metaphor marking the beginning of the social media revolution.

The Whuffie Factor

In her book The Whuffie Factor (2009), Tara Hunt identifies the facts of a reputation backed exchange among real people, communities, companies, and social interactions – with all their associated human complexities. By the gift of wisdom or intuition, Tara’s choice of the modifier “Factor” is an important distinction. In mathematics, a “Factor” is a multiplier against some other quantity.

Social Capital

In Tara’s book, Whuffie is roughly synonymous with ‘new’ social capital – a hugely complex financial instrument that is currently emerging before the eyes of all practitioners of social media. In 2010, everyone still struggles to articulate social capital with a 1999 vocabulary of new conversations living in old financial markets. There simply is no word for the phenomenon of social media daily manifesting in so many new and valuable ways – it’s just too new.

Yes, Tara has critics, but most I believe are short sighted. The term “Whuffie” is as good a word as any, so deal with it. The term “Factor” is what Tara is really talking about, so lets move on.

Love ’em or Hate ’em, Whuffie is a Derivative.

From Wikipedia: a derivative is any agreement or contract that is not based on a real, or true, exchange ie: There is nothing tangible like money, or a product, that is being exchanged. For example, a person goes to the grocery store, exchanges a currency (money) for a commodity (say, an apple). The exchange is complete when both parties have something tangible.

If the purchaser had called the store and asked for the apple to be held for one hour while the purchaser drives to the store, and the seller agrees, then a derivative has been created. The agreement (derivative) is derived from a proposed exchange (trade money for apple in one hour, not now).

Infinite Possibilities

In short, the current value of the relationship is backed by the past and future value of the many other relationship(s) formed. The twist is that social media has vastly equalized people’s impact on the true value of relationships – this remains consistent with Doctorow’s thesis. Tara takes us a step further where the underlying asset can be generalized as simply “value” where the Whuffie Factor is a derivative against this value. This is consistent with Searles’ thesis.

Social Currency

In my opinion, The Whuffie Factor will become one of the seminal books of its time period. Indeed there are many excellent books in the genre of collecting, building, engaging, storing and exchanging trust, reputation, or influence in Social Media. What sets Tara’s book apart is that, like Doc and Cory, she had the guts to call it something real.

Elevate the conversation or get out of the way

Tara Hunt effectively nails this profound abstraction to the floor so that the rest of us can now walk through to define and articulate the Holy Grail of our generation; a true Social Currency. Bravo Tara, Bravo

To Accelerate Serendipity, that’s the Whuffie Factor.

Photo Source/Credit; Jesse Lara

Future of Money and Technology Summit; Non-Quantifiable Exchanges

The above video playlist consists of the full 6 parts of the expert panel discussing non-quantifiable exchanges as recorded on April 26 2010 at the Future of Money and Technology Summit in San Francisco. The complete video is about 55 minutes. I encourage you to watch it because very few discussions about the future of money approach the subject with as much experience, introspection, and clarity as this historic panel has.

This is not another doom-gloom room – but a truly optimistic model of a future financial system built on a platform of social media. These panelists represent some of the top thought leaders, visionaries, and practitioners in the area of “Local Social” – where nothing happens until the rubber meets the road. It was a great privilege for me to be a part of this esteemed group.

Panelists:

Tara Hunt; Social Media Strategist, Author: The Whuffie Factor
Daniel Robles, Director, The Ingenesist Project
Micki Krimmel, CEO; NeighborGoods
Chris Heuer, CEO, Social Media Club

Moderator: Tara Hunt

The future of Money and Technology Summit is one of the most important conferences to emerge as a result of the accelerated innovation and organizational re-structuring forming as a result of increasing constraints on the global financial system. We all look forward to another excellent conference next year!

Two Sides Of The Social Value Equation

There are two sides to the Social Value Equation – the creation of social value and the destruction of social value. There are countless examples where innovation destroys the value of prior technologies. There are also many instances where “progress”, perhaps in the form of a freeway or public structure, divides a community where strong social bonds once acted.

In the presentations that I give, I often cite the value of a bridge over a waterway. The bridge may cost 50 million dollars to build and maintain, but it increases human productivity by 50 billion in the life span of the bridge. We often cite a factor of 1:1000 for the valuation of the dollar to social currency.

Contrary to that, Jane Jacobs (renowned urban theorist and community activist) may argue, the bridge (and roadway) may divide a community or neighborhood. Where the community may once have been scaled for foot traffic, the new boundary may require a car to circumvent. The new road may divert old commercial traffic in many ways that are bad for a community. In such a case, the social capital destroyed by the bridge is in fact the dominant financial outcome.

So here I am, I just destroyed my own best analogy to demonstrate a point. Without vetting the complete transaction in the form of social currency, net “progress” of any kind is as easy to leverage backwards as well as forward at a rate of 1000:1.

Communities that seek to stop a disruptive development program will often organize to protest urban development decisions. Unfortunately, they are usually up against a calculation of economic impact that is dominated by dollar denominated currency. Without a “Social Currency” of their own, quantified and convertible to dollars, communities are doomed. Law suits will play out in the same manner where damages are non-quantifiable, and therefore non-existent.

Jane Jacobs also writes that a community that can place a value on their social currency – although I do not think she explicitly called it that – and can act to preserve value or increase value by their actions. Many communities from Greenwich Village to Boston have thrived under a social currency diverting projects away from sensitive communities. The Big Dig went underground in Boston much like the The viaduct replacement project will do the same Seattle. Granted, the Seattle project mainly preserves water and mountain views for million dollar condos, this concept, in fact, would be more critical to poorer communities than wealthy ones.

Obviously there is no way to impede progress. All innovations destroy prior value in the creation of greater value. The danger is when Wall Street priorities can dominate Social Priorities. Capitalism, for all the greatness it creates, is amoral. Capitalism is committed to dollar currency, and devoid of social obligation except to the degree that obligation is profitable – that is where social currency converts to capital currency.

Through the magic of the fractional reserve system, Banks create money backed by debt vs. deposits at a factor of 1:1000. Therefore, the convertibility of social currency with a capital currency at a similar factor of 1000:1 is essentially the only effective way to convert Social Priorities into Wall Street Priorities.

Facebook Derivatives

It seems ironic that people are using Facebook to urge others to quit Facebook. If they take their own advice, they would no longer be able to give their golden advice to others. If we took their advice, we would not be able to heed the advice of others in this matter.

Is Facebook too big to fail?

The human race is becoming a super-organism of connectivity. Companies like Facebook are duplicating the functions that governments have performed – by various methods with diverse consequences – since the dawn of civilization. There is nothing new about Government organizing society and pandering to corporations. There is nothing new with people protesting governance. There is also nothing new with forms of governance being replaced by an evolution of human consciousness.

The Next Wave of Innovation in Social Media?

First; Facebook itself has no value other than the value of the people and their networks. As such, Facebook behaves like a financial derivative – it is not the actual item of value, it is simply a utility contract representing value.

Second; Facebook can only deal in information – it cannot deal in “knowledge”. Your information is a derivative of your “knowledge”, not the knowledge itself. The real value of a social network is in what lies between the ears of the members. Therefore, one way to encrypt the information is to encrypt the knowledge.

Third; Suppose that your “resume” were coded as a list of numbers and operations representing the quality and quantity of the things you know. Suppose the people in your network were also coded in a similar fashion. As such, your network, would be a combination of these codes. If you really “know” someone, it would be easy to find them. If you don’t know someone, it would be impossible to find them.

Fourth: The game changes because the incentive now is to “Mind Meld” with real people. Marketers can only then profit by telling the absolute truth about what the product is and the affinity that the product serves – anything else defaults to a “no-sale”. The person can then set filters to be notified of products and services that can make them more productive in pursuing the things that they love and care about – their community.

An Emerging Evolution

Many People cite Cluetrain Manifesto (1999) as the start of this higher consciousness. Cory Doctorow introduced a concept currency called the Whuffie (2003). Tara Hunt, Chris Brogan, Brian Solis, Seth Godin, Clay Shirky, Jay Deragon, and many others expanded the idea of trust and reputation in the formation of social capital and associated social reorganization. As these ideas are reconstructed, especially in a form that is independent of the construct of the Corporation, Social Capital is emerging as a highly complex instrument – not unlike a derivative.

If not human knowledge, then what?

Now we notice that Facebook, Whuffie, and Wall Street Dollars are all built on derivatives where the underlying value is human knowledge. That is where all the man-made value on Earth is stored, period. The value stored by Human Knowledge hedges all bets. Nobody has a monopoly on it, but everyone is trying to figure out how. To do so would be to destroy it.

Code knowledge to set it free.

Despite all of the grumbling about Facebook, Wall Street, and all issues Political, there is a clear path toward a higher purpose in all of this. We should ponder this and be quite grateful.

Who Is Quantified by Whom?

abacusWhat is a Non-quantifiable Exchange?

The term “Non-Quantifiable Exchanges” was the title of a panel session that I attended at the recent Future of Money and Technology Summit. In researching the subject, it appears that a “non-quantifiable exchange” is more notable for what it is not rather than what it is. Case in point – after the precursory Google Search, the term and a modern definition does not exist – but the room was full !?!?!

With all of the talk about cloud sourcing economies and romantic notions of emerging organic currencies, it would seems that people could just get along fine without a central mechanism for storage and exchange of value. Instead, each individual would assess the value of the transaction in terms of what it means to him or her. Currency could then take the form of a person’s reputation, productivity and general usefulness for assessing value and helping others to do so in their community (reference)

If it’s not an asset…or a liability, then what is it?

Traditional valuation systems for businesses immediately start tugging at a host of standard assumptions for measuring “performance” – many of which are no longer meaningful. Land, Labor, and capital cannot be deployed to the same efficacy whereas social capital, creative capital, and intellectual capital are being liberated to social media with astonishing results.

Nobody can produce an accurate ROI for social media, however, social media presence is becoming a substantial factor in the valuation of a company.

Likewise, reverse access to personal information about customers on Facebook is both the lifeblood and poison of new engagement marketing. The general public have become “external intangibles” to the business plan – where the heck is that on a balance sheet?

Goldman Sachs claims that those who bought their worst subprime products were sophisticated investors whose obligation it is to understand the quality of the underlying components. Their defense is that the customer failed, not the system of disclosure.…what? How long would Dell last if this had been their response for poor quality?

Cloud Economics or Inversion System?

Vapor is quantified by the balloon that contains it. A cloud is quantified by the weather system that surrounds it. The atmosphere is quantified by the mass of the planet and it’s proximity to a sun, and so on. Therefore, the term “non-quantifiable”, and the word “exchange”, are mutually exclusive. If there is an exchange, there is quantification.

Suppose I was to suggest that value stored in social currency may exceed the value stored by financial currency. The paradigm shift now becomes, who quantifies whom?

Non Quantifiable Exchanges

IMG_1468-600-creamy-tuna-sandwichI had a personal breakthrough recently at the Future of Money and Technology Summit. I sat on an excellent Panel discussing non-quantifiable exchanges for an audience of about 70-80 very intelligent people.

Non Quantifiable Exchanges
Moderator: Tara Hunt, The Whuffie Factor
Chris Heuer, Social Media Club
Dan Robles, The Ingenesist Project
Micki Krimmel, NeighborGoods

I will write a post for each of these incredible panelists in the near future because each are building out the infrastructure of the new economy just by doing what they like to do most.  Soon everyone will be doing the same.

My experience

For one hour, we engaged in a remarkable conversation together. For me, it was a watershed event – I grew personally, socially, and intellectually.

Throughout the 16-year history of The Ingenesist Project, my challenge has always been to explain and demonstrate how the simple act of a conversation among informed people does, in fact, create value in a process that extends back to an intensely complicated production system. The value contained, stored, and exchanged by people is a direct result of their accumulated past and the interaction with their own environment. Until this summit – those two ends would rarely meet.

For example:

Reaching into your wallet and pulling out a dollar bill to purchase a can of tuna fish may seem like a very simple transaction. It is, in fact, intensely complicated from the funding of the fishing vessel, compliance with international law, packaging and distribution, all the way to the creation of the dollar in your wallet amplified through the miracles of the fractional reserve system. It is deeply complicated.

When we bite into our tuna sandwich, we take this complexity for granted. We are in fact, consuming the strenuous articulation of a financial system disguised as the simplicity of the checkout stand, the application of mayonnaise, and aroma of toasted wheat bread.

Similarly, for any meaningful conversation, the events prior and the effects after the conversation, for bettor or worse, reinforce the system through which future conversations will be shared.

While it would have been inappropriate to deep dive on this panel – I was able to transact effectively in this conversational currency system. I was able to come closer to communicating this comparison between the financial transaction and the knowledge transaction in a public forum than likely ever before. For this, I am deeply grateful.

No matter how you slice it:

1. The vast majority of value of an exchange has a history far greater, and future effect far longer lasting, than the transaction itself.

2. When the production systems become more integrated with markets value is created, huge shifts in value can be transferred.

3. Conversation is currency

This, I believe is the future of money and technology

Social Currency and Anonymity

The subject of privacy and anonymity are again rising up with the latest move by Facebook to integrate updates across the Internet onto the Facebook platform.

Conspiracy theories about Facebook and the CIA continue to flourish.  Meanwhile, the marketing and advertising industry seems poised to reboot their dwindling influence under a new cloak and dagger of social media data hustling and predictive demographics rather than playing by new rules of engagement.

Money is one thing and value is another.

I am astonished that people willingly and freely give up huge volumes of information about themselves when they really don’t have to.  In earlier times, marketers and advertisers would pay a great deal of money for far less information that people give them for free.  People do not understand the value that is stored between their ears or how easy it would be to set up an alternate economy that trades in social currencies.

If advertisers can pay someone to cold call me, to graph my data across the web, or sneak around my social networks, then they can certainly pay me to answer the phone.

The Ingenesist Project specifies an Innovation Economy built on the platform of social media.  While that thesis is extensive, let me summarize that the primordial soup of the Innovation Economy is called the Knowledge Asset Inventory.

Anonymous assets

One essential element of the new economic paradigm is the ability to combine knowledge assets so that innovation becomes predictable and therefore capitalized. However, a side effect is that such code makes the individual containers anonymous.  Marketers will have to pay you to find you.  here is why:

Now think about it this way – if you remove 20-dollar bill from your wallet to buy a Latte, you do not know (nor do you care) whether the last transaction performed by that 20-dollar bill was a donation to a charitable cause or a drug deal.  The dollar bill is anonymous – but you, as an asset, are not.

Social Currency is a Social Imperative

Dollar denominated money is a system to control social currency at a leverage factor of 1000:1.  Take away the dollar currency, and the leverage disappears.  Add a social currency and the national debt disappears.

Almost as a bonus, it is an absolute impossibility for marketers and advertisers to store and exchange value denominated in a social currency without extraordinary changes to the way they engage their clients….like, uhm, …don’t waste our time.

If we are smart, we can shut down the privacy issue in a hurry – anonymity of knowledge assets is the key.

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