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.
The difference between the current economic paradigm and the next will balance on the difference between financial currency and social currency. Let me explain:
The flawed calculation
Obviously, the Gulf Oil Spill was a result of a flawed calculation. As a result, the rig was not equipped with an “acoustic trigger” in the event of an explosion – should the dying surface workers fail to hit the manual cut-off – this device would automatically shut the well. The device costs 500,000 dollars.
The estimated damage at 1 month of constant spilling was estimated at 14 Billion dollars with no solution in sight. The residual social cost in unemployment, health and destruction of social fabric could easily double that score. The long-term cost to industries and natural ecosystems could double that number again.
Score: 500,000 dollars vs. 50 Billion dollars; The financial currency to social currency ratio = 1: 100,000
Ted Nugent, a fervent and vocal Republican, Tea Party spokesperson, 2nd amendment activist, hunting enthusiast, and hard rock guitarist accuses this nation of losing it’s culture of accountability. His quote on CNN this weekend “I never had a fire, but I have a fire extinguisher in every room of my house. The spill was a criminal act of negligence”. In this case, I would have to agree with ‘The Nuge’.
Accountability is a calculation
When a company performs a cost benefit analysis, they look at the remediation cost of peril and the cost of mitigating peril and the probability that the peril will occur. The problem arises from the valuation of remediation cost; quoted in financial dollars “subject to litigation” when it should be actually be quoted in social currency. Litigation risk is not a proxy for social currency.
In the example of the Gulf Oil Spill, this equation was off by a factor of 1:100,000. Every other possible failure calculation that could have occurred was likewise flawed by the same ratio. Therefore, there is 100% probability that none of the perils were properly mitigated, hence, accountability was zero. I am sure the 11 workers who perished would have agreed.
Scraping the Deep Web
So what would accountability look like? We see that Social Media, in general, provides a remarkable system to punish low integrity and reward high integrity. Could this medium of exchange in social currency provide an accountability standard to hedge financial currency?
If Facebook can map the human consumption genome, technologists certainly have the data scraping ability to develop a true value calculator that can compare financial value to social value for any venture, prior to the venture being executed. In fact, we should be able to predict what ventures are more likely to occur given the relative values of social and financial currencies. The fear, of course, is that this will hurt business.
True leverage calculator
A true value calculator would, in fact, be better for business because it improves business intelligence shifting opportunities to meet true market demand. A true value calculator would not eliminate markets, it would liberate the true demand of a market. And if that is not enough, consider the 100,000:1 market leverage that the trade in social currencies could have over financial currencies.
Henry George was discredited for many ideas which are now emerging in with the increased economic influence of Social Media, social capitalism, trade of limited natural resources, and the trade of social currencies in reaction to the demise of financial currency.
Why does poverty become a deeper problem as a society becomes more prosperous?
While times and technology are far different than 110 years ago, early ideas are sometimes essential to peel back the complexity and look for the “truisms” that drive the Human Condition. Only then can we find both our common ground and our common direction.
The book describes basically taking Classical Econonomics and distorting it by
artifically merging land into capital, and distorting Classical economic thought
with NEO- Economic thought, and pushing this agenda through media and
institutions… over the last 100 years…
Henry George’s first book, Progress and Poverty: An inquiry into the cause of
industrial depressions and of increase of want with increase of wealth… The
Remedy was self-published in 1879. It went on to become the best-selling book ever on
political economy,* and in the 1880s and 1890s was said to be outsold only by
*Political economy is the science which deals with the natural laws governing the production and distribution of wealth and services.
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”
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.
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).
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.
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.
I 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.
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.
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.
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
I was invited to present at the Future of Money and Technology Summit in San Francisco on Monday April 26. Representing The Ingenesist Project, I’ll be seated on a panel with two very important futurists; Chris Heuer and Micki Krimmel discussing non-quantifiable exchanges. The ever esteemed and respectable Ms. Tara Hunt will be moderating the session.
The Future of Money & Technology Summit will bring together the best and brightest thinkers around money, including visionaries, entrepreneurial business people, developers, press, investors, authors, solution providers, service providers, and organizations who work with them at the convergence of cash and commerce. We meet to discuss the evolving money ecosystem in a proactive, conducive to dealmaking environment.
What I find especially interesting is the incredible collection of technologies for the storage of value and the amazing group of entrepreneurs corresponding to the exchange of value in future markets. The definition of currency is something that is used as a medium for the storage and exchange of valuable. As such, it would be quite the understatement that the FMTS will be a valuable experience.
A great deal of thought, planning, and money has gone into these ventures and now they are together in one room. This can only be attributed to the increasing inability of the current financial system to function as an equitable means to store and exchange value that drives entrepreneurs to new conclusions.
When I witnessed the Mexican Devaluation, the social reaction was to empty out the local WalMart. Those “goods” such as clothing, appliances, and furnishings became an intermediate currency that stored the prior day’s peso value for exchange with tomorrow’s market. The same is true for most financial crises with significant devaluation events in recent history.
The clear and present difference is Social Media.
We now see people busy at work to replace the old currency with improved systems and tools for the storage and exchange of value before the actual calamity arrives. In effect, the new systems are hedging the old one.
It will take many years for the implications and importance of events such as the Future of Money and Technology Summit to make it into the case studies of the major B-school curricula. Ironically, that does not mean that real history is not being made – or shall I say, old history is not being re-made.
So please consider joining us at the conference (details). If you are attending, please, please, please, find me and let’s talk about everything. As always, thank you dear reader because ultimately you are the only reason that people want to talk to me 🙂
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.
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.
I 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.
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.
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.
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.
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.
Few people realize the significance of the emerging trend we call “Local Social”. As we learned from the emergence of Broadband technology, the “last mile” will be the final piece of the puzzle to scalability, integration, and monetization.
When Social Media becomes a tool that allows communities to organize, everything will change. A new generation of business plans will emerge to deliver everything from education to advertising. Engagement Marketing is becoming serious business. These new business plans will integrate social media directly as a means of empowering communities.
On another increasingly related front, community currencies are on the rise. They still suffer from adoption issues and accusations of protectionism – but they are on the rise. Look for correlations between community currencies, Social Community Organization and the slow steady evaporation of government currencies.
The fine Folks at Strategis Advisers provided the following cheery analysis of the world emerging around them. Keep in mind that Strategis is articulating what a real community sounds like. Real implication for the sensitivities of real people. Don’t expect this to sound like “Bernanke speak” any time soon, because it isn’t and that’s the point:
If the community page gets thousands of fans/members, it’ll turn into a wiki that is managed by members of that community.
Also from Facebook this week, you will soon “like” brands rather than be a “fan” of them. Mashable explains here. This is a band-aid to the problem created when i would like information from The Official Days of Our Lives Page , but I don’t want my friends to think I’m a fan . I’ve got an image to maintain, ya know.
It would seem that all currencies have an Image to maintain
If people get spammed on their Facebook activity, I would expect the romance to be short lived. It is important to see what Facebook will do with all of the data that they’ll collect. Remember, Local Social does not need a big platform like Facebook but Facebook needs the micro platform that is “Local Social” in order to monetize.
If Facebook provides consumers with the same information that they supply to corporations; CEO name and address, preferred music, groups joined, etc. Then we’ll see a level of opportunity and accountability that is required to support a universal social currency. That is where adoption issues and accusations of protectionism will be resolved.
I guess that is could be considered sacrilege for a college professor to suggest that higher education is inadequate in some way. My position is that the college degree must go away in favor of strategic combinations of high resolution knowledge assets. The irony is that those who really “get it” understand “school” better than the schools.
The price of college education compared to the value of college education in society is skewing toward obsolescence. The news reports are filled with stories of unemployed MBAs and Engineers. Over qualified, out of date, over generalized, specialized into obsolescence are all risk conditions that can make college a liability, not an asset.
There are many articles in these archives that outline my opinions on the subject. So here is what the kids say….