The Next Economic Paradigm

Tag: transformation

The Mastery of Time

When I was in Music School, I learned some very important things about Time.

As a drummer / percussionist the mastery of time is more important than even the instrument itself.  My instructor would place a metronome in front of me and ask me to clap my hands to the beep.  If he could hear any part of the beep through my clap, I failed.

The expectation was that I must mask every beep entirely at any tempo – indefinitely and seemingly without effort.  The truism is that if the instructor could not hear the beep, then neither could I.  True mastery of time means that the metronome must become irrelevant.

I struggled with this challenge for an incredible amount of hours over many many months practicing this seemingly simple exercise.  One day, my instructor said “it’s not about knowing where the beep is, it is about creating the space where the beep is not”.  In other words: understand the space between the beeps – the emptiness, the void, the silence – and let that become the basis of  your musical expression.

From then on – I could nail the beep.

When we listen to music, we derive value from the transformation of one beat to the next and the transformation of one bar to the next, one phrase to the next, and one section to the next, etc.  Value is what gets created between our actions – but without actions, there is nothing to contain that value.

Social currencies resemble this dynamic in many ways.  While money marks the metronome’s beep, the creative expression happens somewhere between the money – the emptiness, the void, the silence.  Let this become the basis of human economic expression, not the beep itself. Value is what gets created between our actions – let’s capture it there.   The true mastery of time means that the metronome must become irrelevant.

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The Wisdom of Wisdom

Obviously data are related to information and information is related to knowledge and knowledge is related to innovation and innovation is related to wisdom (whew!). But how are they related? What few people realize is that if you take out any of these components, the whole relationship falls apart.

data > information > knowledge > innovation > wisdom

For example, if data are corrupted, then everything that follows becomes corrupted; hence the advanced mathematical equation: “garbage in = garbage out”. Few people realize that at the end of the relationship, the wrong wisdom creates the wrong data and therefore “garbage out = garbage in” starts the process all over again.

Going from one component to the next is called transformation. If the transformation fails, no value is created. Google Transforms data into information. Human intellect transforms the information into knowledge. Knowledge is shared among other people and transformed into innovation. The success and failure of innovation is transformed into wisdom. Community wisdom, through the behavior of individuals, is transformed into data.

Entrepreneurs are concerned with transformation – this is where value is created. The entrepreneur identifies assets operating at a lower level and transforms the asset into a higher level. That is what entrepreneurs do.

The key to monetization is not coffee beans, it’s the transformation of $0.20 worth of coffee beans into a $2.00 Latte.

Transformation is where the most value is created, but it is also where the most risk exists. As such, it is the area where most entrepreneurial opportunity exists to manage risk, eliminate risk, diversify risk, and mitigate risk. To control the node of the transaction is to control the entire transaction. This is where the garbage enters. This is where the garbage is eliminated, this is where the garbage moves on. It’s all about the transformation.

Any asset that fails to change fails to remain an asset. Value is derived from the rate at which assets change. If I produce more in less time, I become more valuable. The RATE OF CHANGE in a phenomenon carries the most interesting and valuable information about that phenomenon. This is an important distinction that many people just cannot wrap their heads around – but they must if they hope to prosper in the next economic paradigm.

Transformation of the wisdom of crowds in social media is the next great opportunity, don’t trash it.

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The Capitalization of Knowledge – The Virtuous Circle

We have set up a new game for entrepreneurs to play called Innovation Economics. We have defined a currency and an inventory where knowledge is visible outside the construct of the corporation – and resident in social networks. We have also described a way for entrepreneurs to visualize the knowledge asset and the supply and the demand for knowledge assets. We have given them a tool for matching assets for profit. We have described how social networks will keep the game fair. We have outlined the structure of new business plans; the brain storming session, product development cycle, the neural network, and the multiplier effect. Future businesses will be built upon combination of these four structures and whatever else entrepreneurs can dream up.

We have described all of the pieces needed to form a new economy. Now we need to connect with the financial markets so that knowledge is readily convertible to other currencies.

For review;

With the financial bank, the entrepreneur assumes that they have the knowledge to execute a business plan and then they look for the money. The risk is that the entrepreneur does not in fact have enough knowledge.

With the Innovation Bank, we assume that we have the money, and we go to the bank to search for the knowledge. The risk is not having enough money to purchase sufficient expertise.

With both banks acting together – the risks cancel each other out and the innovation economy tends toward a ‘risk free’ cycle; the more knowledge you can assemble, the more money you can borrow. The more money you can assemble, the more knowledge you can assemble.

Now we have a virtuous circle. The more knowledge you have, the more money you can borrow; and the more money you have, the more knowledge you can borrow.

There is no shortage of money circling the globe – only a shortage of risk free places to put the money. The innovation economy is an environment of very high return for a very low risk and will attract a great deal of money to fund innovation enterprise.

Earlier we demonstrated that money represents human productivity. It follows that the places that have the greatest potential for increasing human productivity can create the greatest amount of wealth. Therefore, poor areas and marginalized economies with under utilized knowledge inventories or the injection of specific knowledge inventories, become the highest ROI centers in a risk-free system; a condition the explicitly favors the wealth equalization rather than wealth disparity.

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