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Tag: value creation

Social Value Creation; A Blank Canvas

The evolution of money

Money has evolved from coins to paper to electronic accounts. Now we see the emergence of mobile electronic accounts. Money may represent value but does it actually represent the value creation process? If not, then what does and which is more important?

PayPal wants to be like the electrical socket that all mobile payment innovations plug into.   In fact, they have a standing invitation for all technology partners in the mobile payment space to integrate with them. This is called an externalization strategy (much like Facebook, Twitter and Windows), where there are so many developers, users, and participants that NOT being on the platform becomes the competitive disadvantage.

The PayPal offer represents the separation of money from the value creation process.  This exposes a very interesting point to consider.

The Frictions of Monetization

The assumption is that PayPal et al will store and exchange dollars, and only dollars.  As such, they are contained within the financial system: credit score system, a person’s name, birth date, and the social security number as a personal identifier, the IRS reporting jurisdiction, and commercial code vetting mechanisms, etc.

Similarly, the drive to monetize in Social Media is pushing applications toward the same containment within the financial system.  Not surprisingly, the complaints of privacy and data security in Social Media stem precisely from association with credit scores, IRS, personal identifiers, Social Security Numbers, etc.  But “Big Social” presses on – they know not another way. Ironically, this is precisely the battleground; the source of all intermediary tactical and social friction that hinders monetization in the first place.  It has little to do with the creation of value – only containment of value.  To win is to lose.

A Better Proxy for Value

The reality of governance dictates that all business ventures begin and end in a standard currency of commerce such as the dollar.  However, there are NO restrictions on which currency must be traded in between to “create value”.   Nor is there any schedule that determines when a venture must begin, end, or be liquidated to dollars.

While The Social Value Game may start and end with dollars, the value creation process is carried out in a social currency using a “Social Credit Score”, an anonymous “Unique Identifier”, and a collection of “Social Vetting Institutions” independent of government or corporate jurisdiction.  The Value Game is a frictionless, tax-free and self-regulating environment without the guy wires of the financial industry.  The game simply leverages existing value socially to make new social value.

Social Value Specifications

The Social Value Creation Process is a blank canvas and we are writing the specifications today.  If a social currency becomes a better proxy for productivity – it may also become a stand-alone currency fully capable of capitalization and securitization. Theoretically, a social currency may never need to be converted to financial currency any more than a dollar ever needs to be convertible to silver or gold – it simply becomes another ledger entry on an accounting balance sheet.

Is Money Irrelevant?

The value creation process is the hard part.  Transformation of Social Currency into Financial Currency will become easy – anyone can do it.  In other words, if PayPal becomes irrelevant, the money evolution chain will be broken and money will become obsolete.  The market is wide open for a money competitor who can simply transcribe a social currency transaction into a ledger entry for financial currency. It’s a lot easier and closer to reality than many people think.

The Capitalization of Silence

"Silence" by Horst Schmier

Coupon Madness

The business concept of rewards coupons is not new. S&H Green Stamps were among the original applications of the concepts. The fact that coupon cutting is now going on-line is not surprising to anyone. A second major trend is in the area of data collection. Supermarkets have learned that it is valuable for them to “pay” the customer in exchange for data that makes stocking and distribution more efficient. When combined, coupon + data is a tremendously valuable marketing and logistics tool.

The next development of coupon + data model is the notion that if a person likes a product, so too will their friends. This is the coupon + data + association model. Not surprisingly, the marketing value of the combination of these linked data increases almost exponentially.

To Pay Dearly

Brands are now willing to pay dearly for information about the transaction as well as the social networks associated with a transaction. With the ability to track several layers of transaction and association, vendors can paint an extraordinarily accurate predictive model that can be used in their favor – and in competition against market challengers.

The half-life of noise

The hype is brisk and often short lived as most companies eventually run up against the proverbial viral backlash. Someone somewhere can just as easily elevate their own influence by challenging a big influencer. Privacy issues, fair trade issues, corporate responsibility issues are all fair game. Social media forces transparency in an organization too as controlled data can quickly become uncontrollable data.

The battlefield is strewn with the corpses of marketing campaigns gone horribly wrong. Even Groupon, once touted as the champion of mom and pop shops across the land is now accused of dumping economic “sugar calories” into a zero sum game where size does matter – a lot. Groupon is now used by competitors against each other thereby wrecking havoc on Mom and Pop Shops across the land.

Help, I need a Guru

Social Media Gurus continuously pound home the message that they must find their customers grazing in their own pasture and engage them in order to be truly accepted into the herd.  Now the Gurus have all the vendors looking like wolves in sheep’s clothing – nothing could be more obvious or look more ridiculous.

The inherent flaw is that companies are designing and delivering products predicted to interact with people in their own setting. Instead, they must develop a set of products and services that are designed to facilitate human interaction with each other in their own setting – and as a consequence, filter out all the noise that wastes valuable social time.

Coupon + knowledge inventory + anonymity

Learning what people know does not mean that they need to give up their identity.   Joining people who have complimentary knowledge is a superior value creation mechanism than harvesting relationships already played out. The ability to protect and empower the customer in their home setting is the greatest branding opportunity on Earth. The ability to filter out the noise is the single greatest competitive advantage that any marketing campaign can ever enjoy. The ability to bring communities of people together to solve the problems of their own choosing is far more powerful than trying to convince people that they have a problem for which only you have the solution.

This is the capitalization of silence

Image by Horst Schmier

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