The New Economic Paradigm: Part 7; Monetization of Knowledge Assets
Article written by Dan Robles (Taken from http://www.ingenesist.com/)
The New Game in Town:
We have specified a structure for a new economic paradigm by simply integrating the knowledge economy into the same structure as the financial system. The result is a completely new way for entrepreneurs to create wealth.
A. We specified that Information is the currency that is convertible to knowledge assets and innovation assets through a mathematical relationship.
B. The decimal classification and logic system provides a machine-enabled accounting and inventory system for knowledge assets.
C. The factors of production for the new economy are: social capital, creative capital, and intellectual capital.
D. Social Networks provide vetting, perfect information, and self-regulation.
These ingredients allow the spark of entrepreneurship to illuminate the supply and the demand for knowledge assets outside the construct of traditional corporations, government, or academia; instead catalyzing innovation enterprise within and among social networks.
An economy is born:
Entrepreneurs now have all the information that they need for matching surplus knowledge assets to deficit knowledge assets as a means of increasing productivity of these assets in a highly predictable manner. Advances in Social Media will keep the game organized, localized, transparent, self-regulating, and fair. The Unit Business transaction can be assembled in infinite combinations to support countless ‘new-to-this-world’ innovation enterprise.
Show me the money.
Monetization is the process transforming a product or service into a universal tangible currency; specifically, a Dollar, a Euro, Yen, etc. Very few people fully understand how money is created in the first place.
Money represents future productivity:
In short, money is created from debt. Banks are given the authority by a government through the fractional reserve system to literally scribe money into existence. This money is not backed by gold or silver, rather the money is backed by the promise of the borrower to pay it back in the future.
Ultimately, the value of money is a social agreement; a promise based on an estimation of future productivity. When those promises cannot be kept, the value of economy diminishes. When the promise is exceeded, the value of economy appreciates.
Blood brothers or distant cousins?
Debt and innovation have one very important feature in common; both are a proxy for future productivity. Therefore if debt can be used as a basis for a national currency, so can innovation. Everyone should be willing to honour the social agreement because the currency would not change, only the basis of the currency.
The only way to sustainably create more money is to increase human productivity. The only way to increase human productivity is to innovate.
The Risk Factor:
Our financial system has developed over 400 years a variety of systems, methods and analysis tools to manage risk in monetary transactions. Innovation economics has applied the same system to the management of risk for transactions of knowledge assets. The correlation is as follows:
The Financial Bank: the entrepreneur assumes that they have the knowledge to execute a business plan and then they go to the financial bank to borrow the money. The remaining risks are knowledge related.
The Innovation Bank: the entrepreneur assumes that they have the money to execute a business plan and they go to the innovation bank to search for the knowledge. The remaining risk is finance related.
They hedge each other.
The Virtuous Circle:
The more knowledge you can assemble, the more money you can borrow. The more money you can assemble, the more knowledge you can borrow. With both banks acting together – the risks cancel each other out and an economy of risk free innovation emerges.
Amalgamation of predicted cash flows:
With a computer readable knowledge inventory, diverse communities of practice, a percentile search engine, and the virtuous circle of finance; cash flows associated with innovation enterprise can be predicted much more accurately and with far lower risk than any current innovation system.
Were risk is predictable, a portfolio of innovations can be diversifies so if one innovation fails there is an equal chance that another will succeed and the risks cancel each other out. The predicted combined cash flow of all the innovation enterprises can be depicted as a single large steady cash flow with low volatility.
Much like today’s companies do to raise money for expansion, the innovation bank can issue bonds on the open market. A bond is a debt based on future innovation and will act as the transitional instrument to monetize innovation economy. Options can be sold on futures of innovation enterprise.
For example: a bond can issued by a bank or a government with coupon price of 1000 dollars paying a risk adjusted interest rate and redeemable in 8 years. The proceeds can now be used to fund innovation enterprise, which, by definition, are qualified and quantified on the basis of increased human productivity. Investors can buy options on promising algorithms for knowledge assets. This system is exactly how mortgages are financed through global networks of bonds, options, and hedge funds. The current economic crisis happened because estimations of future human productivity failed to support the estimated value of the assets being represented.
The Innovation Economy is the hedge against financial crisis and consumption capitalism - now and in the future.
The New Gold Rush:
Innovation Enterprise can easily exceed the 7-12% return that is normally expected on Wall Street. Venture Capitalists only entertain innovation expected to return 1000%-5000% return. There is a huge market of innovation enterprise in the regime between 12%-1000% that is currently un-capitalized. If innovation bonds and associated options return only 25% consistently, the flow of global capital will be intense and our nation will be transformed far beyond any current expectation. The opportunity is, however, even much greater than that; Innovation will reflect social priorities rather than Wall Street priorities.
The epiphany of innovation economics is that technological change must always precede economic growth. Humanity has been going about the process of globalization as if economic growth can precede technological change. This has been the singular flaw in modern market economics that has created the unsustainable system that we have today. The financial instrument of the innovation bond reverses this flaw and will open the next economic paradigm to extraordinary human progress.
Future modules in this series will discuss the implication and specific embodiments of an innovation economy.
Almost everywhere you go these days people are talking about it. Everyone (except you) seems to be doing it. At networking meetings every businessperson or charity fundraiser seems to be benefiting from it.
So what is it? Social Media. It’s the biggest talking in business circles since Google (that’ll help our SEO performance). But in all seriousness, most people really do not understand it! They feel they should be doing something for their business or charity but they really don’t know where to start.
They probably suspect that everyone else is doing it and so they are the only one’s missing out. The final anxiety is that they are being made to understand that in some way (they haven’t yet grasped) Social Media is a ‘golden bullet’ to success miraculously leading to extra sales, extra clients, extra fundraisers extra whatever they request from this genie in a computer.
In this article I will try and give you a no frills, no hype, honest assessment and summary of where I think we are in the Social Media cycle - and critically, what you can and should be doing about it!
What actually is Social Media?
In my opinion the definition of Social Media is (there are many definitions) any digital platform or vehicle that allows people, businesses and organisations to communicate and interact with each other. This could include everything, and anything, from mobile phones, video, websites, blogs - to vehicles like Face book, Twitter, and Linked-In. There are simply thousands to choose from!
Tip number 1.... less is more! Choose one or maybe two SM platforms/vehicles and really get to know/understand them properly. The worst you can do is to choose a wide range and never use them - or use them incorrectly. Choosing, and properly setting up the most beneficial platform(s) for you your business or organisation is critical to success. This is the point at which experienced advice is most needed. For instance, if you want to interact with the business community because you offer a B2B service, the networking colossus ‘Linked-In’ is the place to start. There is no more powerful online tool if used in the right way. Also, there are options to upgrade from the basic service - which for some can be incredibly beneficial.
Tip number 2.... If you want to interact with professionals in the business community, take the plunge and register on Linked-In. JUST DO IT as my T Shirt says! My only word of caution is that when going through the (easy) setting up process; think very carefully about what you are including in your profile, and how you are including it. Why do I say that? Well Linked-In is searchable and all of the information on your profile acts as ‘keywords’ just like key words on Google – so make sure you include search words that you think people will use to find a business like yours.
If your target audience is more aimed at individuals, or say you wish to engage with the younger generation, then Twitter, Facebook are obvious choices.
Tip number 3.... Having said this- please be VERY careful that you do not mix business with pleasure, unless you are comfortable doing so. Something that I frequently see is people accepting business associates, contacts and even clients as friends onto their personal Facebook or Twitter accounts etc. The danger is that, yes, everyone has a personal life and should be proud of it, but once people have access to your social networking address you cannot control what they may see or read about you from other people’s posts etc. So if you don’t want your best clients seeing photographs of you dancing half naked on the top of a pub table, think twice before accepting everyone as a friend. On the positive side of the equation, Facebook is a very powerful tool for organisations such as charities, football clubs etc. In fact Social Media is one of the most powerful set of tools THE Non-for-Profit sector can use to raise substantial funds and engage with much wider audiences. In fact D2 Interactive (with whom Vizzit have a strategic alliance) are currently working with 4 charities on their Social Media Strategies which will almost certainly result in significant additional income streams by way of additional donations. The way this is achieved is by providing the charities with the tools to integrate with their websites to make donating easier and for running virtual events. In fact one reasonably small charity in Australia generated in excess of 400K Aus $ from a virtual climb up Everest!
Tip number 4... If you are part of a charity that needs to raise additional funds, please talk to us and we can show you how it works.
Tip number 5... Quality communication is King! As in normal life, rules on how to behave apply. In fact they are probably more important because you are being exposed to a much wider audience. One of the key rules is -DO NOT try and sell your services (or at least not overtly) because this will be severely frowned upon your new community may well shut you out. The most effective way to operate is to be friendly, interesting, and relevant - and critically if you are an expert in a specific field provide advice and guidance at every opportunity. This will create a good reputation for you and your company and position you as a subject matter expert. If you are a subject matter expert in your field find a form where people are asking questions and see if you can help them by providing FREE advice and guidance. Not only will they be delighted (and may become a client) but the other forum users will also see what you are doing and may also contact you! It’s primarily a matter of being trusted by your new friends.
I hope you have found this to be of use and that the article has given you some of the basics to getting started or to improve upon what you are already doing. I also hope that you realise you are not alone if you feel confused about what to do and struggling with where to start. This is normal.
The reality is that Social Media is the future and it is something that, like it or not, we are all going to need to embrace if we are in business or involved in the Not-for-Profit sector.
For now, thank you for your attention and talk to you next time.
Vizzit Media Ltd
I am D2’s creative director. For more years that I care to admit, I have earned my keep in the world of advertising.
I’ve seen a few changes to my industry – the most significant being the migration of the high levels of advertising spend onto the internet.
There is no doubt that the Internet is the future of business communication. But why have so many of the fundamentals of marketing communication been swept aside in this mass exodus.
I am from the ‘school’ that believes that you can’t sell at people but need to create a convincing and informed reason for people to want to buy.
This involves gaining a pretty accurate picture of the target audience, their buying behaviour and what they are most likely to want from your product or service. You then set about communicating this.
I am not suggesting that exciting their senses and their aspirations with glossy images is of no value, but I do think that clear explanation of the benefits can often be forsaken for what I consider to be message camouflage.
Websites and online advertising can too suffer from this complaint even when it’s trying harder. All the brand information, whilst ultimately necessary, can get in the way of the visitor firstly grasping the big reason to stop and take note (then hopefully – action).
There’s a simple to remember formula for checking your message. It’s as old as the hills but is still used in full usage today. It’s called AIDA – you have to get their Attention, generate their Interest, create a Desire and make it easy for the reader, viewer or listener to take Action.
This methodology has long served the advertising and marketing industries because if the message is carefully constructed and crafted – it will get through to attract customers and stimulate sales.
D2 Interactive Ltd
PS. I have used AIDA to the benefit of Disneyland Paris Resort, Jewsons, Dimplex (market leader in heating products), Tetra (world leader in aquatic and garden pond products), Mercedes-Benz Retail, Renault Retail, Frizzel Banking and Insurance and much much more.
There is nothing surprising about the fact that business has been forced to go digital because technology has infiltrated all aspects of human and commercial life.
But where do we all have to look next? Recent predictions of a new economic paradigm The New Economic Paradigm/Part 7 are based on the precept that micro economics will dictate the shape of macro economics.
For business, this would mean the application technology tools, knowledge management techniques and marketing communication methods that embrace the rapid changes to traditional methods will be pivotal to these entrepreneurial futures.
It is reasonable to assume that these futures will be reliant on complete understanding and command of our own organisations many Internet activities. Whilst most companies are able to inhabit the Internet, only those with the appropriate technical and financial resources stand to sustain in this increasingly saturated and competitive commercial battleground. Less resourced businesses will struggle.
D2 Integrated, is the new marketing communications-based sister company of Vizzit Media. The new company has hand picked a talented, knowledgeable, experienced team and established a close-knit community of specialists with who they collaborate to provide the advice, expertise and top-up skills to bridge the gaps that exist between their clients and those of their more resource-rich competitors.
The skill sets range across such modern-day essentials as IT innovation, strategy and support, on/offline marketing communications, sales strategies and sales management support.
At the heart of the projects and tasks currently being undertaken by D2 is the strategic planning and application of Internet tools and creative communication methods in order to focus, enhance and intensify their clients on-and-offline marketing, communications and sales performance.
We will keep you posted on the progress of this new venture in future news briefings.
Read our related article: http://www.vizzit.co.uk/news/49-general/178-the-next-economic-paradigm.html
We wish to advise all clients that Vizzit Media Ltd has moved. The new correspondence address is:
Hants, SO41 6DY
As part of our ongoing service quality improvement program we have also installed a new telephone system which will allow calls to be answered centrally, but also to be transferred automatically to the most appropriate persons mobile phone.
The new central number is 01590 700121
Please note for Vizzit Dorset & NF Ltd the address and telephone number remain. 1 Hawthorn Drive, Sway, Lymington, SO41 6DX. Tel 01590 682161.