In earlier articles, I described Social Media evolving into user-generated productivity in the new science called Social Capitalism. A social currency will be required to represent ONLY real productivity, not simulated productivity.

Monetization means that social currency must be convertible with financial currency or accepted widely enough to stand alone across all phases of production.

What exactly will people produce in Social Capitalism and from what raw materials?

We know that buying a can of Tuna Fish at the grocery store is a very simple transaction. This is because the institutions that support that transaction are incredibly complex; there are catchers, processors, banks, transportation, inventory, outlets, etc. – all are very complex pieces that need to integrated in order for that final transaction to be very simple. |

Those same complex institutions must exists in Social Capitalism in order to ultimately make transactions in a social currency very simple and widely accepted so that one may eventually be able to buy groceries with it.

In classical economics, entrepreneurs deploy land.labor, and financial capital in various combination in order to produce stuff.

In social economics, entrepreneurs deploy social capital, creative capital and intellectual capital in various combination to produce stuff.

Now, what is the stuff of Social Capitalism?

WIKiD stands for Wisdom, Innovation, Knowledge, information, and Data. Value in Social Capitalism is created by transforming one of these elements into another one of these elements.

For example: Transforming data into information creates value. Transforming information into knowledge creates value. Transforming knowledge into innovation creates value, and transforming innovation into wisdom created value.

We see this today

In social media bloggers transform data into information, people take that information and combine it with their own to create knowledge. They get together with friends and share it creating new ideas that transforms their businesses. This makes everyone wiser as they see the success or failure of their own or another enterprise.

All this value is being created there just is no way to express it in an economic paradigm except through some increasingly irrelevant association with Land Labor and financial Capital.

In WIKiD Tools, the word “Tools” refers to how each of the WIKID elements is related to each other. You can’t have knowledge without information and you can’t have information without data, nor can you have wisdom without innovation. If you take away one element you lose the others. So these are all related.

On the other hand, you cannot create one without the others.

We can now say that wisdom is derived from trail and error, that’s innovation. Innovation is derived from knowledge. Knowledge is derived from information, and information is derived from data, etc. These are the production “tooling”

Productivity:

The word productivity means all the stuff we can produce within a certain period of time.

So now we can say that:

• The value of wisdom is related to the rate at which innovation can be produced.
• The value of innovation is related to the rate at which knowledge can be produced
• The value of knowledge is related to the rate at which information can be produced
• The value of information is related to the rate at which data are produced.

On the flip-side:

Suppose a social entrepreneur wants to create value. They would simply look for high rates of change of information in a community. That tells them value is being created and all they need to do is transform that information into knowledge and they will enjoy a profit.

If the social entrepreneur sees a diverse group of people getting together to share their knowledge about something, this is a big red flag that value is being created and all they need to do is transform that information into knowledge and they will enjoy a profit.

…Etc.

The Monetization of Social Currency:

This value can be measured sincee Internet analytics record all the required data and their time functions. Analytics can tell the entrepreneur what information is aggregating and where. Entrepreneurs can determine that diverse groups people are getting together at Conferences, Meet-ups, and Social Media Clubs.

Now, Geolocation will accelerate innovation as people populate the last mile of social media. Deep web search engines are mining data at an unprecedented degree of relevance and inter-connectivity – all of it is measured with respect to time.

Done.

With WIKiD Tools, we have an extraordinarily powerful algorithm for creating, measuring, storing, and exchanging value that we can represent with a social currency. Since social currency represents real productivity (as opposed to Simulated Productivity) it can therefore be fully convertible to financial currency.

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 – an accelerant, if you will.

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

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. Think about it as your resume represented in “code” not unlike the Dewey Decimal system represents the contents of your High School library.

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.

The Next Economic Paradigm is a very simple idea yet the overwhelming majority of people have absolutely no idea what we’re talking about.  The strangest part of this work is the knowledge that eventually this will become completely obvious to everyone and the transformation, from beginning to end, will take a very short period of time.

My greatest curiosity is imagining when and how this moment will arrive.

I recently saw the latest Star Trek re-boot where an old Dr. Spock encountered the exiled young Space Propulsions Engineer named Montgomery Scott who had been convicted of attempting a mash-up between warp drive and atomic particle transporting with the commander’s pet schnauzer – where the term “mash-up” was implied to be quite literal.

Um,…the dog wags the tail.

The epiphany came when the older Spock suggested that Scotty’s approach was backward.  Instead of assuming that Space was stationary and the spacecraft was moving, Scotty should assume that the Space is moving and the spacecraft is stationary.

In one fell swoop, all the calculations finally made sense.  A good theory became practical.  All those nasty side effects – like bringing the schnauzer atoms back together – were no longer a problem.  Lo and behold, the Federation was saved.

Of course everyone knows what warp drive is and what transporters do, yet the science involved with their actual construction of these devices remains intensely complex.  The same can be said for our financial system. Everyone knows how to buy a can of tuna fish, but the actual formulation of that transaction is intensely complex.

We have developed a vast set of processes, techniques, and infrastructure around the basic idea that markets are dynamic.  Everyone knows that markets change and move and they behave in many strange ways in response to price inputs, scarcity, surplus, legislation and ideology.

Meanwhile, people are defined by what they consume – like red dots and blue dots on a political district chart, demographic data points, owner/renter, winner/loser, jobbed /not jobbed, young /old, first class/coach, etc.

And that is just the way it is … and the only way it can be.

Now suppose Dr. Spock was to beam down and suggest that markets are static and people are dynamic.  Imagine everyone staring at the can of tuna just sitting there, lonely, dusty and static, doing absolutely nothing except being a can of tuna on a stationary shelf, in an inanimate “market”.

The epiphany is that human knowledge assets are completely and irrevocably tangible in every way, shape, and form. Humans allocate and trade social capital, creative capital, and intellectual capital with each other in infinite ways, sometimes resulting in a can of tuna in a market.

All knowledge assets are tangible in the right exchange system.

I wonder what they will call it?

One of my favorite aggregation sites is Business Week Exchange.  To me BX represents a knowledge inventory.  Everyone who posts to this site is a media maven, social influencer, and trust agent.   Each one represents a galaxy of relationships, experiences, and followers.   All the categories are sourced by these users.  All of the articles are sourced and often written by these users.  All the trending data are produced by the users.  By far, my highest QUALITY followers come from BX; not Twitter, not Facebook, and not Friendfeed.

The site is massive and I’ll spend a great deal of time skimming categories and reading titles to get a good idea of what people are thinking, what they fear, what they want, and what they are optimistic about.  Most articles represent real-time main street issues.

Now, when you compare what’s trending on BX and you compare what is “editorialized” in the mainstream media…and they are different, an important conclusion can be made.  What people care about and what is passed off as “news” are too often quite different from the other.  Herein lies the apex of the social media divide.  News that increases my daily productivity nourishes me.  “News” for which I am powerless to influence is nothing more than sugar calories. For Example:

The top 10 topics from BX on Monday, November 16:

Social Media
U.S. Economy
Social Media Strategy
Business Innovation
Entrepreneurship
Global Economy
Business Technology
Career Change
Leadership
Google

The Breaking News on Bloomberg the same day at any given time:

U.S. Stocks…
U.S. retail…
3Com Options…
EMI Debt Burden…
USB Debt Trading…
AMBACS Bond Insurance…
NY Pension Fund…
Obama/China Trade…
Iranian Nukes…
Bernanke says…

I tried this experiment with many different combination of categorization from the Bloomberg site and not once was I able to produce a set of priorities that represents what other people like me actually care about.  It’s great entertainment, but is it my News?

Bloomberg has an incredible opportunity ahead of them and the question is whether they will develop BX to the highest standard of transparency and promote it to the highest level of editorialized influence – if not the outright taxonomy for their editors to classify so called “news” – or will they squander an astonishing resource of business intelligence.

At the end of the day, the people who created BX and those who support the BX process got something very right in an environment when so much is going wrong for journalism.  They had the guts and the humility to listen to me and people like me.  They gave me their respect and their trust; more tangibly, they gave me their name which empowers my SEO rankings among the mainstream.  In return, we give them a look deep into our humanity – this is who we are, this is our human nature.

The creators of BX are precisely the astonishing resource to whom so many people owe a debt of gratitude.  I call it Journalism at it’s 21st Century best. Let’s hope that Bloomberg sees things our way – at the bottom line.