Posts Tagged ‘empower’
In Search of the Economic Warp Drive
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?
What The Heck Is An Asset?
When you go into a store to buy anything, the rational person will always compare the quality of the object against the price of the object versus any alternative products or markets.
When you buy a home, the property is characterized by descriptions for “quality” (construction, neighborhood, schools) and a series of ”quantities” (number of bedrooms, square footage, price)
When you cross the road, you look both directions in order to assess the quantity and the quality of the traffic that may or may not kill you. Are the traffic slow moving pedestrians or are they fast moving trucks?
When a bank makes a loan, they “quantify” all of your valuable things like your home, cars, 401K, and personal income and they use the credit score to measure the quality of your finances (debts, credit pulls, past history, bankruptcies, etc).
Supply and demand cannot, absolutely cannot, be determined by any other means other than by measurements of quantity and quality.
In fact, economics is the science of incentives where the fundamental graph is the supply and demand curve. Both supply and demand behave according to inputs of quality and quantity, specifically price and availability. Supply and demand for anything absolutely cannot be determined by any other means than by coordinates of quantity and quality.
Investors manage risk.
Risk is an asset, if it weren’t, insurance companies would not exist. There are three things that an investor must know in order to manage risk. 1. They MUST be able to identify their exposure to peril. 2. They MUST be able to estimate the probability that the peril will or will not impact them. 3. They MUST be able to determine the cost of the consequences in the event that the peril happens.
Again, within the definition of risk – to which ALL INVESTMENT RESPOND, are the characteristics of an asset; what is the quantity (1) and (3) and what is the quality (2) of the peril. If the investor does not CLEARLY SEE these three positions, they will not invest. Period.
This is what drives successful markets and what kills unsuccessful markets.
To ignore the fact that all rational human behavior, intentions, decisions, reactions, conversations, relationships, education, ideology and every other state of human consciousness in a market, corporation, community, family, or social network ARE NOT characterized in the form of a quantity and a quality, is frankly, ignorant to ones market, irresponsible to one’s community, and incompetent to one’s profession.
Yet so many people do not see themselves as an asset. Maybe someone should give people permission.
iHub, iSpoke, iLift
The physical world has organized itself around the Airline Hub and Spoke system. As a result, Airline economies of scale have become subsidized in many ways by limitations imposed on passengers. Everywhere that the private aviation industry can reorganize this oppressive world, the business case for private air travel will improve.
The Good, the Bad and the Disrupted
Look at virtual world of social media like a Hub and Spoke system where social networking websites are the Hubs while the desktops, laptops, and iPhones are terminals at the Spokes. Now, if you overlay the aggregate private aviation route structure on this social media “route structure” instead of trying to beat the heavies in their own game, you will become the disruptor instead of the disrupted.
Can’t make a bet without odds
The private aviation industry can develop predictive models from data mined from social networking sites to proactively identify “people hubs” that demonstrate a high connectivity between certain city pairs at certain times, certain seasons, events, meet-ups, birthdays, holidays, etc. In other words, private aviation can offer “Lift Products” corresponding to social and professional networks of real people in real time.
The mutt lives longer than the purebred
Innovation comes from diversity, not similarity – if private aviation can disrupt the cattle drive that people are forced to abide by, a new proposition can be provided to people and what they value most highly; their social value system. However, in order to empower others to innovate, we must first innovate among ourselves.
As airplane folks, we know that most problems are usually more complicated than they look. We rarely expect a problem to be easier than it appears. What if we are wrong?
This ain’t rocket science…
Maybe we would be surprised at how fast people can make value based decisions. Maybe we have no idea how fast a market can shift using social media. Maybe we don’t realize how easy it would be to simply steal the economies of scale away from the airlines and give them back to the customer and pocket the difference.