Plane Conversations

The solution to any problem is entirely dependent on how the problem is defined. Likewise, redefining the problem, exposes huge opportunities for new solutions.

In Fact, a great deal of innovation arises not from a clever solution, but from a clever new definition of a problem.

For example, “build a better mouse trap” has entirely different outcome when one simply changes the definition of the word “trap”.

Manufacturing Problems.

Commercial Air Transportation, for example, was once lauded as a “Time Machine” because airplanes could carry a person into “a future”  that was otherwise impossible to emerge in, or to a “past” that would never have been witnessed by any other means.

However, solving this problem created many more problems such as runways, infrastructure, car parking, noise, oxygen, crashing, etc.  Diligently, we went about solving those problems as well.  Unfortunately, solving each of those problems created a host of new problems. Today we’re down to solving the 3.0 ounce of toothpaste rule and the flammable underwear problem.

At some point we need to ask if we are manufacturing problems with every new solution.  At what point is innovation taking us backwards? How prevalent is this human trait and does it have anything to do with the financial deficit?

Redefine the Problem

One of the greatest opportunities of Social Media (which is rarely cited by the experts) is the opportunity to redefine problems in the context of social media.  Using our airline example, we know that  commercial aviation arose from WWII as a response for bringing troops to static battle fields with such dynamic machines as the DC3. This worked great after the war too!

Today we still treat people as static and airplanes as dynamic.  Suppose we were to redefine the problem so that people are dynamic and the airplane is static?

Think about it, people go about their life with work, family, and friends.  Then they hop into a long aluminum tube, tie themselves down and sit there doing nothing.  After a few hours, they emerge from the tube to go about their life, work, family, and friends. The aluminum tube is static, not dynamic – it’s a time machine, remember?

The opportunity, therefore, is for people to self-aggregate using social media around locations, schedules, and events related to life, work, family, and friends.   The market could then supply the correct size aluminum tube to meet the need of the community. After all, wouldn’t it be easier to move one airplane to meet the ‘market of many’ rather than trying to move the ‘market of many’ to meet one airplane?

This may sound trivial now, but don’t underestimate the creativity of social entrepreneurs to build a better problem to solve.

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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?

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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.

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