Wednesday, July 29, 2015

The Cluetrain

The Cluetrain Manifesto

In 1999, Chris Locke, Doc Searls, David Weinberger and Rick Levine wrote the brilliant Cluetrain Manifesto in which they argued 95 theses the first of which was "Markets are conversations".  They went on to describe the nature of these conversations and how they are inherently human and, because of the disruptive nature of the Internet, these conversations cannot be controlled - and that is a good thing.  If you have not heard of or have not read The Cluetrain Manifesto, please do so. It is the prophetic text of the Internet enabled business.

The New Clues (Jan 8, 2015)

I just noticed that last Jan, Doc Searls and David Weinberger published 121 New Clues which describe a problem they describe as "An organ-by-organ body snatch of the Internet". What they have written is the very best defense of Net Neutrality I have seen.  Like the original book, the New Clues focus on humans and human interaction. A great example of this is the section titled "How did we let the conversation get weaponized anyway?" (Huge shout out to the brilliant piece by Willow Brugh which they reference to define the term.)
It's a great read and a compelling call to action - a call to be human in the context of the Internet.

Monday, July 20, 2015

The Block Chain and Inherently Equitable Financial Markets

Also published on LinkedIn

In the late 1990's I was beginning my teaching career. It was the very beginning of the technology revolution. The California State University system gave all teachers a free personal email account which we accessed via a dialup modem and the glorious Pine email client: text on a monochrome monitor. These were the early days of network computing - the Internet before hyperlinks and pictures. There was a clear sense back then that you were on a computer that was connected to another computer far away and to get more or different information you had to connect to a different computer that was located somewhere else. For me, this was magic - magic in a way that it is probably hard for a digital native to understand.

A map of the traffic on the Internet
Back then you could actually sense the network of individual computers that served files to individual users on their own individual computers. Today, with the prevailing metaphor of The Cloud, it requires some imagination and stubbornness to realize that the network of individual computers and files is still there. It is. In fact, the Internet is exactly that.  It is a peer-to-peer network meaning that any computer can connect more or less directly to any other computer. (Truth is there are a lot of traffic routers in the middle that really are computers but they have the sole purpose of routing your requests to your intended destination.) To manage this network web, the Internet has a standard protocol, a set of rules to which all computers must adhere to be discoverable, to be relevant. There is not a cloud. There is only each of us, Me and Google and you and Silk Road and Amazon and everyone one else. This is the essence of Network Neutrality, that each of these nodes is a citizen in an equitable network.
Idealized Power Law Graph

But this does not mean that the Internet is a random network where each node is equal. Far from it. Some nodes are more popular than others as demonstrated by the traffic map of the Internet. These clusters of activity follow a statistical relationship called power law where the quantity of sites on the Internet varies as a power of the amount of traffic each site gets so there are only a few sites that get a lot of traffic (the left side of the graph) and a lot of sites that get a little traffic (the right side or long tail of the graph.)

And so here is the punchline of this walk down my nerdy memory lane, equity and equality are not the same thing. Equity refers to a pre-condition of interaction like the nature of the network or the level of the playing field. Equality refers to a relative comparison of the value of nodes in a network or the players in a game. There will always be some inequality. In the map of traffic on the Internet above, the clusters of activity - the small number of sites with a lot of traffic - are formed by a process called preferential attachement where the sites with the most traffic generate the most new traffic because of their popularity. Even in an equitable network, preferential attachement is present but in an inequitable network - one where value is assigned arbitrarily or with prejudice - preferential attachment is exacerbated because it is not rooted in actual value relative to the other nodes. This is what we are seeing in our economy today. We have an inequitable network that is producing un-natural or perverted inequality. One way to address this problem is to redistribute value. That is what our inequitable economy has been doing since about the 70's - redistributing value to the rich. We should re-redistribute value to those with less. We should also create a more equitable economic infrastructure. This is why you should care about the block chain.
Here are the two facts about the block chain that I think are the most relevant. 
  1. Block chain is a simple, secure and transparent way to manage the exchange of value. 
  2. Block chain nodes or clients are distributed meaning they are built on a peer-to-peer topology.
Her is what Wikipedia says.
"A block chain is a distributed data store that maintains a continuously growing list of data records that are hardened against tampering and revision, even by operators of the data store's nodes. The most widely known application of a block chain is the public ledger of transactions for cryptocurrencies, such as bitcoin. This record is enforced cryptographically and hosted on machines running the software.[1]" - Wikipedia
The block chain first came to popular awareness as the database underlying Bitcoin. While Bitcoin continues to be a fascinating financial experiment, I believe that the block chain database that powers Bitcoin will be the true revolution. However, because block chain is an infrastructure innovation it will likely not be noticed by most people except as the catalyst behind more efficient and equitable markets. Just as the Internet has a protocol that provides the instructions for each computer to interact as a node in the network, the block chain will be the protocol for a new market infrastructure.

Currently, the network on which our financial markets reside is the opposite of peer-to-peer. Our financial market networks have a hub and spoke topology brilliantly illustrated by Kurt Vonnegut in Breakfast of Champions. Hub and spoke means that the user or client is out on the end of a spoke and all transactions must pass through the center. In market terms this is known as "clearing". (Granted this is an oversimplification as there are several hubs especially when you are looking at a global scale like I did with the example of the Internet as a network.) In the hub and spoke topology equitable transactions are possible; however, perverted or corrupted transactions are also possible because a third party that is required to sit at the hub and clear the transaction. This position at the hub infers immense privilege and temptation as evidenced by various recent scandals (LIBOR, FOREX, and of course the credit default swap casino that lead to the crash in 2008)

In a block chain market, there is no hub, no single place where transactions must be cleared. Instead, value is sold and cleared simultaneously, well, actually in a few minutes because the block chain node your are transacting through must check in with all the other block chain nodes to understand the provenance and the validity of the value that is being exchanged. This is possible because block chain data bases are transparent.  All transactions are recorded and can be queried by anyone. There are several examples of what is called a block chain explorer that query and display Bitcoin transactions. At its core, the block chain is a database.  If you follow the previous link you can click in to a transaction and explore the public details of the transaction. The anonymous details of the transaction can only be accessed by the actors who are party to the transaction and that private data can only accessed via secure private keys. It is those secure private keys that also designate the parties of the transaction - access is ownership.

Because a block chain database has no hub there is no privilege associated with being close to the hub and there is no need for a third party to clear the transactions. That fact combined with the combination of security and transparency means block chain markets are inherently more equitable and less susceptible to manipulation. 

Finally, it is important to note that this is not just a someday-maybe kinda thing. NASDAQ has hired to explore creating a new market infrastructure and companies like Ripple Labs are creating a new payments infrastructure for the equitable exchange of value anywhere in the world. Additionally, a company called Synereo is creating a social network built on the block chain which will be a fascinating alternative to the hub and spoke network of Facebook et al. I highly recommend reading the first chapter of Synereo's white paper.

Sunday, February 22, 2015

Social Enterprise, Time to take ourselves seriously

Originally posted on NextBillion

Social enterprise is mature. By that I mean social enterprises have demonstrated they can sustainably provide unique value to their customers. Market infrastructure has enabled this value to be provided sustainably; i.e. it can be provided continuously over time. However, while mature, social enterprise is not yet successful because success entails solving the world’s most intractable problems. In this post I will try to pull together several threads and suggest a way to increase the likelihood of success for social enterprise and, in turn, success for humanity. (Because that’s why we are doing this work, right?)

Monday, December 1, 2014

Social Enterprise as a Disruptive Innovation

A social enterprise is a business that uses the market to solve a social problem. Far too much is made of this elusive adjective - "social". There are two ways to think about why we created social enterprise. The first is to understand social enterprise as a re-purposing of business to achieve a non-business goal. The second, and more compelling, is to understand social enterprise as a disruptive innovation that addresses the failure of financial enterprise – the failure to provide value beyond profit. I am a Capitalist because I believe the market is the only engine available that can power the change we need; however, the market has also been at the center of creating the problems we need to solve. This is why I see social enterprise as a disruptive innovation focused on providing value beyond profit and illuminating the abuses of its predecessor - financial enterprise.

The Tactics of Collaboration

This was originally posted at the Stanford Social Innovation Review.  I am re-posting it here just to keep track of my writing.


Understanding the tactics of collaboration can help make the unique value of working well together real. It’s important because the whole—all of us, humanity—can be greater than the sum of our parts. We often discuss collaboration in terms of its relationship to competition; competition, at its best, can make each part more valuable and more effective, but collaboration adds value to the whole by focusing on how the parts work together.
Effective collaboration depends on effective relationships between humans. If the right people are in the room, and if there is time and space for like minds and potential partners to find and engage with each other, then even the worst-designed gathering can be productive. If the right people are also talented, driven, and a bit entitled, they will make the space they need to be productive regardless of the meeting’s design. However, setting aside time and space is not the whole story. Effective collaboration also requires that all collaborators gain value from collaborating. When the value is reciprocal, other barriers become smaller and the collaboration is easier to sustain.
Now, if we think of conferences or meetings as our tools for offline collaboration, then we need better tools. Our facilitation methodologies need to evolve and professionalize to focus on the experience and needs of participants. In his paper “Creating Participatory Events,” Executive Director of Aspiration Allen Gunn describes the problem like this:
The Internet era has ushered in a broad new panorama of collaborative tools and interaction opportunities in the virtual realm. But live “offline” events such as conferences, given their unique potential for connecting like minds and catalyzing relationships, have remained relatively non-collaborative affairs, employing dichotomous formats such as “keynotes,” slideware presentations, and panels to let one or several speakers relate across a veritable moat to silent and largely passive audiences.

Friday, November 14, 2014

A Music Review

We have abused all of the great words.  I love words.  Words like finial and newell post or picayune or asinine are so perfect and exact.  And the great words, words like peace, faith, courage and love are so vaulting and once trusting now plaintive in their effort to ask us to aspire to something great. Their meanings are not declarations but interrogatives. In the dictionary they ask: “what could I mean in your world?”

No soldier is more courageous than when she lays down her gun or never picks it up or never considers the gun at all. War and conflict are actually confounding of courage. It is courageous to aspire to grace. Not the receiving of it, because you have it.  You don’t deserve it but that’s the way of grace as my Sundays on the couch self understands it. Not the receiving of grace but the practicing - maybe questing, maybe it’s a journey? Maybe only process is courageous.  Love is courageous - not harts and ponies love - graceful love. I am also clear that courage is terrestrial, even mundane, certainly of the earth and more than self.

I see courage in art and expression.

Sophie Hunger

Just 'found' her (like Columbus 'found' America) last night which is why this post. In her first song (@ 0:16) in this TED “talk” she stands plainly in her humanity. This video is from 2009 and I am hoping, selfishly, for myself, that she is this person for always. The decisions she makes are jarring and beautiful. What would I do with my TED Talk? Could I give this well, be this present?

Valerie June

(If you have never listened to Valerie June, please do not make this video your introduction to this exceptional artist. Maybe try this one first.)
In this video, she makes a plain, actually, a naked offer - “I’ll be somebody to love.” And she does so Good Morning America - maybe the most antithetical stage she could find. Watching her through the course of the song, it wasn’t until I got to the end that I realized I was breathing and realized that I wasn’t breathing before. Could I move from plastic to courageous like she did? I listen to Valerie June a lot - nearly every day because she informs me. Can I give like that?

Friday, September 19, 2014

What is Resilience?

Resilience is a buzzword. Like 'innovation', in a general way we know what it means - enough to nod our heads at a cocktail party or during an elevator pitch. But that's not good enough if you are creating a solution to build resilience.  So, what is resilience?

Robert E. Ulanowicz is Professor Emeritus of Theoretical Ecology with the University of Maryland's Chesapeake Biological Laboratory. He has an amazing body of work in the field of Ecological Economics. In one particularly brilliant paper (Quantifying economic sustainability: Implications for free-enterprise theory, policy and practice) he and his colleagues provided the best definition and context for resilience that I have ever seen.

I am going to provide my interpretation of the paper but I would recommend reading it for yourself.

The first and maybe most interesting point is that resilience opposes efficiency. As a system or a network or a community becomes more resilient it also becomes less efficient. This kinda sucks because both resilience and efficiency are good things.  Additionally, they oppose each other along an access of diversity defined as number of possible pathways or connections. Maximizing efficiency requires reducing diversity or more accurately, maximum efficiency uses only one pathway.

The next point to make is that, because of the whole efficiency opposing resilience thing, as a system becomes more efficient it becomes less resilient and it generates a greater total throughput. This is because there is less diversity or connections so their are fewer choices.  With only one pathway - one input to get one output - generation of the output can be maximized. With too much resilience you have too many pathways to optimize. And this is the point where the wealth maximizing capitalists put on a self-satisfied grin, nod their heads and leave the room.  But wait, come back!

The problem with 'Output' as the Y axis is that it ignores time and time is why we are interested in sustainability. While it is true that greater efficiency creates a greater output, it also creates a more brittle or fragile system that is more susceptible to failure. Our definition for sustainability is 
'the ability to sustain the production of an output over time".  Now that our graph recognizes we exist in time we can include the concept of vibrancy.  Vibrancy is "the state of balancing efficiency and resiliency over time to maintain a healthy system capable of sustaining a desired output". In this graph, we can see the essential nature of resilience.  While it is still true that too much resilience will create a stagnant system, it is also true that the optimal balance between resiliency and efficiency will create vibrancy. It is also interesting to note that the data gathered from real natural ecosystems suggests that the balance point favors resilience just a bit.