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Intervention by Denise Caruso Read Intervention by Denise Caruso, Executive Director of the Hybrid Vigor Silver Award Winner, 2007 Independent Publisher Book Awards; Best Business Books 2007, Strategy+Business Magazine

archive for March, 2008

GETTING PAID FOR INTANGIBLES

by ~ March 31, 2008

Larry Downes had a great blog post a couple weeks ago on The Writers Strike and the Battle for Virtual Value. Downes points out that the traditional media, with whom the writers were negotiating, have not figured out how to make money on the internet. Nevertheless, he asserts, they spent over $2 billion fighting about “revenues that do not yet exist from channels that have not yet been created.”

Contrast this with the recent New York Times editorial by songwriter and author Billy Bragg, The Royalty Scam. Bragg tells the story of Bebo, the social-networking site that grew to 40 million members in two years and, in Britain, apparently ranks with MySpace and Facebook in popularity.

A couple years ago, Bebo founder Michael Birch asked to meet Bragg after Bragg had lobbied MySpace on its proprietary rights clause. Birch assured him that Bebo would always put the interests of artists first—although this “support” never included any kind of royalty to the artists contributing content. Last week, when Bebo sold to AOL for $850 million, Bragg observed:

The musicians who posted their work on Bebo.com are no different from investors in a start-up enterprise. Their investment is the content provided for free while the site has no liquid assets. Now that the business has reaped huge benefits, surely they deserve a dividend. Continue reading »

THE INTANGIBLE IMPERATIVE

by ~ March 21, 2008

I resolved to start blogging about intangibles when I read a recent article in Fortune about soybeans called, “How Brazil Outfarmed the American Farmer.” The article explained how the Brazilians have used cutting-edge technology and well-designed market networks to become a dominant player in the soybean market. I saw this as just the latest proof that, as Thomas Friedman put it, “The World Is Flat.”

I believe that we have a lot of work to do to learn how to manage the intangibles that determine the winners and the losers in this “flat” world. And the American farmers are just the latest in the long line of businesspeople on the losing end of the intangibles game.

Fortunately, around the same time, I met Denise Caruso, who runs the Hybrid Vigor Institute and edits this blog. We became acquainted after she wrote a wonderful piece in the New York Times, “When Balance Sheets Collide With the New Economy” which highlighted the inadequacy of financial reporting to deal with the knowledge economy.

Denise explained how knowledge intangibles are invisible in financial and managerial reporting. They are also often passed over in decision making—in the assumption that “soft” issues cannot stand up to the rigor of traditional analysis.

But it is the soft issues that count. Continue reading »

THE DISTURBING PART ABOUT SPITZER

by ~ March 12, 2008

This post isn’t about Eliot Spitzer. Yes, of course I’m as outraged as anyone over how this scandal takes the wind out of Cathouse: the Musical. But something else about the Spitzer incident really hit home: The confirmation that my financial institution is a federal agent.

According to this USA Today article, financial institutions reported 17.6 million transactions to the Federal Crimes Enforcement Network in 2006. Does this fact imply that 17.6 million transactions in 2006 were criminal in nature? No, they were simply “transactions of interest” (my term). In addition, financial institutions filed about 1 million “suspicious activity” reports in 2006 (up from 413,000 in 2003) to government agencies. Allegedly, it was the suspicious activity reports that linked Spitzer to the prostitution ring.

But most of the people behind the other 17.59 million financial transactions aren’t accused of any crime. Still, their spending habits are monitored, and if anything sketchy turns up they’ll then be accused of a crime. This seems afoul of the Fourth Amendment, Continue reading »