Creating The Social Value Index

by Jay Deragon on 10/27/2010

In yesterday’s post titled “What is Your Social Credit Score” we said “The things we are learning about social media are not about making money from social media rather the means of creating economic value from social currency.”

Social currency represents information shared which encourages further social encounters and each encounter creates social value. Social currency, and the value it represents, is a social system which points to financial gains created by innovation. Part of the innovation we are witnessing is people are learning to leverage assets by reducing friction then exchanging new value with others like never before.

What is a Leveraged Asset?

We all possess assets whether owned, controlled or used to produce more value. Businesses consider human capital as an asset. Have you ever heard a business manager express an individual’s value as an asset to the organization?

Organizations leverage human capital to produce economic gain. Organizations produce products and services considered as assets for consumption in exchange for economic return. Human capital is used to create, distribute and exchange the organizational assets for economic gains.

Individually we use assets to enable our productivity and improve the value we create for consumption by ourselves and others. Individually we possess intellectual, social, creative and spiritual capital that we use in relationship to our personal and professional objectives.

Collectively organizational and individual assets are often underutilized. Underutilized assets represent significant value yet realized or optimized to their fullest value potential.

Reducing Friction Can Optimize the Value of Assets

Friction is defined as resistance encountered when an asset moves against the intent of someone or something wanting to use it. Friction creates disagreement, conflict and discord between people and things in contact with the asset of intended use.

When someone wants to use an individual or organizational asset for whatever purposes then friction is caused when there is resistance encountered. Friction is also caused when access to assets creates barriers, delays or loss of productivity.

Friction in a marketplace represents billions of waste and rework created by disagreement, conflict and discord between people and things in contact with the asset of intended use. Friction in the marketplace also represents billions of opportunity for entrepreneurs who can reduce marketplace friction by leveraging existing assets for alternative or improved uses.

Market makers are learning how to reduce or go around historical friction built in by bureaucracies created from old business models. Just consider what the internet has done to music, advertising, group purchasing, branding, distribution and overall buyer behavior of anything and everything. Fundamentally wherever there is friction there is now a way to reduce or eliminate it. Leveraging assets for alternative or improved uses has never been easier.

The Value Exchange Process

The human network loves value and consumes it naturally as air. Why is the use of social media growing exponentially?  The reason is that social media represents value exchanges with massive reach to a willing audience of consumers.

The value exchanged represents information and knowledge propagated by individuals and organizations. Historically information and knowledge has been propagated by organizations and institutions. Today information and knowledge created and distributed by individuals is trusted more and has greater influence than organizational and institutional content. We will discuss the value exchange process implications in greater detail in a later post.

Social Value Index

The SVI is a performance indicator that measures the ability of individuals and organizations to leverage assets reduce friction and exchange value with others.

The old system of credit scores measured an individual’s performance with the use of money. Business performance has been measures by “scores” from Dunn & Bradstreet and others. In the future we are likely to see the emergence of a SVI as a social credit score which measures both individuals and organizations use of social currency to create economic value for the new marketplace.

Notice that there is no debt requirements to leverage assets, reduce friction, exchange value and thus the SVI score is the reflection of a new economic paradigm.  Sound impossible? People and organizations are already doing this with little or no money. Remember the things we are learning about social media are not about making money from social media rather the means of creating economic value from social currency. Get it?


Zev February 5, 2012 at 2:45 am

“Economic value or social value? Performance or people? However you phrase it, many corporate leaders have seen these as opposing goals.

Today’s leaders must win on all fronts – people, customers, communities and shareholders. The question is: “How?” – I think the answer is- Gifted worlds ( ) It is a way to develop Gifted Education systems towards Knowledge Based Economy and then we will get youth with the ability to create money for themselves and for their society.

jderagon (Jay Deragon) October 27, 2010 at 12:16 pm

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What Does Your Social Value Index Reflect? [link to post]

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onlinemediaguru (Greg Underhill) October 27, 2010 at 11:38 am

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Creating The Social Value Index [link to post] #in #smm #socialmedia

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