No One Gets Fired for Buying Big Blue… until this past week.

When Gene Amdahl left IBM in the mid 1970s he commented on the utility of Fear, Uncertainty, and Doubt (FUD) in the IBM sales process. Popularized under the adage “Nobody gets fired for buying IBM”, the FUD principle just showed the length of its reach this week in Dubai. In my posting today, I am honoring one of Dubai’s most interesting characters who, but for the weight of axiomatic conventional wisdom, would be a household name. Instead, he has become a recent casualty in the global financial crisis. However, as you read about this fascinating personality, I trust that you see that he is a metaphor for many others. In his departure this past week, I consider the inscription on so many of the tombstones in the cemetery of Trinity Church on Wall Street:

All you Good People
that here pass by
as you are now so
once was I, as I am
now so Shall you be
therefore Prepare
to Follow me.

The one about whom I’m moved to write is Dr. Omar bin Sulaiman. “Dr. Omar” – as he is known to most – is a brilliant professional in the Emirates. Rising to the rank of Governor of the Dubai International Financial Center and Vice Chairman of the U.A.E. Central Bank, Dr. Omar was, indeed, deeply dedicated to manifesting the vision of Dubai as a regional and global financial center. And, left to his own intuition, may well have succeeded. However, like so many of his contemporaries in places like Singapore, Qatar, Saudi Arabia, Malaysia, and much of Europe, intuition just a few years ago was jettisoned in favor of “Big Blue” – figuratively and, regrettably, following the acquistion of PricewaterhouseCoopers consulting practice, literally as well. And mind you, whether you’re looking at Saudi Arabia’s growing interest in being the next “Silicon Valley”, Singapore’s A*STAR, or Vietnam’s newest technology centers, the price for consensus thinking will include sharing consensus outcomes.

I first met Dr. Omar on a phone call arranged by business associates in the United Kingdom and a dear friend in Egypt. The substance of the phone call was a discussion of how the planned Dubai International Financial Center and Exchange (DIFC and DIFX, respectively) could become a differentiated financial market – one that offered a global, unique position. I discussed the rare opportunity that the DIFX’s creation had in the world of equity markets – an opportunity afforded no other exchange on the planet. You see, if you really wanted a transparent exchange in which the market was not subjected to information asymmetries (“ignorance arbitrage”, as I like to call it), what better a place to do this then a market sympathetic to Islamic Finance and its strictures on ethical disclosure and risk sharing.

To understand the opportunity, let me take you on an exemplary journey through an actual market case…

You see, when I started M•CAM in the mid 1990s, we started reviewing the intellectual property of the world’s largest companies – many of which were (and still are) publicly traded. In many instances, technology alleged to be “core” to enterprises, was either inadequately protected or not protected at all by means of proprietary assertions made in the marketplace. Representations about drugs, cell phones, power systems, materials, transportation technologies, business methods, and countless other technologies, were incomplete in most cases and were outright misstatements quite often. Earnings projected off of patent licenses were often based on completely fraudulent positions. Against that backdrop, M•CAM was asked to review patents held by competitors but not to look at any information that could adversely impact the prospective client’s portfolio. In short, if you wanted to damage someone else’s assertion on a proprietary claim, that was fine, but if you used the same methodology on your own, it would be devastating.

After the United States’ and the European Patent Offices found out that they were caught issuing counterfeit properties to industry participants who then went on to represent their proprietary interests to the market, they closed ranks to defend the industrial base. Unfortunately, what they didn’t contemplate was that many companies, realizing that their patent portfolios were smoke and mirrors decided to abandoned their useless innovation artifacts and some – regrettably for the tax-paying public, decided to throw them away by way of patent donation. This process frequently involved colluding with a third party – usually a research institution who would vouch for “valuation” – and donating the properties for 10s or 100s of millions of dollars in tax deductible “donations”. The recipient institutions generally abandoned these “assets” as soon as they had completed using them as evidence of corporate sponsorship justifying Federal sponsored research grants.

Many of these same companies continue to flagrantly violate U.S. Treasury rules with what’s known as the In Process Research and Experimentation Tax Credit which is supposed to reward companies for new R&D. This loophole – estimated to be the second largest tax fraud in the U.S. at present – exposes the public markets to enormous tax liabilities and fraud penalties should the government ever decide to tackle this abuse.

So, back to the DIFC opportunity. What if you started a public market for companies that DID NOT have massive fraud skeletons in their closets? What if you launched a market, we suggested, where transparency included things like compliance with tax, intellectual property, and financial accountability? What if you launched a market where mining and oil companies were required to report on their use of indigenous lands and lands taken from displaced people so that the market could see the real price and real profit of an enterprise? What if you really made market ethics and transparency a differentiator? What if you actually used Ethical Standards – as set forth in numerous fatwa – as a global market differentiator?

For the record, Dr. Omar actually deeply considered this. In many meetings in Dubai prior to and immediately following the launch of the DIFX, we sat with him and administrators at the Dubai Financial Services Authority (DFSA) and discussed standards for a different market. However, when one is confronted with the inertia of incumbency, the appetite for differentiation wanes. And so it was that the bright vision of Dr. Omar and his patron, Sheikh Mohammed Bin Rashid Al Maktoum vanished in the dust storms blown by easy credit, credit default swaps, and sukuks which were indistinguishable from financial products unmoored from any responsibility or risk sharing. In short, the sirens of convention and ease, fully engulfed one of the most promising market opportunities of modern times. And, by September 2005, one of the most promising global market opportunities relented to the “Big Blue”.

The DIFC and NASDAQ Dubai are not lost. In fact, in the face of this past week’s announcement of Dubai World’s massive liquidity challenge, we may actually see an opportunity re-emerge. What we know is simple. Dubai is not unique. It followed many. Raising Tokyo a ski slope as the Japanese were razing theirs. Out malling Singapore and Hong Kong as the high fashion retail sector was being mauled in the rest of the world. Building castles in the sky while the atmosphere was toxifying for commercial and high-end residential markets.

As we see the global market continue to reel, the world needs a market based on transparency and ethics. While Dr. Omar has been the professional casualty of the tectonic tremor in Dubai, his intuition was not off. He came closer to the next financial reality than anyone else. And with so many other GCC and North Africa efforts trying to mimic Dubai, there is a lesson to be learned here. And if learned, the world will be better for it.

Tribute to Caden

On Sunday, November 22, 2009 a young man named Caden joined the morning Light. I was deeply moved by this seven year-old both in his life and in his passing. And so, a few days late, this week’s InvertedAlchemy post is my way of sharing with you a story that bears retelling.

I met Caden on the same day I met my dear friend Bob Kendall. From that day to this, I learned that Caden would teach me, in a few short months, wisdom that I never aspired to know. I didn’t want to know what it feels like to stand in a hospital with beautiful parents while the details of a tumor are described and find the end of words where all I could do is be present. I didn’t want to know that there comes a time when McDonalds French fries and Chicken Nuggets are too exhausting to eat so that a Happy Meal cools with time and tears into an inedible mass. I didn’t want to know that the empathy that binds humanity could invade days and nights for months as child and parents implored the universe for one more day on the lake, one more ride in the forest and that this empathy would find its way to me whether I was in Virginia or on the other side of the world in Papua New Guinea. However, I needed to learn through these catechisms and needed Caden to be my teacher.

Caden carried light in life. He communicated with all of us and for all of us. As his voice failed, he took to drawing and began linking color and image in artifacts which will be long held in their cipher. However, Caden drew one image on the night of our first meeting which will live, for me, as the message of hope in these times of puzzle. The image is in purple marker. At first glance, one can make out a form that could at one moment be a tree branch and the next could be the wanderings of a caged bird. None of these. The image is of a bridge. The bridge has an anchor only on one side and juts into the whiteness of the page. It goes to? Nowhere? Anywhere? Everywhere?

Caden’s Bridge is a gift of wisdom. For in it, a child of six years invited a reconsideration on many planes. Does a bridge only have its identity and essence if it looks like a bridge? Does a bridge contain its utility only when it connects two identified points? Can a bridge merely be the beginning of a connector which is sufficient for others to draw their own destiny? Can any image drawn in purple be a bridge not to a destination but linking inquiry between planes, times, and understanding?

Caden has crossed. Lux Invictus. Peace.

_

The Voice of the Trees

One month from now we will be advised as to how humanity will tackle climate change. As the closing manifestos are being spun into the tapestry heralding the dawn of a new age of ecology, we will see many efforts to insure that those who have asked for too much cede “enough” for those who seek to preserve their lust for consumption. Extraction and consumption incumbencies already presage a win post-Copenhagen in which, no matter what, the models they have come to use will require marketing adaptation rather than systemic transformation. Following the innovation already rife in the carbon trading world – namely the present laundering of money and U.S. Treasuries for drug, terror, and arms trade using carbon credits as the unregulated utility of choice – alchemists will do their best to turn Copenhagen into gold. NGOs will raise money to champion their particular cause. Industries will hire marketing firms to create messages to insure that public knows they’re committed to bold initiatives. And in the end, I wonder, who will speak for the trees?

Not long ago, I was asked to explain carbon credits to a group of community elders and leaders in a land far removed from Copenhagen. Combined European Union and National Aid agencies had taken advantage of the Prime Minister of this place and his imposed mantle of being a “model for the developing world” as a collaborator in carbon trade. Communities were asked to enter into an agreement to sell their forest canopy for a fee in exchange for the industrial use of said canopy for carbon absorption.

After explaining photosynthesis, the Kreb’s Cycle, and combustion in a detailed level thought tedious by the most respectful of the group, one of the elders looked at me with the most puzzled of expressions. “But why have they picked the trees to clean up the mess?”

Together, we sat beneath a rain tree, with its branches spread wide against the humid skies. Its trunk and limbs held thousands of ferns, mosses, and vines. Bird, reptile, and mammal had sanctuary in every vantage point. What would these carbon buyers pay for:
- the pure water which the leaves condensed from the air irrigating the plants, animals and people below;
- the medicine that can be prepared from the leaves;
- the nutrition that can be derived from the bark and roots;
- the wood that is used to build homes when a branch falls;
- the animals that call the tree home;
- the soil that the tree’s roots retain;
- the leaves that the tree produces which provides fertile soil for crops; and,
- the promise of the new trees which sprout in the protection of this one tree?
The living being – the tree – it turned out, was worth more than its carbon consumption value. And the communities were being asked to indenture the tree for a carbon credit.

I was struck, in that moment, with the realization that our best intentions to save the rainforests, purchase carbon indulgences in a vain attempt to buy our souls’ redemption, and to create a monetary utility for development – all seemingly laudable objectives – actually had created a greater ecosystem tragedy. In the end, having fully addicted ourselves to our pathology of relentless consumption, we have now taken an interesting social psychotic shift. It appears that our environmental preservation impulses may actually be aligning with a concept attributed to David Bernstein called “Abusive Multiple Transference”. Here is the much repeated (though uncited) lay definition of AMT:

“abusers not only transfer negative feelings directed towards their former abusers to their own victims, but also transfer the power and dominance of the former abusers to themselves.”

Now, let’s consider the ecological impulse in light of AMT. Having consumed ourselves to the point of destruction, “we” (both as perpetrator, participant, and victim, we tell ourselves) need to “do” something. So, what “we” “do” when we are most awakened to a laudatory enlightenment is solve our social problem by making the trees consumers. Yes, that’s right, in an impulse to create a solution, we turn to the only utility we have – consumption. Only this time, we’re imposing our consumption on the trees. As if the trees, all along, have been slacking! Somehow, we rationalize, if we exchange money in their sight, we will induce them to consume more CO2. And the most vocal supporters of this advocacy are those who feel most victimized and helpless in the face of an extracting and polluting insanity!

In the run-up to Copenhagen, can we please consider a world, just for a moment, where we don’t project consumption onto nature? Haven’t we done enough damage? Can we consider that an alternative approach would be to look deeper? Why have the sum total of our utilities been reduced to consumption memorialized by an exchange of money? Could Brazil, India, China, Papua New Guinea, Vietnam, Peru, Indonesia, Argentina, Chile, Colombia, Costa Rica, Egypt, Israel, Malaysia, Mexico, Nigeria, Republic of Korea, Russia, South Africa, Thailand, Ukraine actually be united in an economic engagement in which they are not compensated for what they don’t do in terms of environmental destruction but rather lead as prime contractors for deployment of technologies and corporate models which are aligned to humanity and nature? Could the “Woods of Bretton” become the new paradigm where a systemic monetary policy could be freed from capricious extractive debt and aligned with stewardship of the Global Commons? And while we’re in the woods, could we take a few minutes to contemplate how the trees could teach us?

breathe, just breathe
let the life that you lead
be all that you need
let go of the fear
let go of the time
let go of the one
to try to put you down
you're gonna be fine
don't hold it inside
go ahead right now
and let it all come round
breathe, just breathe
take the world off your shoulders
and put it on me
breathe, just breathe
let the life that you lead
be all that you need

- Ryan Star “Breathe”

_

Archimedean Theorem 2 – “Worth Doing” Metrics

Increasingly I find myself engaging with individuals and communities who are tuned into the realization that we are on the precipice of a great transformation. Incumbencies on all fronts are evidencing voids where confidence was once thought to dwell. And while many stand in awe of the crumbling icons, a growing number now believe that they are both observers and actors on the stage of what’s about to be. In many respects, a sense of a community of stewards of that-which-is-to-come is bubbling up in all corners of the globe and the notion of individuated identity is fading.

However, as façade crumbles, a tragic irony has emerged. And this irony struck me quite profoundly in two conversations I had over the past week with two different groups of transformation advocates and prophets. As we discussed the hospicing of the old paradigms of power and values in the interest of affording the immanent transition some degree of grace and dignity, we began to discuss what tentative first steps could be taken into the dawning transformation. And then, like the Medussa from the mist, the phrase was uttered, “We could really get this started if we could find the funding.”

If we could get it funded.

When was the last time you heard this? When was the last time you said this? What manner of idolatry have we come to? An idea is good, but it’s only actionable if it’s funded. Addressing a social need or humanitarian crisis is laudable but it only rises to a level of action if it can be funded. Deploying new forms of development initiatives for the most marginalized states in the world would have merit if only an NGO would step up and fund it. An enterprise may achieve global impact but it only is successful if it accumulated monetary artifacts because, “that’s the only scorecard we can measure at the end of the day.” The UN Development Goals are only actionable if they are funded. Each of these statements has been made in my hearing in the last 7 days.

Well, I am here to tell you that anyone who speaks of transformation and punctuates it with “if it gets funded” is animating money with an insidious power that will perpetually obstruct and destroy every impulse preceding the statement. I have been overwhelmed by those who, in the run up to the UNFCCC event in Copenhagen, believe that we will transform our extractive degradation of the public commons of land, air, water, culture, and community based on a balance sheet argument where money is the final arbiter. We could address carbon emissions with green investments and government incentives if the right political forces just give us our funding. I often wonder if we have invited our "if it gets funded" invocation into such conversations for the explicit purpose of having the faux comfort that we've secured our moral plausible deniability. "After all", we argue, "we would have done the right thing if it had been funded." I am repulsed when I hear NGOs state that they will back off of principled social justice and the rule of law regarding matters such as food production, medicine delivery, and infrastructure support because they cannot threaten their donor base by challenging legal abuses such as trade and industrial property legal violations. When one of the world’s largest NGOs chooses to ignore agriculture and medicine technologies which exist in the open source so that their multi-national donor partners can “participate” in public-private partnerships which are tax-deductible and laden with goodwill marketing, where is the voice that speaks for the millions who suffer and die at the hands of the moral bankruptcy?

Down this bizzare inquiry we find Archimedean Theorem II. Worth doing is a condition in which an individual or collective response to human need persists to a point sufficient to conclude that, with money it would be “worth doing”. An important corollary to Archimedean Theorem II is that whatever exists in abundance in the community discerning “worth doing” is the resource that is required to initiate action and this will never be money. It will often take the form of reputation risk, vocal endorsement, courageous leadership, a prophetic voice, an organizing or catalyzing act or other resources of inestimable and undenominateable value. And it is quite likely that the first measure of integral engagement will actually be marked with an invitation to execute “worth doing” with less money as the first step is likely to be unrewarded with a monetary endorsement. However, when the monetary metric incumbency sees that “worth doing” persists, untold resources will align for subsequent activity.

Living in the realm of Archimedean Theorem II is “worth doing”. As an itinerant in such a land, I can tell you that the consequences are beyond your wildest, wealthiest, imaginations.

-

Global Innovation Commons receives pre–Copenhagen coverage; European Patent Office official minimizes violation of patent law

Global Innovation Commons receives pre–Copenhagen coverage; European Patent Office official minimizes violation of patent law

November 5, 2009 – Brussels, Belgium –– Innovation policy will be the fulcrum for many climate negotiations at United Nations Climate Change Conference 2009 in Copenhagen. Negotiators seek to extend existing intellectual property practices to vital issues including climate change technologies. M·CAM has provided the world's most comprehensive interactive archive of climate change technologies which have been opaque to the global market for decades – being brought to international visibility in the Global Innovation Commons (http://www.globalinnovationcommons.org). In a deployment partnership with the World Bank and International Finance Corporation's (IFC) infoDev, M–CAM has made available over $2 trillion of both revenue generating and research and development technologies for public, open-source, use.

In today's cover article in Der Spiegel – Patent Lies: Who Says Saving the Planet Has to Cost a Fortune – M·CAM's work on innovation ethics is highlighted. In addition, a now retired senior officer of the European Patent Office acknowledges, on the record, that the illegal practice of redundant patent filings is merely a "detail." "Sometimes patents are not worth what they claim they are in terms of innovation," Gerard Giroud, the recently retired international affairs director of the European Patent Office, told SPIEGEL ONLINE. "But it seems to me a detail. Patent offices should grant patents to encourage investment in a particular type of technology – because that investment is what will save the planet."

For the complete article, please download:

http://www.spiegel.de/international/europe/0,1518,628606,00.html

It is important to realize that every conversation about "innovation" as a key to economic "recovery" centers around the belief that somehow or another, the U.S. and Europe will emerge as the innovators of the next economic cycle. This assumption is unfortunate for a number of reasons. First, it presumes that the past 30 years of education of the world's best engineers, business people, and technologists didn't produce more Chinese, Indian, Korean, and Taiwanese professionals than the total of those from and residing in the U.S. and Europe. Second, it presumes that the past two decades of consumption have been based on innovation. Unfortunately, we have been seeing a growth of consumption - not innovation - in most industrial sectors. Finally, it fails to acknowledge that our conversion ratio of innovation to enterprise is less than 3% in the U.S. and Europe. We are good at building food chains for incumbent acquisition in M&A but we're not good at transformation and adoption of game-changers.

The new will be collaborative, open source, and borderless.

_

Transforming Values for an Alternative Destiny

Text for World Bank and IFC Plenary Address at:

infoDev Global Forum
Florianopolois, Brazil
October 27, 2009
Dr. David E. Martin
Executive Chairman, M•CAM Inc.


Honorable Governor Luiz Henrique da Silveira, Director Mohsen Khalil, Distinguished Guests, Ladies and Gentlemen,

We meet on this day in the land of the Tupi-Guarani to manifest transformations. At this Global Forum, we have assembled from every land not as explorers seeking conquest but as stewards of experience committed to building a more prosperous future for all. It is only fitting that we begin in this land of the mountain arising from the channel in the sea – the ancestral name for Florianopolis – with a moment of reflection for those whose feet have passed before us and who left the land beautiful for our enjoyment. Let us commit to leave this land, and all the lands from which we come, more beautiful than we found them for those who will follow us.

Today I would like to explore three transformations: Values, Resources, and Leadership and the role they play in our discussions here over the coming days. To do so, we must dedicate some time for honest assessment of where we are together with a consideration of our path to this moment. From that point, we can invite a dialogue about aspirations we have for the future. And finally, we can resolve to take the first step, enlivened and unfettered, into the future empowered by a vision which sees through obscurity into possibility.

What do we value? At conferences like this, it is often quite easy to begin with a series of unspoken assumptions – those untested, unspoken consensus beliefs to which all are presumed to assent. For example, we all assume that innovation is “good”. We are asked to believe that entrepreneurship is a modern ideal to which societies should strive. We are encouraged to hold as ideals the myths of the past 60 years of economic activity and all long for a “Silicon Valley” utopia in every corner of the globe. We are encouraged to speak of numbers and compare “ours” with “theirs” to see who is developed, who is developing, and who has the least. If it’s on a balance sheet, deposited in a bank, or traded on the stock market, it’s valuable. If it’s not, then we best ignore it. We agree, we presume, that it would be strange to speak of culture and indigenous wisdom and, instead speak of semi-conductors, nano-particles, and anti-retrovirals.

When did we lose our humanity? Let’s explore a couple of facts about values in the context of innovation.

Living systems have innovated as long as they’ve existed. And no, humans aren’t the only innovators. Ecosystems are filled with innovation. As trees’ roots respond to nutrients and water but grow to accommodate the pressures of wind and grade so to will the human seek to find sustenance and assurance. Unlike our ancestors, we often limit our use of the word innovation to things – usually things that require the non-replenishable consumption of natural resources, power, and labor – rather than seeing an ecosystem in which innovation has as much to do with how we do what we do as the artifacts we create. In our obsession with development, how many of us take the time to learn from the Heritable Knowledge of indigenous peoples who know how to use plants, soil, and water to live? How many of us have considered that we would benefit from innovation in enterprises and value exchange as much or more than developing the next ringtone on an iPhone?

Entrepreneurship should be encouraged, right? Well, maybe. How many of you remember that the modern corporation was established in Europe to shield individuals from personal responsibility. Would we really want to fly in an airplane built with limited liability wings? Would we want to drive a car with limited liability wheels? Yet we encourage our young entrepreneurs to participate in the prospective future employment for thousands on the foundation of limited liability. While we lament the breakdown of the markets over the past two years, have any of us considered that the very institutional foundations we seek to create – corporations – are expressly established to separate the person from the accountability of the venture?

Sixty years of success since the success of Silicon Valley. Really? Of course, you remember the World War II war reparations that lead to the birth of the computer and data industry now heralded as an American success. Magnetic tape, without which there would be no data storage industry, was created by Hitler’s Third Reich as a propaganda machine. Computers were created to decipher the codes of the Japanese and the Germans – codes that baffled the innovative minds of the U.S, the U.K., and Australia throughout the war. And the wealth of Silicon Valley half a century before came from Federal Government stimulus in the railroad industry and the banking sector – not from innovation. Without the Morrill Act for the railroads, there would be no Stanford University. We do no favors today by forgetting the truth of our past. Not a single element of what made Silicon Valley a success – preferential government procurement, national security technology transfer, trade incentives in the form of preferential tax concessions leading to effective anti-competitive pricing – would be legal today under WTO yet we see dozens of countries attempting to create that which didn’t actually happen.

Let’s visit the past to inform the present and future. Recall that the great trading empires which created the incumbent powers in the North were built on extractive trade. Sure, here in Brazil, coffee played a huge role with the Portuguese. However, the same drug trade which plagues our cities today was the currency of the empires just a century or two ago. Today’s cocaine is yesterday’s heroin. Today’s marijuana is yesterday’s opium. Friends, if the foundation of our markets was built on addictions and violence. Shouldn’t we consider transformation? Shouldn’t our conference be focused on a new morality rather than the next turn of the extractive wheel grinding up those who it leaves behind as consumables?

Today, we might reconsider values. How do we encourage creativity that rewards those who address society’s greatest challenges with prosperity and public confidence? Is it possible, in this conference, to commit to aligning our innovation impulse to meet and exceed Brazil’s visionary president’s call for rainforest preservation and carbon emission reduction? Can we see value in 8,200 cubic kilometers of fresh water in this great country and see this as a Commons Trust rather than an exploitable commodity? We can and we will transform values here today.

In his treatise on the economy, John Maynard Keynes codified a sense of resources that has enjoyed little re-examination until the present day. In Keynesian terms, Brazil is 90,000,000 laborer consumers, bauxite, gold, iron ore, manganese, nickel, phosphate, platinum, tin, uranium, petroleum, timber, coffee, grains, sugarcane, cocoa, citrus, and beef. Oh, and now, we need to be fashionable and throw in millions of hectares of carbon sequestration for the polluting world. How many of you would be happy to be told that your only worth on the planet was limited to the bank account you have, the car or bicycle you have, the number of employable children you have, and the house in which you live? That’s it. Nothing else counts!

Well, you are more than that. We are more than that. It is a tragedy that the last 80 years has reduced our mental capacity to see our land, our people, and our ecosystem for what others can take from it rather that for what it can generously provide.

My company, M•CAM, works with helping countries re-discover and reclaim their own story. In the wake of our discovery of the degree of abuse in the global market of carbon trading – including the growing use of carbon credits to launder drug money and finance terrorist organizations across the world – we decided to work with communities in Papua New Guinea to revalue their forests. Working with the Quachet in East New Britain province, I sat with elders and asked them what a rain tree was worth. They told me about the tree and its many functions. The rain tree supports hundreds of species of plants and animals in its expansive reach. Its bark, leaves and roots are filled with healing teas, pastes, and medicines. Its vast leafy canopy condenses rain from cloudless skies providing pure water to the land and life below. Its wood, when one of its limbs falls, is sufficient for several houses. So when I asked them if I could buy it for its carbon absorption, they laughed. “Why would you want only that from such a generous tree?” they asked.

Together, we worked to create the world’s first Heritable Innovation Trust – a new legal framework which renders obsolete the WIPO’s traditional knowledge paradigms. While here in Brazil and in many other parts of the world there is a growing sense of the need to “protect” indigenous or traditional knowledge, what local communities are not told is that by putting this knowledge into copyrighted form, they are really accelerating its loss into public domain. In 70 years, the information that is recorded by well meaning programs, like those here in Brazil working in Amazonia, will enter the public domain under industrial property laws in compliance with WTO’s TRIPS agreement. In the Heritable Innovation Trust, the community stewardship of community and ecosystem knowledge is placed in a perpetual Trust which can neither expire nor be taken by those who seek to exploit without community engagement.

Resources come in many untraditional forms and are often most prevalent where they’re least expected. Just a few months ago at the infoDev conference in Coimbatore India, many of you witnessed a commitment on behalf of my organization and infoDev – a commitment that is fully delivered today. For those of you who were not there, let me give you some background.

Since the modernization of the intellectual property system and sponsored research programs of the past four decades, economic development and exclusionary innovation property rights have gone hand-in-hand. However, as far back as 1980, these property systems were contaminated with a growing practice of using patents and other intellectual property regimes to block commercial access and market use. It is no accident that some of the largest patent estates were filed (and restrained from market adoption) by companies who had the most market share to lose. Oil companies filed and held thousands of environmentally desirable patents in fields ranging from solar and wind power to hydrogen and hybrid propulsion. Paint companies filed and held thousands of patents on alternative surface coating techniques only to continue using toxic metals in industrial production. Pharmaceutical companies and their agro-chemical allies filed and held thousands of patents on treatments and cures for disease and on land renewal technologies and insured that these options were not available for deployment. And the list goes on. However, in this “cold war” of innovation abuse, the most economically most marginalized states (a term we use in place of the conventional term “Least Developed Countries” or “LDCs”) were overlooked. Patents were not filed in markets that didn’t seem to matter. And this has created an unprecedented opportunity for bringing hope to us all.

Exemplified in the extreme in the area of climate-impacting energy and infrastructure technologies, an unhealthy alliance compounded the global failure to accept and adopt technologies which could have provided pre-crisis interventions in environmental technologies. Through infrastructure bond funding programs with their associated long maturities, economic incentives existed to blockade the acceptance and deployment of efficient – albeit obsolescing – technologies. After all, there was no effective way to install distributed power generation five years into a 30 year coal fired grid based electrical system. By funding things in extremely large, centralized scale, innovations that were made were not judged for their technical merit or feasibility but rather for their ability to be scaled into legacy inefficiencies. Compounding this economic impediment was the patenting practice, adopted by the majority of patent applicants throughout the 1980’s, called “defensive patents”. Defensive patents – representing an estimated 80% of all filings by industrialized nations – do not represent artifacts of innovation but rather utilities for litigation risk management. By extension then, when patents on litigation anticipation or financial obsolescing “innovations” were awarded, they not only precluded others from entering into research and development or market efforts, but they also froze much needed technology out of the market.

Out of this ill-conceived industrial policy emerges an unprecedented opportunity. Patents on environmentally necessary technologies born in the research and imaginations of energy shocks dating back to the 1970’s afford an amazing Global Innovation Commons which can serve to catalyze solutions for the climate crisis as well as the global economic disparities which have fueled acrimony between countries leading up to Copenhagen.

It is a violation of patent law to engage in “double patenting”. This practice is simply the seeking of a patent on something that someone else has already claimed. When Volkswagen received a patent for a hybrid electric vehicle that includes a rotating flywheel mass variably engaged by a series of clutches in 1979, their allowed claims are so broad as to describe virtually every hybrid electric vehicle built since. This patent expired in 2002 and is now in the public domain where anyone, anywhere, can practice every element of this invention without any fear of patent enforcement. That’s right, an automotive company in a marginalized country could use 100% of this information to design and build a car to compete with Toyota’s Prius. Today.

When policy-makers debate concepts like “compulsory licensing”, the problem is that they are masking a giant asset which exists disproportionately benefiting the Most Marginalized States (“MMS” or conventionally designated “Least Developed Countries”). They are attempting to reinforce, rather than reform, a patent system which has been failing all interests – including those in the industrialized nations.

In short, the perpetuation of the illusion that we still haven’t “innovated” enough has placed the challenge on the wrong dynamic. Over US$1.6 trillion in market innovation latency has been created over the past three decades alone which has been overlooked – not on its merit but rather on the fact that it would challenge incumbencies. Given the magnitude of the challenge before humanity, our clarion call is for the deployment and honoring of these innovation impulses which have been marginalized and the use thereof to seed enterprises in the Most Marginalized States.

Using a framework called the Global Innovation Commons, all innovation artifacts (patents, research publications, government or industry sponsored research reports, and technology procurement records) have been assembled and reviewed for their legal standing in every country on Earth. These innovation artifacts have been compiled so that jurisdictions of enforcement are easily assessed to avoid any infringement in any jurisdiction. This enables a business or government to know what can be developed for domestic use only, for limited export, or for general export. Wherever possible, using abandoned patents, global freedom-to-commercialize positions are identified for unrestricted commercial use and deployment.

At this conference, in a partnership between infoDev and M•CAM, you all will have access to almost $2 trillion dollars – more than the entire GDP of virtually all countries represented here today – of innovation waiting to be put into use. It represents the greatest assembly of innovation ever and it’s yours today! We have an opportunity to transform our view of resources to include a world of innovation which has been kept from deployment until today – a world of innovation that will lead to clean water, ethical health care, adequate food production and distribution, and renewable energy. And when we have ethical and open use of this innovation, we will be free to innovate exchanges of value which do not require wealth asymmetries which foster poverty, violence, and terror.

While conferences across the world lament the lack of financing for small and medium sized enterprises – they turn to venture capital as a solution. Why? Because that’s what the U.S. and Europe did, right? Did you know that here in Brazil and in most countries represented at this conference, the greatest available cash to start ventures is currently sitting, unused in the hands of your governments in the form of Trade Credit Offset obligations? You’ve probably never heard of these because you were being deafened by those who wanted to sell you inefficient equity models which have destroyed more enterprises then they’ve created.

When a government – like Brazil – purchases goods from a U.S. company, for example, a percentage of the value of the contract – often between 10 – 30% - is required to be “returned” to the country in the form of a Trade Credit Offset. The selling company may be required to set up a local manufacturing center for critical components. In the case of China, the company is required to transfer technology and training. In every instance, before the seller can book the revenue for their contract, they must reinvest in the country involved in the purchasing. So why, at a conference like this and at every innovation and entrepreneurship conference around the world, aren’t you being told to link your business incubators with your countries’ Trade Credit Offset managers? In a few cases, it’s because these offsets have become the source of corruption. But, in most cases, it’s simply because you didn’t know. Well, now you do.

Honorable delegates, what I’m really calling for is leadership. I would like us to invite a transformation of our view of leadership – away from the belief that the loudest voice with the largest crowd is leadership. In our CNN 24 hour flat-screen New York Stock Exchange view of the world, we’ve failed to realize that leadership comes from those who are worthy of being followed – not from those who demand attention and blind loyalty. In fact, the only place where leadership can emerge is from those who learn first to be good steward citizens. Our challenge here today and in the coming days is to evidence a humanity so inspiring that others will choose to follow.

When Professor Anil Gupta and Dr. R. A. Mashelkar and others in India chose to launch the National Innovation Foundation and other grassroots innovation initiatives, they embarked on a journey that was filled with challenges. In partnership with my organization and many others, we began working with grassroots communities – people in rural villages in India – to re-imagine a world where to be an innovator meant addressing real human needs. In its first year, only a few innovations gained a market however, in its second year, acknowledged by India’s President Abdul Kalam, over 2,500 innovations were serving as the basis for prosperous engagement across India. Mind you, many of the markets were not based on the exchange of money. Many of the grassroots innovators actually gave and received goods and services in exchanges ranging from barter to complex utility derivatives. In some instances, the value that was bestowed upon the innovator was a garland of flowers placed around the neck of the distinguished person by India’s President. While this is not “money” in your traditional sense, in many communities throughout India, honor from the President is a social value money could never buy and lasts far longer than a few thousand rupees.

When we work with small and medium sized enterprises in South Africa, the Kingdom of Tonga, or Chile, our goal has always been to look at a practical way to transform the past models into a prosperous future. I would encourage you to consider the following as a process to employ.

First, honor and value the innovator. Every person who has an impulse to change his or her life or those in the community should be honored. However, this does not mean that they must be pushed into a company. To the contrary, we need to transform the incorporation of a company into the incorporation of an innovator into the global community of like-minded innovators. When we see innovation as the inclusion into a community of creative people rather than an isolated event to isolate a hero, we will transform innovation.

Second, honor and value the community. In every innovation, many creative minds have come before and every one of their contributions must be included in the next step being taken. By using models which reward collaboration rather than proprietary isolation, we create value that impacts the lives and livelihoods of many rather than the wealth of a few.

Finally, reward that which replenishes rather than extracts and destroys. For too long, we have been told that we are a sum of our extractive parts. I am delighted to be here in Brazil – a country which spends 30% more of its GDP on education than on the military – discussing the transformation of value. While this government has served as a beacon for many others in calling for a “sustainable” future, I’m encouraging you today to innovate that vision. Take the next step and be the first country on Earth where we see consumption as one element of an economic cycle but where we also see stewardship and citizenship a value which is cherished in tangible and intangible ways. Transform the impulse to protect from outside abuse to a motivation to celebrate a Common heritage and destiny in which innovation serves to integrate a better future rather than isolate an unfortunate few. Today, let us all commit ourselves to a Common Future built on Transparency, Accountability, and Citizenship.







Dr. David E. Martin
Executive Chairman, M•CAM Inc
210 Ridge McIntire Road
Charlottesville, VA 22903
Web: www.m-cam.com
E-mail: info@m-cam.com


Batten Fellow, Darden Graduate School of Business Administration,
University of Viriginia

Archimedean Theorem 1 – “Reality” Metrics

One cannot escape the cognitive reductionism which is a constant companion in our recent economic paroxysm. “No one saw it coming.” “We are adequately capitalized,” immediately preceding business failures and bankruptcy. Triple-A ratings on investments that had no market or value. Bank stress tests. Earnings growth by slashing future productive capacity. Equity market euphoria over missed earnings forecasts. Without question, we are collectively measuring the wrong stuff, or applying the wrong metrics, or applying the wrong metrics to the wrong stuff, or we just haven’t a clue. While we bask in the nuclear winter light of what I’ve been told is our post-post modernism (come-on, we can’t even come up with a decent name for today so we just revert to a very, very, very, very old technique we last used when counting words for our first written assignment in elementary school in which the number of words was the objective), we seem to not only have lost our way, we seem to have no clue where Polaris is or how to use a compass.

When Sir Isaac Newton inadvertently set in motion our present economic calamity, he did so by postulating that to every action this is an opposed and equal reaction. He never knew that central banks, bound by his “law” would find themselves compelled to engage in manifold folly by falsely misdiagnosing the action (the mortgage crisis rather than a destructive, dehumanized consumer debt cycle propped up by careless leverage policy which turned real estate into ATMs) leading to an insanity where recovery came from further indebting the taxpayer by bailing out AIG and providing year end bonuses for bankers who actually made their earnings on fee income derived from moving bail-out funds between themselves! We have a malignancy of ignorance and, courtesy of the market reporting media, we have the evangelists for the cult of impulsive greed chanting incantations at such a frenzy that if you wanted to find the truth…wow, I’m exhausted.

Let’s take a breath. Let me take you to one of the first places we lost our way. To find the roots of our current value bankruptcy, we need to understand that our current debt-based view of economic systems has inextricable roots in the 13th century – specifically the Fourth Lateran Council and the funding mechanisms put in place by Pope Innocent III for the financing of the fourth Crusade. In his Papal Bull (why does this animal keep showing up? – and yes, I know it’s not that kind of bull), he details the establishment of taxation of the public, preferential dispensations for the central bankers, and a removal of all rights from those outside the faith – not to mention his ultimate creativity of accelerating mortality for those who didn’t play by his rules. All of this to fund a war and provide liquidity for the State. Sound familiar?

Ironically, the reason why I link Newton and Pope Innocent III is critical. Both of them were absolutely confident in their definition of “truth” “values” and “laws”. Both of them were greatly motivated to impose reductionist simplicity on a world filled with heterogeneous thought. And both set in motion those who would become sycophant adherents who would conduct literal and figurative inquisitions which would stifle enlightened, creative thought and inquiry. And they did so by what appeared to be an innocuous act. Pope Innocent III gave us reality in the form of transubstantiation where the paradox of St. Augustine and Aristotle was resolved by fiat – it was the body and blood for Christ’s sake! And Newton gave us reality by confirming that only that which can be measured and observed is, in fact, real.

In our collective evolutionary regression, we obsess with “real”. We want to measure things, count things, compare who has more, who has bigger or better. Our obsession with metrics has paralyzed our creativity. It has dehumanized value and values. When my friend Tony offers to buy happiness from a company because they say it has no book value, no one is willing to part with it for any price. If we have less, than others with more should move to action. If we have more, we want to keep it from those who have less and want ours or find our morality in self-laudatory generosity and sharing. Pope Innocent III gave us debt-based currency. Newton gave us metric-delimited reality. And the present moment has given us a wonderful opportunity to realize that we have no clue what we’re measuring anymore.

What is the value of gold? As we swooned to see our golden calf (there’s that animal again) leap over the $1,000 an ounce moon, did any of us realize that the all in cost of movement of ore for processing last year’s production of gold required the equivalent of 14 billion human year’s worth of effort? That’s right, just to move the ore from mine to refinery, it would take 14 billion people working 24 hour days every day for a year just to move the ore. If you’re reading this, you clearly weren’t carrying ore. Neither were most of your neighbors. No, thanks to technology that pollutes the earth, water, and sky, we’ve become more efficient. But did we ever pay for the land from which we’re taking the gold? Did we actually set aside value to repair the environmental, social, and ecological damage of gold? If we did so, would gold really only cost $1,000 per ounce? Is its value what it costs? What it will cost the future? Is it worth what someone pays for a certificate saying that someone, somewhere has a bar with your name on it? What is its value? We have NO clue.

What is the value of earnings? When Intel and JPMorgan reported better-than-forecast results, their stock was rewarded with a vote of confidence, right? No! They lost 2% of their value. IBM topped expectations but investors rewarded it with a loss of value.

What is the value of prosperous engagement in the workforce? Unemployment continues to rise. The Federal Government demonstrated this week that it cannot even track its own expenditures when it attempted to report on the jobs saved or created with the Recovery Act. Silver lining? The Recovery Board is spending a reported $18 million on updating its website so the stimulus recipients’ self-reports of economic impact are more prone to accuracy.

What is the value of public support of innovation? I just spent the past two days with an inspirational leader from South Africa. During our conversation, I was disheartened to hear yet another instance when the innovative value of a country was measured by the number of patents filed by its researchers. We measure the innovative contribution to the world by how much we block others from using creativity? How tragic.

I am repeatedly asked questions about how much revenue my company makes. How many employees do I have? Why don’t I turn our technology towards making massive wealth and, after amassing a fortune, use it for good causes? And these questions come not only from crass capitalists but by perplexed social activists.

It is time to understand the elegance of the Archimedean Theorem I. Reality is that which catalyzes, harnesses, releases or perpetrates action or stasis in one or more projections thereby evidencing energy, dimension, field effect, and consequence. The understanding and assessment of Reality can be described only when Perspective delimiters are honestly disclosed with sufficient clarity so as to evidence understanding in the observers. The fulcrum we need to open a new, more integral view of value and its exchange will include a dynamic, kinetic understanding of Reality. And our social challenge is to move our ontology from metric to metaphor – from finitude to infinite orthogonality. One step closer to the next…

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