What Is Value? What Is Money?

In a very recent Conversation (What Is Value? What Is Money?) at Edge, physicist César Hidalgo managed to talk about a varied range of topics, from Big Data, to value creation, organizations, institutions and many other things. The video is a bit long: 44 minutes, but worth having a look.

Here is my particular choice of quotes:

About the magnifying effect of Big Data:

I think that our ability to collect data  is opening an increase in resolution that is unprecedented. We are able to see systems that we have looked at many times before. But we’re able to see them in much more detail, and my belief is that increase in detail is not cosmetic.

(…) a long time ago (Galileo) was looking at an object that everybody else had looked at before: Jupiter, which is super bright. It’s one of the brightest objects in the night sky. But, he looked at Jupiter with an increased resolution, because he had this telescope. That increased resolution allowed him to see that there were these little things going around Jupiter: the Galileo moons of Jupiter. The increase in resolution allowed him to show that there were things going around something other than the earth. It was not that he looked at something that never had been looked at before. Everybody had looked at Jupiter. It’s one of the things that your eyes are going to fix on when you go out at night. But, this increase in resolution showed him that the universe was different than what everybody else had seen before. That’s why it’s not cosmetic.

About value creation and appropriability:

(…) Facebook is generating a large amount of value. But its ability to appropriate from that value is very little. Facebook can only appropriate a very small amount. If it were a traditional business with a billion customers, probably it would be able to appropriate of more value than in this type of business.

(…)

Corporations now have a big incentive and a big constraint and a big panic to try to find ways of appropriating the value of the data that they have. They’re trying to monetize rather than understand, and I think that’s not the right way around it because you want to first generate value and then find a way of appropriating, rather than constraining your ideas to your ability to appropriate.

About the value of organizations:

If you take the price of an F-22 and you divide it by its weight, you get that, per pound, cost something between silver and gold. It’s that expensive! . Now, take your F-22 and crash it against a hill, or crash it against the ocean, blow it up into tiny little bits and pieces. How valuable it is now? It’s probably way less valuable than silver. It’s probably almost worthless after it’s broken down. So, where was the value?

The value cannot be in any of the parts or in any of the materials, or in anything other than the complexity of how these things come together. So actually, value is set by the property of organization. It’s more of an entropic, or anti-entropic more precisely, idea of value.

About Bureaucracy:

Many times what I see is that more effort goes into asking permission than in doing the job that you asked permission for, simply because the system is getting more and more structured into these bureaucracies and these political structures that consume a large amount of resources. You have to basically do the whole research, and you have to spend more time writing the grant than eventually running the experiments or writing the paper, simply because that’s the only way of getting the resources that you need to get a grad student to help you, or to have a team working with you.

About renewing institutions:

I’m a firm believer that the democratic system that we have nowadays, or the way that it’s implemented is not a result of a deeper truth, but rather is also a result of a deeper philosophy and constraints that are provided by technology. I’m sure that if the Founding Fathers of the United States had had access to the Internet, probably they would have done a more direct form of democracy at that time. Obviously they had to do the best that they can with the technology that was available.

We need to evolve all of those institutions, and I think this is something that probably everyone that thinks in this way is going to get laughed at for the next 10 or 15 years. But eventually the future is going to be one that is in that direction, and if we wait for the time to be right for those technologies to be adopted, we are obviously going to be late. If we want to be innovators, we have to execute the idea when nobody believes in it. If not, it’s not a good idea.

____________________

Featured Image: César Hidalgo Website

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