A SCVA Investment Thesis. Congratulations! Barbara Gray and Brady Capital

Figure1-Performance-vs-Benchmarks-11-13

At various times on this blog and in the ebook I have thanked my MBA classmates and professors. Way back in 2007, they let my interests in social capital invade every conversation and assignment.

In one such case, in our Portfolio Management course, I persuaded my group to adopt a Social Capital Value Add investment thesis. We ended up being over weighted in banks because of the deep data that these companies have on the life cycle of consumers. But we did not have a lot of data to go on and it was a six week experiment. We were outperformed by at least half of our competitors.

Nevertheless, there is a difference between a weak thesis and poor execution. So I am pleased to share this update from Barbara Gray and Brady Capital.

On November 15th last year, we launched our Customer Value Index 200 (CVI 200), a research-based analysis, based on my social capital investment thesis, that provides investors with exposure to the top 10% of North American-listed companies with a market capitalization over $1 billion that score the highest in terms of competitive strength, social attributes, and authentic core values.

.. the CVI 200 (www.cvi200.com) came in with stellar performance in its first year – rising by 41.3% compared to the 32.1% gain in the S&P 500 over this period – an outperformance of 920 basis points. And as shown in Figure 1, the CVI 200 shone against the resource-laden Canadian S&P/TSX Index, which gained only a paltry 12.7%, outperforming it by 2,880 basis points.

To be clear CVI does not employ SCVA’s valuation method, but it is nevertheless, trying to focus on the same drivers and defenders of value.

See the full update here. Congratulations Barbara and Brady Capital!

Cdling: principles of Social Capital Value Add applied

We have extended our closed Alpha Group from our HTML5 mobile version onto the web.

Please sign up.  You can really help just by signing up.

Last week we poked up our heads to make an alpha release of our Cdling Scores. With the chart available at that link, you can quickly and easily see that Jason Calacanis has great instincts when it comes to assembling a diverse judging panel of established investors, Founders and influential analysts.

The same applies to helping investors in Ontario or the UK or Germany or NYC or Chicago or Asia or anywhere … build trust faster with investors in Silicon Valley.  Cdling Scores tell you a lot about a player in innovation at a glance.

Folks who took the time to check out the chart were galvanized by the insight.

Pulitzer prize winning Forbes journalist George Anders ask us to use Cdling Scores to compare the existing influence of the PayPalMafia with the emerging Facebook Friends.  With this kind of insight, the PayPalers can make better decisions about who they might co-invest with from the Facebook folks to help insure that they keep getting chances to get in on the best deals and have the best connections to help their existing portfolio of startups succeed.

We are grateful to Christine Wong at ITCanada for writing about what we are doing in an informed and entertaining way. And to her Associate Editor Brian Jackson for understanding that even when you are introducing a way for everyone to win, it is really, really hard to get folks to support a new approach.

Mark Fidelman hits the nail on the head

I just came across this post by Mark Fidelman. It is the best illustration of Social Capital Value Add that I have ever seen.

It still focuses on the grand influencer – but it captures the value impact.  And Mark does point out that there are a number of factors that impact the increase in value, including I suggest the value of the whole community that Robert Scoble fosters.

Why Every Company Needs a Robert Scoble on Seek Omega

http://www.seekomega.com/2011/01/why-every-company-needs-a-robert-scoble-infographic/

3 Economies of Online Currency: money, reputation and attention

I think we are doing some ground breaking work with Cdling, coming up with our “seeds” monetary system.

I have been doing some related reading this evening.

When I read this post by Alistair Croll, it prompted me to get off my duff and actually post something here again, so I think that is a huge endorsement.

Check it out:

The Three Economies of Online Currency.

Social Media for Government Conference, Toronto

Thank you to the organisers of the Social Media for Government Conference in Toronto this week for inviting me to kick things off by leading a three hour workshop.  Thanks also to the folks who attended.  Here are my slides:

It was an interesting challenge to lead an “Introduction” to Social Media. Two years ago when I led a similar workshop in Ottawa, 90% of the room would have had mostly fear and virtually no personal exposure in using social media. This morning, only 10% of the room would have fit this description, yet feedback was that the definitions and strategic frameworks that we went through together were still useful in helping participants process their experiences and adjust their traditional notions of brand and communications for the network era.

For the last 30 minutes we went through this “map” that was developed by Jody Radzik at the Institute for the Future. I did not set out to deliver a full understanding of each of the 13 trends in Government 2.0 that are highlighted during this time (impossible) but this piece is the best that I have seen that encapsulates the overall context of changes shaping up. I asked participants to share a project that they are envisioning or initiative that they have read about that prompted them to decide to come to a conference like this. While this map is a projection out to 2020, we were able to quickly establish that in all of these areas, the future is already here, it is just unevenly distributed.

Collaborative Consumption by Rachel Botsman & Roo Rogers

Entertaining video here and their Booktracker campaign is an interesting memetic approach.

Eric Berlow: How complexity leads to simplicity

The Corporate Spark

Thank you to Social Capital Blog and @peterwmcmahon for bringing Frank Koller’s first book to our attention.  I am looking forward to giving a read.

Here is the Wall Street Journal’s review of Spark. How Old-Fashioned Values Drive a Twenty-First Century Corporation:Lessons from Lincoln Electric’s Unique Guaranteed Employment Program.

The Social Capital Blog and WSJ reviews focus on the issue of guaranteed employment because that is the tack that Koller has taken with the book.  But guaranteed employment is just one of James Lincoln’s four organizational pillars that remain in place to this day.

The others were a management advisory board made up of employee representatives; wages based on piecework, so that the quality and quantity of individual workers’ output can be monitored; and annual performance-based bonuses.

Here is the quote from Lincoln that inspired Koller to explore this story:

“The only way we’ll have any kind of widespread job security in today’s business environment is if we change our thinking as to what makes good management.

Instead of praising corporations that downsize, we need to look at their actions as admissions of failure.

We don’t need layoffs – we need creativity.”

It is easy enough to see why Koller has headed in the direction of job security and guaranteed employment, but I wonder if he zeros in on the wrong point.

It seems to me that Lincoln took his strategy to develop trust with workers.  The most important elements of the quote in my opinion are not the reference to job security but the call for a “change in thinking” and recognition that trust is a critical prerequisite to the organizational creativity needed to maintain sustainable competitive success.

In other words …

We must manage to optimize our enterprises for social capital to thrive in

the new economic model.

I am not interested in reading Koller out of nostalgia for “Old Fashion Values”.  I find it easier to relate to James Lincoln as a visionary, ahead of his time … which explains why so few have followed his example.

My interest in reading Koller’s Spark comes from the opportunity to learn more about experiments in maximizing corporate social capital.

On the other hand, if we need to look at Lincoln as a throw back to mystic better times to sell entrenched aging management, I am all in.

New Section on Internet and Social Capital at Social Capital Gateway

Fabio has launched an new section that highlights only papers that focus on the Internet and Social Capital.

Most of this work has been done over the last few years.

This a great resouce:

http://www.socialcapitalgateway.org/internet.html

Once again, if anyone would like to read and write a review for www.socialcapitalvalueadd.com of any of the papers that you find there, please do not hesitate to contact me.

Crowd Building: 2020 Media Future @ OCAD

Thanks to Walter Derzko for inviting me to join yesterday’s 2020 Media Futures Workshop at the s-Lab (Strategic Innovation Lab) at OCADSuzanne Stein and Greg Van Alstyne did a great job of moderating and facilitating a fairly free wheeling group of thinkers.

It looks like I was the only one using twitter during the workshop or maybe I had the wrong tag? Here are a few thoughts that emerged that could each be turned into a blog post:

  • We think about discontinuity as a threat but the new global success stories will have discontinuity at the heart of a new approach.  Are the incremental gains achieved through “baby steps” and the “go slow”, “fast follower” practices of Canadian business enough to maintain Canada’s position in the world moving forward?  At the moment many are quick to heap praise on the stability of our financial sector.  I remember a few observers noting that growth in Nova Scotia was not effected by the global downturn.  Hmmm. When achieving global success requires embracing discontinuity, what design approaches should we advocate and adopt?
  • How do digital connections qualify/disqualify people for precious face to face time?  Many of us have now experienced the little thrill of having connected with someone online via twitter or a blog exchange and then met them in real life.  As we become more connected, how will the productivity of our face to face time be impacted.  Is it a sign of disrespect if you have not bothered to “google” someone before attending a scheduled meeting with them?
  • Does copyright transform into “identity right”?  Copyright was established to protect the investment and intellectual property of creators for a reasonable time period.  Online is “busting through to reality” (pick up Jesse Schell’s talk on the Future of Gaming at the 10:56mark).  Is the final produced piece of art or software code the point where we need these protections?  When our life stream is “sensed” and iterative design is key to progress, do we need an entirely different set of rights to ensure that individuals have the ability to profit from the digital footprints that they cast off or in other words, how they direct their lives?
  • We must integrate consumers into design & production.  This generalizes to “crowd sourcing” or making sure that we make corporate decisions, not based upon the smartest person sitting at the table at that moment, but based upon having the smartest thinking anywhere available at the table for the moment of the decision.  It is the kind of motive behind the idea for a Seedling Prediction Market that initially drew me into MDes’ (i.e. Masters of Design in Strategic Foresight and Innovation) orbit. This is not really a question for 2020.  I think it is a question that we need to be answering right now to maintain Ontario/Canada’s position in the world.
  • So some “Crowd Building” related design thinking …
  • MIT Tech TV