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Venturing on the Frontiers – A simple guide.

Venturing on the Frontiers – A simple guide.
Originally uploaded by Michael Lewkowitz

Venturing on the frontiers is about the early stages of taking on big challenges. It’s a space where conventional models to planning and management prove ineffective. It’s the place where entrepeneurs trust their ‘gut’ and face the challenges with an unrelenting push forward. And it’s the place from which the greatest change can come about.

I’ve been tapping my own experience, researching into systems science and talking with some of North America’s leading venture investors who are themselves pushing the frontiers. Through all of that I’ve emerged with an understanding that I’ve tried to capture to the right. Essentially it describes a venture as a set of spaces (‘founding agreement‘ which gives rise to a ‘magic box‘ which operates within certain ‘realms of relevance‘). Venturing then is the process of ‘framing‘ those spaces, ‘planning’ immediate action, and ‘connecting‘ to get things done and evolve the spaces. Collectively that led me to the following set of principles for venturing on the frontiers:

Create spaces for things to happen
Make it simple and accessible
Tend to connections and connecting
Keep venturing

I’ve published the image under a creative commons license so please feel free to use and build from it accordingly. And as always, this is but a snapshot of understanding and bound to evolve… so please do get in touch with your reflections, experiences, and suggestions.

I’ll publish future posts on the implications for ventures and venture investors who are pushing the frontiers. Don’t expect magic bullets, but rather a prompting of some productive questions. If anything this has reminded me is that there are no answers, only questions… and asking the right ones can make all the difference.

Venturing and venture investing on the frontiers – in simple terms.

I’ve been asked a few times about what I’m working on in simple terms. Not always easy for me – but here goes top-of-mind while riding the train…

My focus is on venturing and venture investing ‘on the frontiers’.

venturing is about organizing and directing resources toward a purpose
venture investing is about improving the capacity of ventures to achieve their purpose (or certain milestones along the way)
‘on the frontiers’ means the places where conventional ways of doing things are least effective

My work is focused on being able to systematically improve ventures and venture investors operating on the frontiers. My belief is that by focusing here, practices can be developed and demonstrated that will themselves become conventional in time and thereby move ‘the frontiers’ greatly increasing our society’s ability and capacity to take on our civilization’s greatest challenges.

So how will ventures be different after employing these practices?

more efficient and effective at getting things done
better responsiveness to the environments it’s operating within
better anticipation and avoidance of ‘crises’
more flexibility in responding to immediate opportunities and challenges
more focus on and faster progress toward fulfilling the purpose

And how will venture investors be different?

better investee governance with less effort
increased capacity of all portfolio companies (whether they’ve applied the approaches or not)
better results from existing portfolio (fewer failures, greater success according to purpose)
better able to go earlier with less risk
better able to go deeper into realizing non-financial aims (particularly relevant for ‘social’ venture funds.
lower transaction costs

And what’s at the root of what’s different?

concerned with systems vs. plans

(Said in different ways – couldn’t resist…)

creating spaces for uncertainty to resolve itself vs. trying to solve uncertainty
organizing under a purpose vs. organizing around an idea/product/service
unfolding vs. turning inward
enabling vs. constraining
fluid vs. rigid
framed vs. forced
…

This biggering is buggering… a call for a new vision of ‘prosperity’.

I attended a session for Sustainable Prosperity last week and was left with a pretty big realization that evolved for me into what blurted out in a strategy session for Windfall Ecology Centre on Friday as..

“This BIGGERING is buggering…”

Obviously, this is inspired by Dr. Seuss’ “The Lorax“, (see the specific quotes here), but it also refers to a growing realization that the thing that economy is based on – continuously increasing consumption – is reaching a breaking point. To be clear, this isn’t a recession inspired ‘people aren’t going to consume as much anymore’ statement, it’s a ‘if people consume anywhere near what we’re consuming we’re all screwed’ statement. “Story of Stuff” by Free Range Media for the Tides Foundation makes a simple and decent case for that.

So getting back to Sustainable Prosperity, I can’t help but think that if any new definition of prosperity is going to have any impact, it has to address this, and the other underpinning of our society, if the individual doesn’t prefer it for their own selfish motivations, no level of altruistic appeal will change their behaviours. The 60 minutes “House of Cards” segment on the sub-prime mess shows some of that with a shocking display of people’s self-interest at play.

Putting those two things together then, any new definition must then:

Not be dependent from continually increasing financial prosperity (growth)
To the individual, be considered as comparatively superior to the conventional notion of financial prosperity

It’s easy to argue that’s not likely to happen – when the furthest our ‘greatest’ capitalists go is ‘creative capitalism’ (Bill Gates) – but I can’t see how anything but will have a chance of getting at the root of what we’re dealing with. Imagine though what Gates or Buffet could do if they backed that kind of a definition.

Things are broken. We need a new basis to start from. Personally, I can’t deny it anymore… this biggering is buggering and so I’m beginning again.

But before I begin my beginning, I’ll just share something from another great kids book, this one by Jamie Lee Curtis (whoda thunk?) and Laura Cornell called “Is There Really a Human RACE?”. I’ve posted the full text here, but will wrap with this provocative page:

“Do some of us win? Do some of us lose?
Is winning or losing something I choose?
Why am I racing? What am I winning?
Does all of my running keep the world spinning?”

The definitive definitions of venturing!

One of the surprising things that I came out of my latest exploration into the frontiers of venturing and venture investing is a set of definitions. I’m actually not one that likes to debate definitions ad infinitum but I found I needed to clarify things to be able to have meaningful conversations going forward. So here, is what I’ve come up with… for now (I’ll keep updating this definitions as the evolve so feel free to check-back or link here for reference).

Venture: An agreement among people to do things in service of a purpose and according to a set of values.
Venturing: The process of creating and evolving a venture.
Venturer: A person primarily involved in or responsible for venturing.
Operator: A person primarily involved in or responsible for operating a venture.
Entrepreneur: A venturer that also carries primary responsibility for operating a venture.
Frontiers of venturing: The effective limit of conventional approaches to venturing.
Frontiers of venture investing: Investing in ventures that are on the frontiers.

Crowd sourcing in venturing

Just saw this post tipping me to VenCorps which seems to be a venture fund using ‘crowd sourcing’. I’m going to be interested to see how it goes and expect they will do well by essentially ‘amping up the network’. My guess is that they will be better at dealing with ambiguity (related to progressing along stage of development) in ventures but I’m curious to see if it will help them deal with complexity (related to depth of systemic change). The thing that gives me a sense that they won’t be as effective here is the military style they are coming out with. That to me indicates a very linear, command and control approach which is not effective in dealing with complexity.

Looking forward to learning more and seeing how it does. Regardless of how it performs its great to see the innovation in venturing.

Giddy-up: getting better on the frontier.

Coming out of this first inquiry I’m left with new definitions for venture, venturing, and venturer and also a simplistic grouping that the process of venturing essentially requires agreement, action, and governance. It is important to note that these are a set of observations and interpretations that will continue to be evolved in practice. As such they represent a starting point for a concerted effort to ‘get better at venturing and investing on the frontiers’.

DEFINITIONS

Venture: An agreement among people to do things in service of a purpose and according to a set of values.
Venturing: The process of creating and evolving a venture.
Venturer: A person primarily involved in venturing.

AGREEMENT: The venture profile
In getting better at venturing on the frontiers, it becomes apparent that the first things required in a venture are an articulation of:

purpose;
values; and
agreement, followed by action.

This is particularly so in an effort to address complex ambiguity and so also must include the foundational foci that are effective amidst complex ambiguity, namely distinct, discreet attention on:

core viability (CV); and
the process of productive, iterative exploration (PIE).

These items become the core components of a ‘venture profile’ which is an articulation of the collective agreement on what the venture is.

Another interesting realization through these conversations and above definitions is that a venture, at it’s core, is an agreement. It starts with the first agreement between 2 or more people and grows with the deepening and addition of new relationships. Essentially a venture is ‘simply’ a bundle of relationships. Accordingly the individual relationships should also receive special attention through consideration and articulation of the essential process for evolution or termination of the agreement, and of each party’s:

acknowledgment of the other party’s venture profile;
their contribution;
the manner of contribution;
their compensation for their contribution; and
any other explicit responsibilities and expectations.

Collectively, the bundle of individual relationships along with each associated agreement form the essence of the collective agreement articulated in the venture profile and could be visualized through multidimensional maps which naturally will evolve as does the collection of individual relationships. Here there is a significant opportunity for new and improved practices in venturing. The collection of individual agreements also forms the basis for financial model. This is not the same as financial projections which are often an exercise in justifying an anticipated outcome but rather they are the basis for being meaningfully able to anticipate the results of the existing and anticipated agreements under certain conditions.

ACTION: A planning process
With the core profile in place we move into the activity of the venture itself which is best determined by those that have the authority to complete the action being determined. This follows from observations in systems science that planning only happens when action is the result and so can only be carried out by those with the authority to act. The most effective planning approaches will be recognized as intentional, co-creative, and iterative action planning. Established approaches from community and software development could be well applied here. For example, the methodology from the Institute for Cultural Affairs Technology of Participation are particularly effective when conducted with short time horizons (e.g. monthly and/or quarterly) within the context of the venture profile which itself is reviewed periodically (e.g. annually with the inclusion of strategic direction planning). Similarly the agile development process is particularly relevant for venturing on the frontiers.

GOVERNANCE: Cohesion and instability preemption
Governance of a venture (collective agreement and the action that unfolds from it) is best fulfilled through attention on the cohesion of the venture and on signals of incipient instability. Going back to the definition of a venture, this is about monitoring the changing trends in relationship status and agreements. This is perhaps the most unique discovery in these conversations. Changes in the tone of relationships is often one of the biggest and most consistent indicators of incipient instability. This by no means implies that relationships should remain static or that relationships should not be allowed to decline, that’s simply a part of evolution. What it does imply is that changes in the trends of relationships status are particularly powerful indicators of change including growth and incipient instability. For example what’s often described as ‘momentum’ is an upward trend in the strengthening and addition of relationships. Or a founder of an organization challenging the direction the venture is taking may be an indicator of a change in the collective agreement, particularly if it was well articulated at the outset (which is rarely the case). Of course, monitoring financial metrics and changes in budget/plans can also signal incipient instability and by no means should be excluded. Rather disciplined attention should be focused on the metrics that indicate potential instability. If the management system is attentive to incipient instability it will be able to minimize its effects or avoid it all together. The other dynamic of effective governance is attention to the cohesion of the venture itself. This means that ensuring that both PIE and CV are being attended to and that the dynamic between them is constructive.

There are of course more detailed design aspects to organizing and operating a venture, several key ones of which are described in Heart of Enterprise, but from my experience, research, and through the recent conversations I believe venturing effectively on the frontiers requires the essence of:

agreement and articulation of the venture (venture profile, relationship map, financial model);
action through intentional co-creative, iterative action planning (process, budgets, time lines); and
governance attentive to cohesion and able to anticipate and preempt incipient instability (future indicating metrics, report card, ability to respond constructively).

Practically, there is significant opportunity in improving upon each of these areas and particularly in the area of relationships with the emergence of new ways and styles of connecting brought forth by virtual communications developments such as social networking technologies. And with that now begins the process of putting this into practice and an open invitation to those who want to embark on this with me.

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Gettin’ it goin’ without goin’ under: cohesion and incipient instability.

With requisite attention being held a natural propulsion will emerge. The act of managing and nurturing that propulsion is attended to with a focus on cohesion and being proactively aware of the emergence of incipient instability.

These concepts are addressed in depth in Stafford Beer’s viable system model (my reflections here on reading Heart of Enterprise) and are really about holding the tension between future (vision), and here and now (operations) [see last post for more on requisite attention]. Cohesion has a lot to do with articulating purpose as so well described by Collins and Porras in Building Your Company’s Vision. And incipient instability is about monitoring trends in financials, plan performance, and relationship status (after all, ventures are systems, concentrated bundles of relationships), and then spotting changes that indicate that something is becoming instable in a way that could harm the cohesion of the system as a whole.

Again, both of these concepts seem relatively straight forward, and in fact are things that play out automatically in any natural system including ourselves. But as ventures are intentional human constructs we need to be intentional about them for the system to remain viable. On the frontiers, the pressure to focus on ‘getting things done’ leaves little space for this to happen, and unfortunately the models of doing this tend to come from linear management theory that takes more of an audit and control function which is of little interest to the venturer and begins the dance of storytelling through massaged metrics. Accordingly bringing this into practice needs approaches that are lightweight and constructive – some concepts for which will come in the next post.

(special note: this has been a difficult post to keep short, there are many offshoots and explanations possible in every sentence — something best explored in conversation and specific context)

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Venturing on the frontier: requisite attention

Venturing on the frontiers requires distinctly holding attention on two discrete aspects of any venture:
– Productive, iterative, exploration of the complexity dynamic
– Core venture viability

Simple to say but in practice, venturers who aren’t stuck in perpetual analysis and thought, are pulled toward focusing on linear, or hopefully exponential, growth of the most promising aspect at hand particularly after attracting professional investment capital. Stop thinking and just do it right?

Well, avoiding the trap of perpetual analysis does not have to mean stop thinking and exploring, it simply means actively cycling through observation, reflection, interpretation, and decision that moves the venture forward. It means not getting stuck. There are many models for doing this with the key aspect being that the focus of the exploration tends toward the deeper purpose, that the cycles are measured in weeks and months as opposed to quarters and years, and that the results change the venture in some way. Explicit attention on this process will ensure that the venture continues to innovate and work toward it’s purpose including continually improving upon it’s ability to achieve that purpose. Another important consideration in this exploration is that the greater the chasm between the purpose and the daily activity of the organization (as is the case with ventures on the frontiers), the greater the flexibility the venture needs to be able accept and meaningfully enact the outputs of the process. This flexbilty is informative in understanding what is meant by ‘core’ venture viability.

Core venture viability at its essence is the ability for the venture to maintain its existence in service of its purpose. Commonly, and importantly, a key aspect is financial viability. Early-stage ventures tend to be perpetually resource constrained making the flexibility required of the outputs of the exploration process described above, very difficult. This is where ‘core’ viability comes in. The core viability does not have to do with maintaining the venture as it is but rather maintaining the ventures ability to continue to serve its purpose which often does not require doing everything that is currently being done. It could be a subset of what is being done, it could be something entirely new. Usually it boils down to concentrated set of people and relationships and the synergistic activity/supports among operations. Taking this perspective can often illuminate the amount of activity that could be done with out. It also will enter into decisions about growing operations and help to clarify what actual purposes of growth related activities are. Another way to look at it might be refined bootstrapping.

The tension created by these two attentions inherently have the potential to compel the venture toward being more efficient and focused with less risk of failure and higher probability of meaningful achievement of its purpose. And like everything else, easier said than done right? Yup.

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