Tag: frontiers

The new threads of ‘Organization’

Thread
A thread runs through it.

Organization is one of our most potent social technologies. In a world where chaos, connectivity, and creativity have risen to new heights, increased attention on the topic is both natural and welcomed. Quite simply, if our civilization is set to pivot, getting better at it will help us realize a better future, sooner.

My three favourite books on the topic are (reading recommendations at the bottom of this post):

I recently revisited them side-by-side to see what they had in common. What stood out for me were the themes conditioning, humanity, networks, and social technology.

Conditioning trumps control

Already back in Heart, Beer recognized the role of management as attending to cohesion, sensing for incipient instability and making the minimum of intervention. In both Future and Pull the authors are more critical of the dehumanizing effect of command and control driven organizations and zero-sum management practices. They all argue that control restrains the creativity, humanity and innovation needed for any organization to thrive and adapt in complex and dynamic environments. Designing and managing organizations is increasingly about creating and conditioning spaces for passionate people to pursue a common purpose.

Organizations are human first

In Heart, Beer talked about the ultimate manager being someone who achieved enlightenment – someone who was fully alive and aware of who they were. Similarly he saw the optimal organization as one ‘exploding into self-consciousness’. Future and Pull more simply recognize that people are at their best when they are free to pursue what matters to them, in short, when they are treated as human beings, not production resources. Where Pull dives into the shift from transactions to relationships and the role of trust, Future summons the moral imperatives of beauty, truth, love, service, wisdom, justice, freedom, and compassion.

System dynamics dominate

Information flow is at the heart of Beer’s Viable System Model and Heart excels at driving the rigor of design around information sensing, amplification and attenuation. Its purpose is primarily for being able to sense for incipient instabilities and opportunities within and around the system in focus. This systems perspective is more fully fleshed out in Future through a case illustrating the power of prediction markets in achieving more accurate forecasts than the best analysts. Pull goes further drawing from examples of how sharing, production and collaboration through social media foster natural innovation and illustrate how these dynamics lead to increasing returns. In fact, they argue, that the real value of an organization lies in its networks of long-term relationships.

Social technology playing a pivotal role

Before Beer wrote Heart, he led a Star Trek-esque roject using telex machines in Chile to manage a centrally planned economy. It’s hard not to have a chuckle at first glance, but the core principles of the design are at the core of the opportunity in the emerging ecosystem of social technologies we have at our disposal today. In Future, written at the start of Web 2.0, Hamel boldly declares “Argue with me if you like, but I’m willing to bet that Management 2.0 is going to look a lot more like Web 2.0”. While the novelty of Web 2.0 had worn off a bit by the time Pull came out, the examples of how social technology is enabling people to pursue their passion, connect, and create value are foundational to how organization actually happens today. It is of course about more than the technology, it is about the technology having reached a point where it nurtures, enables and is compatible with the other three themes above. It seems, these technologies are instrumental in allowing organization to happen more naturally, and of course with over 4 billion people connected, at a scale never before imaginable.

In summary, it seems that the technology of organization is undergoing a transformation, enabled by our social technologies, and powered by passionate people. It seems that we naturally are drawn to collaborate around purpose to create a better future, sooner, however that looks to us individually. It seems, even, like a rennaissance of humanity.  Whatever it is though, it is on the upswing.

I’m looking forward to seeing what the great thinkers and writers discover next. I’m also, of course, looking forward to seeing what I can contribute to the game with things like Epic.io.

These are fun times to be alive and engaged.

>>> for those who haven’t yet read the above books… here’s my quick take on which is best for whom

  • Heart of Enterprise: A beast of a read but the most accruate understanding of what an organization actually is. Best for those who really really want to get their geek on… or those who are somewhat sadistic.
  • Future of Management: A powerfully passionate case for reinventing management. Best for those who are in management and in need of serious rehab from convention… if you don’t what I’m talking about, that’s you.
  • Power of Pull: A well researched and articulate understanding of how ‘organization’ is fundamentally changing. Best for those who want to understand what is going on right now and why… and those who are working to innovate for good right now.
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Micro-funds and the Social Venture Commons

Working with the building blocks for a new kind of venture capital I’ve been shaping a couple of core components – micro funds, and the social venture commons.

Micro-funds: making small, flexible, intuitive, low-cost, high-leverage investments. Features:

  • Short life: fully invested within 3 years or less
  • Small, high-leverage investments: invest financial (e.g. $25-50k) and social capital in high-leverage ways – core capacity, incremental engagement, financial seeding
  • Low or no fee: offset with performance based incentives for financial and impact returns appropriate to the fund
  • Light-weight and dynamic operations: led by individuals or organizations that have a unique position or perspective on the ‘frontiers’ – run as a ‘side-car’ to existing occupation
  • Commons interdependent: fund and individual investments must spark and support a conversation and generally contribute to and engage community to mitigate risk, improve success, and demonstrate returns
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Social venture commons: convening and catalyzing capital, community, conversation. Features:

  • co-created infrastructre: enable self-service deal support, reporting, and portfolio tracking for micro-funds and their investees
  • nurture conversations: technical and financial support for stimulating micro-fund and investee conversations
  • harness social capital: help develop, weave, and harness social capital among funds and investees
  • strengthen community: seed and support unique, focused community gatherings and capacity supports including ‘forum’ style monthly entrepreneur groups

The key in this lies in the interdependence between the micro-funds and the commons. The commons nutures and convenes community. Funds add some fuel and spark by investing and catlyzing conversations. The ventures serve themselves through supporting each other and participating in the commons.

I’m continuing to refine this as I move toward a working example and will continue to think out loud as I go. And if you haven’t checked it out – take a look at the Entrepreneur Commons being led by Marc Dangeard. He’s farther along and is tackling similar issues as he goes. The similarities and even more so, the differences, are interesting and good fodder for conversation.

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Building Blocks for a new kind of Venture Capital

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A new kind of venture capital for purposeful ventures is something I’ve been exploring for a number of years and was recently reenergized by some conversations at the OpenEverything retreat in September. I’m writing this now as I head to SoCap08 and looking forward to testing some of these ideas against other emerging models (e.g. Enterpreneur Commons) and amongst the worlds leaders in social venture investment. I’ll follow-up this post with any big insights that emerge and in the meantime I’m interested in any comments about what I’ve started framing below. Feel free to contribute in the comments or email me directly. And of course if you are buliding another model – feel free to take anything you gain from this and use or remix freely – just ping me and let me know what you are working on and share alike.

The context of venturing is changing and this next generation of ventures requires new models of investment that are more compatible with the new context.  There are two main influences which shape the building blocks for a new kind of venture capital.

Influences on Venturing

  1. Increasing rate and depth of systems shifts
    Markets and industries are coming unhinged (e.g.  financial, music, automotive, airline, etc.) and game-changing ventures seem to ‘come out of nowhere’ (e.g. Craigslist and Google). It means that any venture is subject to drastic, unanticipated changes in their operating context making conventional planning less effective or reliable. Two major drivers of these shifts are changes in the energy and financial markets along with the pervasive adoption of communication technologies and an emergent culture of people comfortably communicating and collaborating with greater numbers of people independent of geography or in-person relationship. These shifts affect everyone, often in unexpected ways and at unexpected times.
  2. A new mode of organization
    A by-product of the underlying shifts above is a new mode of organization that has been exemplified in open source software, creative commons, and activism. This mode of organization features increased permeability in the production of the organization, more rapid iteration, and evolution through intentional emergence vs. long-term planning and resource ownership. It also draws more strongly from social and human capital than it does financial and proprietary intellectual capital.

Building Blocks for a new kind of Venture Capital

  1. Focus on outcomes vs. sectors
    The frontiers of these changes are at the edges and intersections of sectors – in places where technologies and trends challenge or circumvent current systems. These frontiers are thriving on the the Increasing complexity in our society and blurring conventional silos and sectors. Focusing directly on desired outcomes opens the seeker to the range of frontiers that influence the possible pathways to achieving the desired outcome versus being constrained to traditionally defined silo.  Focusing on specific outcomes also favors smaller, more fluid pools of capital able to evolve along with the frontiers.
  2. Surf and surface the frontiers
    As opposed to ‘pulling’ deal-flow through conventional channels, the new kind of venture capital needs to be immersed in the frontiers to uncover potentially game changing patterns. Practically this can be accomplished in part by participating in and stimulating public dialogue on these patterns – such as by blogging and commenting on other blogs relevant to the frontiers. This serves to engage a broader range of participants and fosters the identification, emergence, and advancement of innovative solutions targeting the desired outcome.
  3. Employ comprehensive capital (financial + social)
    With the increasing importance of social and human capital relative to financial and proprietary intellectual capital, the new kind of venture capital must apply the same attention to the management and leverage of social capital as they have conventionally applied to financial capital. The value of social capital lies in facilitating connections and trust among the collective social capital networks of those involved – linking several degrees of connection among all nodes of the collective network. Social capital has long been employed in venture capital by ‘bringing the rolodex’. It is still however largely untapped and represents a high ROI investment opportunity entirely compatible with financial capital and the needs of the new mode of organization.
  4. Invest in intentional emergence (systems + engagement)
    This is about building a system from which the most effective actions will emerge vs.  building a company to execute a pre-determined plan. This accomplished by designing a ‘viable venture system’ and the building the capacity to continually engage the right resources at the right time to produce the venture. Together these things fuel emergence and enable a venture to rapidly iterate the best solution for an evolving context. For that emergence to be intentional, however, the venture must be firmly grounded in a deep understanding of its purpose, values, theory of change, and have a clearly articulated goal.
  5. Serve as a conduit for capital
    Focusing on outcomes vs. sectors means a shift away from larger investment funds toward highly targeted ‘expeditions’. It also presents and opportunity for investors to assemble portfolios of target outcomes vs. a portfolio of funds. Actively employing comprehensive capital (financial and social) also means porftolios could reflect social and financial capital invested in individual outcomes and deals while returns would include quantitative metrics and qualitative stories. The viable venture system for this new kind of venture capital must cost-effectively facilitate the engagement of a broad number of participants in flowing financial and social capital among capital sources, targetted outcome explorations, and specific ventures.

One possbile model for a new kind of venture capital might be a conduit for capital with the following features:

  1. Distributed investment and deal flow – “Outcome Expeditions”
    Engage individuals to conduct ‘outcome expeditions’ – . These people would be expected to blog and comment on others blogs on the frontiers related to specific outcomes.  They would also be able to make small investments in ventures (e.g <$25k/investment and >3 investments/yr.) that would meaningfully improve the venture’s system or advance key stakeholder engagement. This would be done with minimal paperwork and would help draw deal-flow and attention on the frontiers. Investees would then be listed in a ‘venture commons’ as a ‘frontier venture’.
  2. Personal venture and outcome portfolios
    Enable investors to invest social and financial capital directly in either frontier ventures (as deals arise) and ‘outcome expeditions’. Their portfolio would track social and financial capital invested as well as quantitative and qualitative returns generated. Furthermore, the portfolios also become a gateway to the frontiers of interest for them, feeding the blog posts, comments and other information generated in the outcome expeditions and investee ventures. Investors would have to commit a minimum amount of social and financial capital on an annual basis to participate in the platform but would be free to allocate those funds as they saw fit over the year.
  3. Active employment of social capital
    Tracking social capital involves tracking contributions and connections made for expeditions and ventures either directly or indirectly. Ventures and expedition leaders are expected to report on returns realized from specific social capital investments where value was generated. These will be captured as best as possible in quantitative and qualitative measures. While likely best implemented initially on a voluntary basis, this could evolve to contractual over time including pre-determined participation in financial returns generated from social capital investments.

Walking the Talk

Investing on the frontiers and encouraging a new mode of organization means that the new kind of venture capital should itself operate in that new mode. This means being increasingly permeable in the production of the organization, iterating rapidly, and being intentionally emergent.  More specifically this means challenging some conventional barriers such as sharing of information working from a starting premise that all should be shared vs. all is proprietary. It also encourages distributed descision making and designing a system for investment to happen vs. buildng a fund to invest. The use of wikis, blogging, participating in public discourse and the information commons is a simple cornerstone of this type of organization as evidenced in the opensource and activism communities. Additionally, skills of community building and management including the effective employment of advanced communication and collaboration tools are necessary core competencies.

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Reflecting on OpenEverything: the rereat, the movement, and the meaning.

Reflections at Hollyhock

It’s been almost a week since the OpenEverything retreat and the reverberations continue. Heading into it, not having any roots in the open-source community, I was technically the biggest noob on the convening team. At the same time, what drew me into the meme and the event was a sense that something bigger was going on and that that something was rooted in a set of ideals and a drive for the practical that resonated with my core and my life experiences.

On the other side of the event I’m more clear than ever that ‘open’ is not something new but rather is reflective of a powerful shift in our culture, driven by technology and circumstance, that is fundamentally restructuring the systems of our society. A shift that is also at play in the social change and ecological sustainability movements as much as it is in the Open movement.

http://flickr.com/photos/digitalgrace/1795262311/

David Eaves talks about ‘open’ as a social movement which it certainly is. What excites me is that at it’s core it’s also part of the movement of our society toward a more just a sustainable state – a movement that’s based on a common set of ideals that transcends meme, sector, or method. A movement that works the tensions between ideals and practical. A movement of people that recognize themselves as interdependent parts of everything from their project to their community to humanity etc.

This is what has me so interested and where I hope people rally – around the thing that is unifying – the thing that represents the change in course our society so desparately needs. For me, this is coming out through contributions to the wiki – Open Organizations and Investing and Open – and a continuation of my work ‘venturing on the frontiers’ (which I’ll be sharing more on this site in the weeks to come.

And what about you? Do you feel this shift underway? How’s it showing up? How’s it changing you? What does it mean for you, for us, for humanity?

A crack in the dam – opening a new domain.

It’s been in the works for awhile and I now think we’re really starting to make a connection between web tech (2.0+), venture investing, social innovation. That connection is going to unleash some tremendous innovations and a surge in the activity directly working on the challenges facing our civilization. It feels like the emergence of a new domain that will take some very different approaches to change and influencing the course of civilization. It seems inspired by open source, technology innovation, financial risk taking, a venturing culture, and now a deepening and deeply felt realization that there are more important tasks to tend to.

I’ve been digging deeply into this for a while (Venturing on the Frontiers, Open Everything <site>, and The Great Remix) and these two posts (Umair Haque and Fred Wilson) have me feeling that something just shifted. What I love is that this isn’t just the same old folks getting into this AND that they are coming at it from an understanding of how systems emerge. Umair uses the language of DNA and Fred is living it through his investment approach in web tech companies.

Maybe what it is, is that all the different groups I’ve been working/having the conversations with (MaRS, SiG, CSI, Renewal Partners, Communicopia, Causeway, Tides Canada, and Good Capital) are using different language to talk about the same things.

I’m not sure. What do you think? Is this just a personal moment are others sensing that some thing has shifted too?

“Bets n’ chips” – Implications for investors on the frontiers.

There seem to be two types of bets that investors make when doing a deal. A bet on the team. A bet on the plan. The closer to the frontiers (early stages and deep change) the greater the emphasis is on the team. And rightly so. We all know that plans don’t last on the frontiers.

So how can we get better at investing on the frontiers? Surely betting on the team alone isn’t a sound investment strategy.

From my conversations the current practices seem to be either focused on ‘rolling up the sleeves’ and getting involved directly (few, high-cost investments) or being a hands-off patron (many small investments). Either that or back off from the frontiers and use conditional investment to achieve specific results (e.g. disadvantaged employment or other enviro-social activities). The limitations in each of those should be fairly self-evident.

So what else could we make bets on? Well if venturing is a process, we could bet on the process they are following. If we know plans are not static, what is the venture doing to continue the process of framing, planning, and connecting?

And what other practices could we employ? Well if one of the biggest chips an investor brings to the game is their social capital, well then how can that capital be better employed in the task of connecting? Going back to the image above, we can see that at minimum it requires a venture to have articulated simple and accessible spaces. I wonder – how many entrepreneurs and their investors would truly describe the primary spaces of their venture in the same way? How about in your venture or your portfolio? My bet is that’s strongly correlated to the difference between friction and luck.

Summing up, that leaves us with making bets on:

  • a team;
  • their venturing process; and
  • their spaces (accessible and simply articulated).

And it means bringing our social chips into the game to make the connections the venture truly needs (more in a future post).

Now that’s an investment space I’d bet on.

“Gettin’ lucky” – implications for ventures on the frontiers.

I wrote about the gist of this image here. Now I’m turning to the implications for venturers.

Quite simply the essence of venturing is a process. A process of creating spaces for things to happen (some call it ‘luck’). The simpler and more accessible the space, the easier it is to get people engaged and get things done (some would say ‘the luckier you get’).

Sound simple? It should be, but can you simply articulate the 3 primary spaces for your venture? Do you have a time and place to think about and evolve those spaces? Why are people connecting to you? Do they know what they need to meaningfully contribute in ways you may not have asked or may not be expecting? How often have you been ‘lucky’?

So how can ventures get better at “gettin’ lucky” on the frontiers?

Step 1: Define your spaces (framing)
Get out you favourite notebook or stash of napkins and start framing each of your primary spaces separately: founding agreement, magic box; and realms of relevance. Keep them separate. Keep them simple. (more on this in a later post)

Step 2: Get your team together and get to it (planning)
Revisit planning as a team – those who control the resources and those who do the work. In the context of your spaces, figure out what your going to do for the next meaningful chunk of time, making the most of what you have, and getting what you need to move you most towards fullfilling your purpose.

Step 3: Connect with purpose (connecting)
Make connections throughout your spaces to better understand and define your spaces, and to get done what you need to get done. Do it with purpose and give it space to let something happen.

Step 4: Repeat (venturing)
Take a look at what you did for steps 1-3 and do it again – but better. This becomes the process of venturing. Find what works for you and your venture. There is no right way. There is no right answer. In fact, there really are no answers… just keep asking questions, keep moving forward, and keep at the process.

You can’t know where exactly you’ll end up but you’ve got a much better chance of “gettin’ lucky”!

Venturing on the Frontiers – A simple guide.

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
  • …

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.