The dynamics of the frontier: complex ambiguity

The frontiers of venturing are the places where conventional venturing and planning approaches become least effective. It is the effective limit of conventional approaches to venturing that define the edge of the frontier with the deepest depths of the frontier being the pre-concept stage of a systemically focused venture.

Conventional approaches loose effectiveness the earlier a venture is in the development phase because of increasing ambiguity.  The less that is known the harder it is to do linear modeling and planning.  Choices made continually reduce ambiguity as the venture moves along the development and into the realm where conventional planning approaches can be effectively used.

On the depth axis, the more systemic the purpose, the greater the complexity. As the system changes, so will the problems and opportunities being addressed as will the community addressing those challenges and opportunities. The interrelatedness of planning decisions and planning context can be an all consuming black-hole. The more you are trying to shake things up, the less you know how things are going to shake out.

While all ventures face a degree of ambiguity, the depth of your foray into the frontiers depends on the depth of complex ambiguity being taken on - a function of complexity and abmiguity.  Conventionally, managing this is accomplished either through blind faith in the entrepreneur and management team or by reducing the complex ambiguity by advancing the planning horizon and responding to situational opportunities and problems. Taking the latter approach often serves to reduce near-term operational risk but also severely limits or eliminates the potential for achieving systemic level impacts, while the former approach is limited by the abilities of the entrepreneur/management team in the unique situation of this specific venture. Neither option suggest even modest probabilities of success particularly at the depths of the frontier... which describes the venturing and venture investing community as it currently operates.

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Venturing on the frontiers - Inquiry #1wrap-up

A little over a year-ago I began considering what's next in my journey and exactly 3 months ago I initiated my first inquiry into what's needed on the frontiers of venturing and venture investing. It hasn't been a linear journey of course, with a good deal of my attention going towards getting Causeway going over the last year.

While that was ongoing, I had about a dozen conversations over November and December with some extraordinary social venture investors and funds in North America (including Renewal Partners, Social Capital Partners, Kellogg Foundation, RSF Social Finance, Good Capital and others). To all of you I am tremendously grateful for the generosity of your time, the candor with which you shared your experiences and the enthusiasm with which you've approached this exploration. Each conversation integrated into my own experiences and readings, and into every other conversation. What has emerged for me is a point of summary from which I feel ready to attempt some active experiments into how do we get better on the frontiers as venturers and venture investors.

What follows now is a series of posts on:

• The dynamics of the frontier: complex ambiguity
• Venturing on the frontier: requisite attention
  
• Gettin' it done without goin' under: cohesion and incipient instability
  
• Giddy-up: getting better on the frontier

Onward...

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Social blogging

Fred Wilson at USV had a post exploring the differences in twitter and tumblr from other things like blogs and social networks.

I am sure there are a lot of people reading this who think "how is this different than blogging?" I'd like to suggest that everyone try this

I blogged earlier about a simple way to give twitter a try (here and here) and think that both of these need to be experienced to get a sense of what they are like. There's something about the ambient nature of twitter (think the value of fb status updates amped up). It's of course much more than that and I'm finding tumblr encourages me to explore and share creatively. So much of it has to do with the sharing of pictures, videos, music, and quotes that I'm finding it interesting to watch what it is that interests me in what I'm posting or reblogging. I think it keeps me on the frontier - exploring things that I can't quite articulate yet and certainly finding things that have prompted a breakthrough in my thinking in ways never intended.

Give it a try - both twitter and tumblr and add me if you do (igniter on twitter and igniter.tumblr.com on tumblr).

Measuring incipient instability

I've been thinking about what it is that really needs to be tracked in early-stage and transformative ventures. There certainly is the simple dynamic of financial viability and then there is the concept of productive, iterative exploration in the area of complex ambiguity I raised in an earlier post. I've been digging into what the measures are that actually help indicate the emergence of potential instability - before it's actually happened. That's the trick because learning that ap has exceeded cash + ar at the next board meeting isn't very helpful. And that's not such a rare scenario - e.g. customer holding 80% or your ar is suddenly unable to pay.

So what is it then that could be tracked. In my experience these things are often foreshadowed by either a lapse/misplaced/confusion of responsibility and/or changing dynamic in relationships. Seems to me that consciously tracking the trend in the key relationships (e.g. Strengthening, stable, destabilizing) and mapping the responsibilities for the key drivers/activities of the org may be the most enlightening things to monitor in terms of indicating potential instability. It shouldn't really be a surprise because relationships are the essence of cohesion in any venture particularly in those early stages of development.

Complex ambiguity

In my last post I intoduced 'complex ambiguity' as the stuff in venturing that entrepreneurs are really trying to figure out --- where no-one 'knows' the answer. The deeper the change and the earlier the stage the greater the complexity and the ambiguity. My earlier tumbls about pentagram and that one designer have tweaked me that it's akin to the creative process. Like designing a logo. Except that venturing can be a pereptual series of logos for something that itself is somewhat ambiguous and continuinally evolving. That's complex ambiguity.

The penatagram video made me think about what it takes to build a successful early-stage venture shop, in particular one that looks at tackling big change or new frontiers. Having started a creative shop with some great talent, penntagram definitely seems to have operationalized something important.

One thing I'm sure of is that it's going to play in my thinking on early-stage transformative venturing.

Venturing and investing on the frontiers: Intial observations...

Having been doing nothing but early-stage venturing from all sides of the table for more than a decade I decided to start a series of conversations to explore what works and what doesn't.



From this initial set of conversations, primarily with investors working on 'the frontier' (social change and social tech) here are some of my initial observations.

1. Being on the frontier increases "complex ambiguity" (we don't really know what we are doing, and if we think we do it's probably a false sense of security)

• At the frontier, complex ambiguity emerges in each of these areas:
• The ultimate goal/objective is difficult to clarify in conventional quantitative terms
• The approach needed to accomplish that goal is unsure/unconventional/untested
• This leads to challenges in measurement and therefore tracking progress. It also has something to do with why stories are being found to be more effective in describing impact, progress, and learnings.
• Complex ambiguity is a source of opportunity and risk, can and should be focused, but reduction/minimization results in a corresponding reduction in potential
• There is a strong connection to the notion of 'requisite variety' in general systems theory and it's application to organizations that is worth pursuing
  
• The root questions then seem to lie in what we need to understand in terms of goals, approaches, and measures in order to be able to determine our interest, track performance, and orchestrate support.

2. Effective handling of complex ambiguity requires particular attention on requisite competencies and internalized responsibility.

• Competencies required to handle complex ambiguity are not of the conventional functional variety
• What they are is an important question going forward
• Complex ambiguity should in no way confuse or obscure the need for the conventional competencies required by the venture
• E.g. Just because you're trying to change the world doesn't mean you don't need to get the accounting done.
• Responsibility for handling the 'complex ambiguity' can be carried only by those that are committed to sorting it out AND are sufficiently connected to the fields related to it
  
• E.g. a conventional business partner is not likely to strive to achieve anything beyond what is specified and required - which implicitly means they are not actually dealing with the 'complex ambiguity'
• Commitment to 'sorting it out' is strongest in the person(s) that is (are) deeply connected to the purpose/values of the organization
• 'Sorting it out' is accelerated through explicit attention, should be oriented around taking action, and cannot be at the expense of the viability of the venture
• This critical balancing point is the key determinant of the ultimate success of the organization. Too much of a focus on the ambiguity and nothing happens, too much focus on viability and the potential impact is diminished.
  

3. Successful investing on the frontier is subject to the same challenge of handling complex ambiguity.

• Considering the points in 1 and 2 above in the context of managing a fund on the frontier is another stream of inquiry
  

4. Successful investment practices on the frontier address complex ambiguity among investees.

• Some examples include:
• Actively building networks of connections around and among investees. A network of venturers on the frontier are more likely to share and have access to appropriate competencies for venturing on the frontier and are inherently all engaged in exploring complex variety. Optimization of this is a significant opportunity.
• Focusing the ambiguity down on core goals such as employing the unemployed (e.g. partner with those that have/run complementary businesses that could benefit from that employment). What does this do the potential and how where/how is the responsibility internalized?
• Minimizing/simplifying legal agreements helps to internalize responsibility for the relationship between investee/investor (encourages greater dialogue)
• Supporting entrepreneurs to make time for exploring their purpose/goals/approach.
  
• Creating events to bring together venturers on the frontier.
• Mixing conventional and mission-based investment team members.

Going forward I want to probe further into:

• where risk is most often perceived going into a deal?
  
• where does risk actually end up coming from?
• what activities have led ventures on the frontier to success?
• how did those activities come about?

From there I'm eager to dig into exploring potential areas for practices and shared services that could improve the success in investing on the frontier. Possibly framed by this matrix, the goal would be to find one thing to start experimenting with:

• Investor Axis
• Exploring complex ambiguity
• Requisite competencies
• Responsibility allocation
  
• Deal process
• Venture support
• Solution Axis
• Internal practices affected
• Internal practices envisioned
• Outsourced/shared services affected
• Outsourced/shared services envisioned

This sure has been fun so far and I'm curious to see where it goes... particularly as it turns to action.

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The rest of the macroshift.

Continuing on my previous macroshift post, here are my reflections from the remainder of Ervin Laszlo's book Macroshift.

For me the rest of the book was a lighter read with some simple observations relating to the mindset shift that is called for and clearly already underway. Here are a couple of framing quotes to set the stage:

"In the past, a more adapted civilization evolved over several generations; the rythym of change was relatively slow. This is no longer the case. The critical period for change today is compressed within the lifetime of a single generation."

" A Chineses porverb warns, 'If we do not change direction, we are likely to end up exactly where we are headed.'"

That last one could be classified as 'duh' but it truly is amazing to look to our civilization and how little we get that, particularly in the face of clear indicators that our trajectory is unsustainable and has brought our civilization into a critical state of instability. In the face of the examples presented in the book of the unsustainable relationship among people and generally with the planet, it moves to exploring the new mindset to be created drawing from Ghandi's quote "Live more simply, so others can simply live."

From there comes the call to forget the following obsolete myths/beliefs:

• "Nature is inexhaustible"
• "Nature is a giant mechanism"
• "Life is a struggle for survival"
• "The market distributes benefits"
• "The more you consume the better you are"

along with the following lesser beliefs:

• Order through hierarchy
• The ideology of Westfalia
• Everyone is unique and separate
• Everything is reversible
• My country, right or wrong
• The cult of efficiency
• The technological imperative
• Newer is better
• Economic rationality
• The future is none of our business

"Values and beliefs determine the way we perceive the world and suggest the ways we prioritize the responses to our perceptions. They affect almost all areas of our judgement and behaviour."

From here comes the call for a 'planetary ethic' that is described simply as: "Live in a way that allows others to live as well." where 'others' refers not only to humans but to all the plants and animals and all the living beings that make up the planet's web of life. This ethic asks also that we meet our responsibilities in the personal, business, and civic or political spheres.

"Logos-inspired evolution was materialistic and conquest and consumption-oriented. The alternative to it is evolution centered on human development and development of human communities." This quote frames the remainder of the book which suggests we are moving from:

• a focus on ends of conquest, colonization, and consumption
• which were served by technologies that use and transform matter, that generate the power to operate matter-transforming technologies, and that whet people's appetite, create artificial demand, and shift patterns of consumption.

Replacing those ends are the means and ends of connection, communication, and consciousness.

Some of the specific mindset shifts uncovered include:

• The shift from competition to reconciliation and partnership
• The shift from greed and scarcity to sufficiency and caring
• The shift from outer to inner authority
• The shift from separation to wholeness
• The shift from mechanistic to living systems
• The shift from organizational fragmentation to coherent integration

So to summarize, what I took is that we are seeking to emerge a planetary ethic of:

• "Live in a way that allows others to live as well"

and the means and ends of:

• connection;
• communication; and
  
• consciousness

And to cap off this post, I'll end with one of the final quotes that described the spirit of this for me:

"To live with and not against each other, to live in a way that does not rob the chances of others to live as well, to care what is happening to the poor and the powerless as well as to nature calls for feeling and intuition; for sensing the situation in which we find ourselves, apprehending its manifold aspects and creatively responding to it." There's a lot in that one as I reread it.

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