Mindset: How To Build A Social Venture

In March of this year we launched the Social Ventures Incubator Program (SVIP, Cohort 1) with the City of Adelaide. In May we closed the applications program with 52 applications. 25 startup teams were asked to go through a selection process and pitch their project.

In the end we have a cohort of 11 teams

 

 

In the MegaTrend of Social Innovation we discussed the larger environment for a social ventures. In the launch, we discussed why in Adelaide and how we have created the program. And below we detail some of the key assumptions in terms of the delivery of the program.

The SVIP program is built around a set of assumptions of what it takes to support a social venture and its founders with a focus on the right mindset.

 

  • The social venture founders & teams come from a predominantly NFP space rather than a for profit background.
  • The key challenge is not values or vision or how to change to world (the participants come with this) but what should we do now for your customers? (design thinking & customer discovery)
  • A venture is a venture, whether social or not. What it means is that the same principles, tools and skills are needed for all startups. (lean startup + Steve Blank)
  • The main ingredient of success is clarifying the power of pricing, the good of an enterprise, the mindset of building a business model and a bias towards action. (why business can be a force for good)
  • There is a need to have more practical support than mentors (tools & skills > inspiration).
  • Push, push, push towards action (design thinking is great for this)


Thanks to Ben Hamley for feedback on the blog

The why of the “social ventures incubator program”

In this context, it is no wonder that a rigorous, 90 day program for startups with a focus on impact: social or environmental is launched in Adelaide. We seen an incredible bunch of ideas, talent and aspiration in the various nooks and corners of the Adelaide. We want anyone and everyone who wants to make a difference to participate in this.

More here

Virginia Postrel on the future

“How we feel about the evolving future tells us who we are as individuals and as a civilization: Do we search for stasis—a regulated, engineered world? Or do we embrace dynamism—a world of constant creation, discovery, and competition? Do we value stability and control, or evolution and learning?… Do we think that progress requires a central blueprint, or do we see it as decentralized, evolutionary process? Do we consider mistakes permanent disasters, or the correctable by-products of experimentation? Do we crave predictability, or relish surprise?”

Review of her book The Future and its enemies by Dr Edward Younkins.

Dynamists prefer an open-minded society where creativity and enterprise, operating under general and predictable rules, generate progress in unpredictable ways. Dynamists appreciate evolutionary processes such as market competition, playful experimentation, scientific inquiry, and technological innovation. A dynamist is one who works creatively across barriers and obstacles and in areas once thought to be disparate to construct combinations based on the free play of imagination and discovery. Dynamists seek progress, rather than perfection, through trial and error, feedback loops, incremental improvement, diversity, and choice. They are learners, experimenters, risk takers, and entrepreneurs who understand the importance of local knowledge and evolved solutions to complex problems. Not surprisingly, dynamists are frequently attracted to biological metaphors as symbols of unpredictable change and growth, variety, experimentation, feedback, and adaptation. 
 
The author explains that dynamism is for people who like process and pattern and an order that is unpredictable, spontaneous, and ever-shifting. Dynamists appreciate dispersed, even tacit, knowledge and recognise the limits of the human mind at the same time that they celebrate learning. They also prefer competing nested rule sets and want to limit universal rule-making to broadly applicable and rarely changed principles. Dynamists also permit many visions and accept competing dreams. To work together, they do not have to agree on metaphysical principles or what the future should look like. 
 
Ms Postrel states that the central organising principle of dynamism is an open-ended process and that its central value is learning. Unconscious evolution can sometimes develop better solutions than can the best engineers. Dynamists, members of what Ms Postrel calls the party of life, look for solutions to emerge from the interaction of all the individuals. They share beliefs in spontaneous order, experiments and feedback, unintended consequences, an infinite series of evolved solutions to complex problems, the limits of centralised knowledge, and the possibility of progress. Dynamists care about protecting the processes that permit an open-ended future to unfold. 
 
Dynamists learn from choice, competition, and criticism. Both new ideas and criticism are part of the process of trial and error learning. Dynamists also understand that cultures learn from experience. 
 
Dynamists appreciate and accept the variety of human life and value the joys and possibilities of human life that can occur when people are free to experiment and learn. The dynamist moral vision emphasises individual flourishing and responsibility – it sees human nature fulfilled in learning, creating, and adapting to the world. Dynamists believe in the capacity of human beings, gradually and voluntarily, by trial and error, to improve their lives. 
 
Ms Postrel discusses dynamists’ attraction to systemic, process-oriented approaches and their appreciation for how simple units and simple rules can form complex orders without design and produce countless combinations. Patterns are shaped by decentralised actions, feedback, and responses. For example, dynamists see the market as a process, a decentralised system for discovering and sharing knowledge and for trading and expressing value. 
 
Dynamism sees the past and the future as inextricably connected and progress as incremental – knowledge and experience are cumulative. Dynamists believe that we live in a world of options constrained by decisions already made and actions already taken – many before we were even born. They attempt to refine and improve our inherited ideas and determine more precisely the limits to their applicability. Dynamists view cultural trends as part of a decentralised, undirected process of experiment, feedback, and learning. 
 
Progress, for the dynamist, is an infinite series – a process, rather than a product. For them, an opportunity is a problem no one has solved, addressed, or considered. Innovations are based on coming up with new combinations of ideas, testing them, finding their deficiencies, trying possibly better combinations, etc. Technological progress thus is a series of stages involving experimentation, competition, mistakes, and feedback. 
 
A trial and error process invests no one with decision power, assumes no one is omniscient, acknowledges human differences, and permits diverse approaches. This process recognises the human condition including both the limits and potential of the human mind. 
 
An infinite series of progress allows for learning, diffused expertise, and the search for x-factors – the unarticulated knowledge that can only be elicited by experience and experiment. So-called tacit knowledge is expressed in relationships and habits transmitted through webs of economic and social connections. Tacit knowledge, a special case of local knowledge, is embedded, in the things, customs, services, and routines we encounter daily. Tacit knowledge sometimes only travels through apprenticeship. The paucity of articulated knowledge increases the value of turning local (including tacit) knowledge into easily shared information or products. Local knowledge is dynamic, constantly adjusting to new ideas, information, and events. It exists as dispersed bits of incomplete and sometimes contradictory knowledge which all separate individuals possess. Prices are an important signal of changes in local conditions. 

Built to Last or Explode in Greatness

Funky Business:

“But what if [former head of strategic planning at Royal Dutch Shell] Arie De Geus is wrong in suggesting, in The Living Company, that firms should aspire to live forever? Greatness is fleeting and, for corporations, it will become ever more fleeting.The ultimate aim of a business organization, an artist, an athlete or a stockbroker may be to explode in a dramatic frenzy of value creation during a short space of time, rather than to live forever.”—Kjell Nordström and Jonas Ridderstråle, Funky Business

H/T: Tom Peters

An Entrepreneurs’ Manifesto

An Entrepreneurs’ Manifesto — book by Steve Mariotti’s, founder of the Network for Teaching Entrepreneurship (NFTE), 

The most political act a person can ever do is to create a business. To become an entrepreneur has the power to revolutionize lives, rescue families, and forever change communities and countries.

Is the structure of VW its downfall?

Design flaws that blight German business – FT.com

Scale also exacerbated a problem that VW shares with many of Germany’s best-known companies: an excessively centralised corporate structure. Business has failed to learn the lessons of ancient Rome, which thrived in large part because of the autonomy of its provinces. Its unwieldy corporate empires look more like Prussia.

The tight chain of command has played a large part in enabling Martin Winterkorn to build VW into a formidable manufacturer in his eight years at the top. But centralisation can be an impediment. It encourages managers to spend energy defending their fiefdoms, and can reward executives for telling their superiors what they want to hear, leaving headquarters without the sensory system it needs.

 

John Key in FT:

The profit-making corporation is, should be and will remain the central institution of the modern economy. But that does not mean the purpose of a profit-making corporation is to make a profit; we must breathe to live but breathing is not the purpose of life. The purpose of a corporation is to produce goods and services to meet economic and social needs, to create satisfying and rewarding employment, to earn returns for its shareholders and other investors, and to make a positive contribution to the social and physical environment in which it operates.

Indra Nooyi on Purpose

From an interview in HBR:

You often use the term “purpose” in talking about your business. What does that mean to you?

When I became CEO in 2006, I did a series of town hall meetings with employees. Few said they came to work for a paycheck. Most wanted to build a life, not simply gain a livelihood. And they were well aware that consumers cared about health and wellness. We realized we needed to engage our people’s heads, hearts, and hands. We had to produce more products that are good for you. We had to embrace sustainability. Purpose is not about giving money away for social responsibility. It’s about fundamentally changing how to make money in order to deliver performance—to help ensure that PepsiCo is a “good” company where young people want to work.

Would you be willing to accept lower profit margins to “do the right thing”? Surely, there have to be trade-offs.

Purpose doesn’t hurt margins. Purpose is how you drive transformation. If you don’t transform the portfolio, you’re going to stop top-line growth, and margins will decline anyway. So we don’t really invest in “purpose,” but in a strategy to keep the company successful in the future. If we hadn’t tackled certain environmental issues, especially with water, we would have lost our licenses in some countries. Now, sometimes when you’re changing the culture radically, you run into problems. Transformations sometimes hit your margins or top line because things don’t always go in a straight line. But if you think in terms of the life span of the company, these are just small blips.

 

Project Loon from Google X – Idea to Product

Design thinking requires a prototyping mindset. So how does that look like? This is a great example from Google’s effort to build a worldwide network of balloons to provide wifi everywhere. Crazy, yes but step by step with rigorous testing.

The Idea

Wild concepts must survive ­rigorous ­vetting. Here’s how one idea—­Wi-Fi delivery system Project Loon—­progressed.

PROBLEM IDENTIFIED:
Google X’s Rapid Evaluation team bats around lots of issues worth tackling. Project Loon actually started as an idea involving connections between mobile devices. But in June 2011, Rapid Eval head Rich DeVaul decided to shift focus toward increasing Internet access for rural or poor areas.
IDEA DEVELOPED:
Lockheed is working on a high-altitude communication airship that can stay in one spot, but keeping such a craft stationary is extremely difficult. DeVaul had an insight: What if an airship floats away but there’s another one behind it? In other words: balloons.
SOLUTION TESTED:
DeVaul bought some $80 weather balloons online and assembled radio transmitters in a cardboard box that could be attached. Then he launched the contraption at the San Luis reservoir, an hour southeast of Google, and drove along under it in his Subaru.
PROTOTYPE BUILT:
X executives commissioned Loon as an official project in August 2011, hiring a team to build a small fleet of prototypes. Xer Mitch Heinrich began to work on a Loon antenna; his team built a small house in their shop to see how the antenna might attach to customers’ residences.
PRODUCT INTRODUCED:
X brought in entrepreneur Mike Cassidy to manage the project’s rollout as an actual business. The first step was a pilot program in New Zealand, where Loon went live, temporarily, in June 2013. As X now weighs interest from global telecom providers, the team is considering which business models might work best.

The Testing and Scaling Up

A is for Alphabet and G is for Google. Are you a conglomerate too?

The biggest news in the tech sector is the change in structure of Google.  A new company called Alphabet which will act as a holding company where Larry Page is the CEO, Sundar Pichai is the CEO of Google as we normally know it. Google X, Nest and a whole bunch of interesting companies will be under the holding company of Alphabet.

Each company will have its own CEO and run it as its own business. This is the classic conglomerate. The behemoths which became big at the turn of the 20th century and over time the strategy of specialisation meant, spin-offs, sell-offs, divestures etc. Ofcourse, GE is the classic version of this.

In Asia, it is a common occurrence to see it. Whether Tata in India with its 100+ companies, or Samsung from ship building to smart phones. Entrepreneurial CEOs/Founders have always run them like that. Even the internet age Alibaba and Xaoimi are a conglomerate in a way.

Why are so many entrepreneurial CEOs going for this structure that most professional CEOs and strategy specialists have said it does not work? My take on this: because it gives them more entrepreneurial energy and continue to do what they do best.

Entrepreneurs are more makers in retrospect to  professional CEOs as managers. Makers need to continue to want to make things. They get bored when there is nothing new on the horizon. At the same time, some are good at nurturing other makers.

The conglomerate structure provides the opportunity to be entrepreneurial and nurture new talent.

Have a look at your organisation? How big are you? What areas do you play in? Which ones need a maker and which ones need a manager? What are the growth areas?

What can we learn from the makers? What structure suits best for you?

 

 

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