Taylor Davidson
Blog
Financial Models
About
Contact

Posts Tagged ‘change’

GameChangers, Improvisation and the Agreement Principle

One of the things I have enjoyed the most about my current road trip has been the opportunity to bridge the offline and online worlds and meet, in person, many of the people I regularly converse with online.

Last December in Los Angeles I was able to meet Mike Bonifer, co-founder of GameChangers and author of the GameChangers blog and book, GameChangers: Improvisation for Business in the Networked World (thanks Ethan!).

Throughout the book Mike uses the language of improvisation (players, games, scenes, roles, openings, issues, entrances, exits, gifts, etc.) to give us the frames of reference to understand the business world. The explanation and applicability is not strained: improvisation gives us “the tools to prepare for and participate in change, and make that experience an enjoyable and profitable one”. Change is with us everyday: we are either changing, being changed or standing by while change occurs around us.

Remember, inaction is a form of action.

Among the many lessons Mike points out is one that I find particularly meaningful in my own life (throughout my writing, consulting, photography and travels), the principle of agreement and “Yes-anding” (from the book):

Agreement.

If there is one principle of improvisation that has the potential to change not only the way business gets conducted, but to change lives, it is this one. … The process of agreeing is known as saying ‘Yes and’ or ‘Yes-anding’.

… A new idea comes alive when you ‘yes-and’ my idea, I ‘yes-and’ yours, and we suddenly arrive at what neither of use could have created on our own: an idea that is uniquely ours.

… [There is] an important distinction between agreeing to collaborate in the game being played and being a ‘yes-person’ who blindly agrees with everything. … Agreement does not mean rubber-stamping. It is not unquestioning, dogmatic acceptance. … the expression used to define the Agreement Principle is not yes. It is yes-and. With the ‘and’, an improviser supports his or her fellow players by acknowledging their contributions and building upon them. … ‘and’ becomes the bridge that connect players to one another and the team to its new;ly-created reality. … We keep advancing one another’s ideas and supporting one another’s actions until we arrive at the objective.

… the Agreement Principle means acknowledging the worthiness of every individual in the group and valuing the performance of the group over that of any of its individual members.

We apply the principle of ‘yes-and’ everyday in our range of online discourse: in our writing, linking, curating, commenting and sharing, we are ‘yes-anding’ our fellow creators and commentators. Rarely do we all agree with each other, but by agreeing to listen, share and discuss we build the discourse and exchanges we need to create change.

Venture capital creates real options

Continuing the thought on testing ideas in the marketplace…

Startups and venture capital are all about creating change.

A startup typically creates or requires some fundamental change to succeed: change in technology, economics, marketplace, changing consumer behavior, changing management, or perhaps just a change in customer, supplier, vendor, manufacturer.

Sometimes it’s disruptive, sometimes it’s not: but by nature the value is created through change.

At the same time, since most change doesn’t happen in the way we think it will, most companies fail.

Given the difficulty in predicting the outcome of change it’s pretty obvious why venture capitalists diversify their investments and stage their investments. The basic hit-driven nature of venture capital and startups is the foundation of the economic model and entrepreneurial culture.

But why do the vast majority of new businesses fail? Why do venture capital firms have to depend on hits to create the returns necessary to pay back the losses on the vast majority of their bets? Is it because the system forces entrepreneurs to decide and focus too early?

Think of starting a company as a way to test an idea in the marketplace. Testing an idea is a way of creating a real option; by making small investments (in money, time, passion, intellect) in hashing out ideas we are creating options for future, larger investments in the winning ideas. Real value is created in testing even if it does not see the marketplace, if for no other reason than it mitigates value at risk.

Of course traditional venture capital is based on this stage-gate approach, using the value of time and information to help them make decisions on investing further money and time in companies in follow-on investment rounds. But maybe the first gate requires too many decisions, too many lines drawn in the sand? Perhaps early-stage investors require entrepreneurs to decide on too much too early, restricting what is being tested and limiting the opportunities for adaptation and evolvement. Entrepreneurs can test ideas with self-funding (bootstrapping), but it’s a step few entrepreneurs really understand.

Can we create a system that allows entrepreneurs to test even more?

Can we increase the amount of ideas that get tested, but decrease the amount of businesses that fail?

MORE: Financial Models for Entrepreneurs
Copyright 1976-2012 Taylor Davidson