One of the intriguing aspects of venture building is the contrast between two very different types of engagement: the creation of new potential opportunities and the cutting off of those opportunities that, after some probing, don’t appear viable.
The two steps of venture building
These two types require two very different modes of work. In operations research they are known as “branch and bound”. Within an established company, “research” and “development” are typically two separate organizations within overall product R&D.
The reason for this is simple: the skill set for doing creative work, and the work environment needed to get into a creative mindset, differ starkly from doing decisive work — the word decision itself comes from the proto root of “ripping off a branch”.
Pruning is an integral part of gardening, but few innovation groups, tasked with vertically integrating both creative (research) and decisive (development) aspects of product and venture creation, have managed to resolve the inherent conflict.
Often the only change from a traditional R&D setup is to put the two teams together under one roof and hope for the best. Success has been very mixed, and ten years after the first hype of corporate venturing, many innovation labs are being retooled, downsized, or spun out.
As veterans of the innovation revival going back to the early dot-com days we’ve spent the last two decades building up a toolset of best practices and techniques which we call pathfinding. The underlying idea is that creating and cutting off branches has to be an integrated, goal-directed process.
Life as pathfinding in a labyrinth
The idea goes back to Nobel Laureate Herb Simon’s recognition that human behavior resembles finding a path through a labyrinth, something we can simply express as a search tree with many branches and endpoints with expected rewards — a concept we call futures.
The skill is to combine these two tasks into one coherent whole by conceptualizing the possible and the favored futures as a first step of a venture building program. We can think of it as the human equivalent of a backpropagation process.
We create and choose branches by reasoning backwards from the envisioned futures and follow the paths most likely to lead us to the favored futures, based on the expected social and technological developments.
If this sounds sensible enough, it still requires taking the right preparations in the right order. Like it is always better to consult a map before going on a journey, and not only after we got lost.
Pathfinding is at the center of what we do. In computational form, it runs most enterprises of the information age, but idea generation and implementation are still human-centric tasks which require intuition, creativity and decisiveness.