To pivot is, essentially, to fail gracefully. While the term has been in the start-up lexicon for decades, it is coming up more often in the current Internet boom, as entrepreneurs find that many investors are willing to keep the money flowing even if a start-up takes a hard left turn.

“Ideas are like lightning in a bottle, so if the company is small enough and didn’t seem to capture lightning on their first try, it makes sense to try again,” said Ben Horowitz, one of the founders of the venture capital firm Andreessen Horowitz. “The art of the pivot is to do it fast and early. The older and bigger the business, the harder it is to change directions.”

Mr. Horowitz speaks from experience: A decade ago, he went through a pivot of Loudcloud, a publicly traded enterprise services firm that he founded with Marc Andreessen, into Opsware, a networking software company. “That was very public and very scary,” he said. “We dropped down to 35 cents on the Nasdaq, and although we went back up to $14, it took awhile. When you’re a small company, no one really notices if you make a big change.”

- Jenna Wortham, For Some Internet Start-Ups, a Failure Is Just the Beginning - NYTimes.com

The use of the term ‘pivot’ in startupland is the corollary to the now commonplace notion that you may have to fail in order to learn a life lesson. While this has become conventional wisdom, startup founders are reluctant to admit their baby is ugly, or that massive success is not going to come with the next release. The adoption of pivoting is a great metaphorical headshift, and it’s one great example of ambient innovation: the startup scene has adopted, applied, and spread the concept of pivoting, and that has had major impacts on founders willingness to junk weak ideas.

Getting To Trust: Better Swift Than Deep

Venessa Miemis is trying to get a group of ‘change agents’ to collaborate, and is finding it hard going:

Venessa Miemis, How Will We Collaborate if We Can’t Trust Each Other?

The next few years are going to be defined by a culture of learning and interactivity that involves more trust, and so naturally, more risk. If we’re going to go beyond just sharing links with each other to actually *helping* each other, working together, experimenting, prototyping, and adapting to changing circumstances, *we* have to first change in order to make that possible.

I’m in the process of experimenting with this firsthand, bringing people together into an online collaboratory space, and I’ll admit – it’s not easy. We’ve got a group of ‘change agents’ who want to do things together, to form ad-hoc teams around short-term projects, make something cool happen and improve our world and our lives — but how to begin?

Each of us is a free agent, delicately riding the edge of chaos and uncertainty as we try to pave our own path. Each of us likes the sound of a peer-to-peer culture, a transition from scarcity to abundance, a move from a transactional economy to a relational economy (ht jerry michalski), and a redefinition of value and wealth. Each of us sees the promise of a new way of working, living, and Being.

And yet there is still fear.

Are you gonna steal my idea? Are you gonna follow through with your commitments? Are you gonna take the credit? Am I gonna get screwed — yet again?

My question to you is: How do we transcend this, surrender, and take the next leap of faith?

(ponder it)

Assuming you are curious enough about the possibility to find out how it could work, what is the critical component that’ll inspire you to jump?

For me, it all comes down to trust.

Not just blind trust in everyone else, but trust in myself and a commitment to move past fear and into action. Lead by example and see who wants to come with me. Become aware of who I’m connected to and choosing carefully with whom I want to build things. Take small risks together so we can gain momentum. Start having some Collective Epic Wins.

I think Venessa is trying to do something that’s very hard: she’s trying to get a group to form a collective, with a shared set of principles and shared goals. And she’s right. To get there you have to build deep trust: a polite way to say that the folks in the collective have to sort out the politics involved. In general that can take months, even when the participants share a great deal in common in education, background, and temperament.

But why form a collective? As she points out, it’s risky. If you want to build things, you can define a small project to test some ideas, and form a Hollywood-style project team to accomplish it. Instead of trying to collaborate on a big, wholly integrated vision of the future — where everything has to be discussed and agreed on before the first thing gets done — just cooperate on something fast, small, and low risk.

The way of the future is cooperation, not collaboration.

Among other reasons cooperation merely requires swift trust, a well-researched human universal. People are capable in some circumstances of relaxing their general desire to establish deep trust — that time-consuming, political practice —and will simply adopt a role in a project, and suspend their disbelief about other’s motives, etc. This is a way to get folks to suspend their innate concerns about trust and control. In these contexts, people start with the presumption that the others in the project are professionals and that everyone will focus on doing their jobs as best as the can. A lot of communication is needed to keep it all working, but much less than in deep trust organizations, like the conventional enterprise.

This is how freelancers generally work, and it’s the way that cities work.

But Venessa and her friends are involved in forming a collective, and there is no short cut for them. They will need to build deep trust, and establish processes and practices, and politics to manage them.

My recommendation to Venessa was and still is to take the short cut, though. Define some constrained projects, with more modest goals and defined time frames, and work on them with a few others. It might lead to deep trust, but even if it doesn’t you can still be working, making headway, and maybe some money, too.

Me, I’m trying to work on a few interesting projects with some smart people, but I am not pushing them into one group and trying to create a way that all of us can be involved in everything. I’m going to work with Teresa DiCairano of Intervista on ‘ambient innovation’, which is our term for social, bottom-up innovation. I’m going to work with Claude Théoret of Nexalogy exploring the science underlying social networks, and trying to make that more accessible to the average person. And I am going to push ahead with my analysis in work media — the use of streaming social media tools in the enterprise — and I will be pulling a few others into that project with me, too. But these will be three discrete projects, with non-overlapping groups of participants. I am not making everything, everything.

I am trying to remain liquid, loosely connected to others, heading the same general direction. I am specifically not trying to solidify relationships — build deep trust — before getting something done with others.

So, my general recommendation is that people should favor loose connectives — social networks with less tight ties — that rely only on swift trust. If and when you establish deep trust with individuals, perhaps during short-term, swift trust-based projects, then perhaps your can form a collective, where the principles shared common, long-term purpose.

But such collectives are not a higher form of human solidarity that we should aspire to, and are not what we have to build in order to get big things done. On the contrary. An increasing proportion of professional work is being performed by freelancers, who live in a short-term project based economy. Why should I have to agree on a long term strategic vision about the future of work media just to work with other researchers on the state of that industry, for example? Or to take the example of the city, all the stores on Main Street do not have to agree to not compete with each other, or to pool their profits, or even to paint their storefronts the same color.

The costs of deep trust are too high, in general, for what they return. This is one reason that work is changing so quickly. Companies are loosening their hold on employees, providing them more autonomy, relaxing the requirements for deep trust: becoming more like cities and less like traditional armies, with everyone is made to march in step, and pointed in the same direction, all the time.

Why Black Market Entrepreneurs Matter to the World Economy - Robert Capps via Wired

Robert Neuwith thinks 2/3 of the world’s workers will be part of ‘street economies’, operating in the gray or black markets.

Robert Capps via Wired

Not many people think of shantytowns, illegal street vendors, and unlicensed roadside hawkers as major economic players. But according to journalist Robert Neuwirth, that’s exactly what they’ve become. In his new book, Stealth of Nations: The Global Rise of the Informal Economy, Neuwirth points out that small, illegal, off-the-books businesses collectively account for trillions of dollars in commerce and employ fully half the world’s workers. Further, he says, these enterprises are critical sources of entrepreneurialism, innovation, and self-reliance. And the globe’s gray and black markets have grown during the international recession, adding jobs, increasing sales, and improving the lives of hundreds of millions. It’s time, Neuwirth says, for the developed world to wake up to what those who are working in the shadows of globalization have to offer.

Using the French term débrouillard — hustler — Neuwirth talks about System D:

Wired: The sheer scale of System D is mind-blowing.

Neuwirth: Yeah. If you think of System D as having a collective GDP, it would be on the order of $10 trillion a year. That’s a very rough calculation, which is almost certainly on the low side. If System D were a country, it would have the second-largest economy on earth, after the United States.

Wired: And it’s growing?

Neuwirth: Absolutely. In most developing countries, it’s the only part of the economy that is growing. It has been growing every year for the past two decades while the legal economy has kind of stagnated.

Wired: Why?

Neuwirth: Because it’s based purely on unfettered entrepreneurialism. Law-abiding companies in the developing world often have to work through all sorts of red tape and corruption. The System D enterprises avoid all that. It’s also an economy based on providing things that the mass of people can afford—not on high prices and large profit margins. It grows simply because people have to keep consuming—they have to keep eating, they have to keep clothing themselves. And that’s unaffected by global downturns and upturns.

Wired: Why should we care?

Neuwirth: Half the workers of the world are part of System D. By 2020, that will be up to two-thirds. So, we’re talking about the majority of the people on the planet. In simple pragmatic terms, we’ve got to care about that.

And the growth of the grey economies is being fueled by urbanism: as migrants move into denser larger cities, the easiest path to employment is often self-employment in the street economy. And large companies — P&G, for example — are increasingly finding ways to move product into these street distribution networks to capture market share cheaply.

And with so much entrepreneurial energy, the underground economies are a real source of innovation:

Wired: You also say that System D is a source of innovation.

Neuwirth: That’s true. Chinese phones were the first to offer dual-SIM-card capability, for example. It was a reaction to a need that wasn’t being met by the formal market. In many countries of the developing world, different mobile companies have the best service in different regions. So, if you’re in the big city but your mom is out in the country and your brother is in another city, you might need separate services to talk to both of them. With a dual-card phone, you can keep two SIM cards in your handset and switch services as easily as you answer call-waiting. There’s a big market for that, and the System D entrepreneurs figured this out long before the legit world did. Nokia makes one now, but the underground Chinese manufacturers had them back in 2007.

Wired: So System D companies can move faster than more formal businesses.

Neuwirth: System D merchants are the ones figuring out what people need. As I said, it’s these merchants who go to China and place the orders. Chinese manufacturers didn’t figure out that a dual-SIM-card phone would be a really good thing. Some folks from Africa and elsewhere said, “Hey, this would be a popular product. We want it.” And the Chinese were happy to make it.

Wired: Merchants drive the innovation?

Neuwirth: Yes. I’ll give you another example. In many places in Africa, there’s no municipal water system. You have to buy drinking water. In West Africa, System D came up with something called Pure Water, which is water in a baggie that’s filled and sealed by a special machine. You get half a liter of water for a minimal price on the street. This has become the way that people throughout West Africa get their drinking water. System D entrepreneurs produce it, and System D hawkers sell it. Together they’ve created a new kind of product that serves a vital need, and they make money doing it. The government in Nigeria even figured out a way to work with the unlicensed Pure Water companies to monitor the purity of their water without forcing them to get registered or regulated or to pay taxes. Every baggie now has a stamp showing it’s been approved by the Nigerian equivalent of the US Food and Drug Administration.

Innovation not just in consumer products, but as the Pure Water example shows, innovation in areas where government’s social policies fail because of lack of infrastructure or funding.

This is a great example of ambient innovation — societal, bottom-up, and distributed — taking place outside of large corporations, academic research, or government agencies. This is innovation happening at the edge

(Source: underpaidgenius)