Entrepreneurial Challenges
“Tom, I hate you.”
These were Eric Marcoullier’s words to me on day three of our second ever 10.10.10 program – a 10 day program that brings 10 successful serial entrepreneurs together for 10 days to explore market-based solutions to wicked problems. We call these successful serial entrepreneurs “prospective CEOs” because although they’ve founded companies in the past, they aren’t currently CEOs of a company. They participate in 10.10.10 because they plan – at some point in the next 12 months – to start a new venture. And we want to help and inspire them to do just that. The organizations I have created in the past four years – 10.10.10 and X Genesis – are focused on these two things: (1) helping successful serial entrepreneurs find “founder opportunity fit” so they will make better decisions about what they do with the next chapter of their lives; and (2) turning entrepreneurs’ and investors’ attention and investment toward the opportunities disguised as wicked problems – in health, water, food, energy, learning, infrastructure, waste, security and climate. That’s how Eric and I came to be speaking with each other at this particular moment.
Eric was one of 10 prospective CEOs I’d invited to participate in the program, and he wanted me to understand what he was feeling.
He wasn’t feeling good.
Some months before this, Eric had approached me seeking an invitation to the upcoming program. Eric is a friend. Like me, he is an entrepreneur with a lot of experience, with substantial successes and a few failures. (But just between you and me, even Eric’s failures look more like successes than what passes for success with some entrepreneurs.) Since Eric is an amazing entrepreneur, I was quite happy to make sure he had one of the very first prospective CEO slots in the program. Along with the other 9 prospective CEOs, the room was filled with Validators, Ninjas, problem advocates and 10.10.10 staff. Groups, organizations, institutions, and individuals had all come together to learn about wicked problems in health and to explore the potential for creating new ventures that would address these problems.
But here we were, 3 days into the program, and Eric was telling me he wasn’t happy.
I asked him to elaborate.
“First,” he said, “I don’t like the way people in healthcare talk about people, about human beings. “‘Lives under management???’ Are you kidding me?”
OK, I said. Is there more?
“Yes,” he said. “My whole career I’ve been at the leading edge of what’s happening. I love new technology. I love learning about it. I dig in so deep and learn so much that I tend to be way out ahead of things. I may fail. I often fail. But even if I fail at first, I’ll eventually find something or figure something out. I’ll eventually build something that’s really valuable. And here’s the thing. If I do that in an established sector, like healthcare, nearly all the benefit from what I discover or create will flow to the established organization. But if I do that in a typical tech startup, a lot of the benefit flows to me.”
I told him I understood, and I offered a suggestion. Even if he couldn’t find the thing he was looking for, perhaps he could offer help to one or more of the other prospective CEOs in the program.
By anyone’s reckoning, Eric has been a successful serial entrepreneur. He started multiple ventures. His first serious venture culminated in an IPO, an initial public offering of stock. His second effort was acquired by Yahoo! A third venture he founded was purchased by Twitter.
I wanted Eric to find his next big thing through 10.10.10. But so far at least that was not happening.
On day four, Eric came up to me, obviously excited. He’d figured out what he wanted to do. We talked over the details of his upcoming talk at the grand finale. And on the last day of the 10 day program, he stood in front of an audience of 500 people. His presentation began with a single image – a bleak looking assisted living facility. “How many of you know someone, a person you care about, someone over the age of sixty-five that you think might one day be living a lonely, isolated life in a place like this?” Eric looked out on a sea of 500 people, and nearly every hand was raised. “Okay, I guess I have a market. So, I want to show you something.” He then put on VR goggles. We saw the bleak assisted living space transformed! More amazing still: within the space was a virtual companion. And she spoke! “Hi Eric, what would you like to do today?”
Eric, “Um, I don’t know.”
Virtual Companion, “Would you like to look at some pictures?”
Eric, “Sure, that sounds great!”
Virtual Companion, “Do you recognize these photos?
Eric, “Yes! Those are my kids!”
And with that little virtual reality presentation, Eric blew everyone away. A week earlier, he had nothing. But at that moment, during that presentation, he showed us the promise of a future that was better than the present, a way to deliver powerful support for an aging population in a way most people hadn’t even begun to think about.
What has any of this to do with sustainable solutions? Quite a bit.
A Sense of Purpose.
Since 2014 I have been working with extraordinary groups, organizations, institutions and individuals to explore sustainable, market-based solutions to wicked problems in health, water, and infrastructure. 1 I don’t claim here (or elsewhere) that all wicked problems can or should be addressed via market-based solutions. I am not persuaded that this is true. I do, however, offer an ambitious claim: some wicked problems (perhaps many) can and should be addressed through market-based and supported solutions. And the catalyst for many of these market-based solutions will be found through the work of capable entrepreneurs who are supported by private investors.
10.10.10’s model is unique.2 It is based on the following seven assertions:
- Many of the world’s problems are “wicked problems”
- Wicked problems live in complex adaptive systems
- Governments and large industry won’t address wicked problems
- Listening and learning; leveraging and launching are key parts of the process
- Entrepreneurs can and will create the new ventures we need to address wicked problems
- Investors will support these new ventures because they generate both ROI and impact
- The world will be better off
Wicked Problems
Our well-being as humans depends on many things, and our survival as a species is far from guaranteed. When vulnerabilities and problems arise, as they often do, in the context of complex adaptive systems, we call these problems “wicked problems.” This isn’t a New England colloquialism. It’s a term for a specific kind of problem first outlined by Horst Rittel and Melvin Webber 45 years ago in a seminal paper, “Dilemmas in a General Theory of Planning” (Dilemmas).3 In Rittel and Webber’s construct, wicked problems are materially different than “tame” problems. Tame problems lend themselves to the kinds of solutions that science and engineering routinely produce. Wicked problems are beasts of an altogether different nature and can be described by ten characteristics.
1. There is no definitive formation of a wicked problem.
2. Wicked problems have no stopping rule.
3. Solutions to wicked problems are not true or false, but good or bad.
4. There is no immediate and no ultimate test of a solution to a wicked problem.
5. Every solution to a wicked problem is a “one-shot operation;” because there is no opportunity to learn by trial and error, every attempt counts significantly.
6. Wicked problems do not have an enumerable (or an exhaustively describable) set of potential solutions, nor is there a well-described set of permissible operations that may be incorporated into the plan.
7. Every wicked problem is essentially unique.
8. Every wicked problem can be considered to be a symptom of another problem.
9. The existence of a discrepancy representing a wicked problem can be explained in numerous ways. The choice of explanation determines the nature of the problem’s resolution.
10. The planner has no right to be wrong.4
These elements articulated in Dilemmas are no less important or relevant today. But how do wicked problems arise, and how might they be dispelled or addressed? This is what we set out to explore.
We quickly learned two things: (1) wicked problems are abundant and are substantial in size;
(2) these problems tend to arise within and be locked in place by complex adaptive systems. Dilemmas does not explicitly address complex adaptive systems. And yet . . . every aspect of Rittel and Webber’s discussion about what distinguishes a wicked problem from a tame problem has to do, fundamentally, with complexity and with complex systems. Often, though not always, the complexity they describe can be traced to humans. Much of the complexity is social and political – it involves human conditions and the interactions between and among individuals and groups or even “groups of groups.” It arises through the diversity of human experiences and perspectives. And it gives rise to problems that will not easily be put to rest. Wicked problems.
Complex Adaptive Systems
To deal with wicked problems, we need to begin to understand something about the systems within which they arise. Donella H. (“Dana”) Meadows wrote one of the best and most accessible introductions to systems and thinking5 and also helped explore many of the challenges we face as we attempt to generate lasting change. Complex systems can be maddeningly counterintuitive. “The systems analysts I know have come up with no quick or easy formulas for finding leverage points.” She adds, “We know from bitter experience that when we do discover the system’s leverage points, hardly anybody will believe us.” Dana’s original list of the ideal points to intervene in a system:6
1. The mindset or paradigm out of which the goals, rules, feedback structure arise.
2. The goals of the system.
3. The power of self-organization.
4. The rules of the system (incentives, punishments, constraints).
5. Information flows.
6. Driving positive feedback loops.
7. Regulating negative feedback loops.
8. Material stocks and flows.
9. Numbers (subsidies, taxes, standards)
Lasting change is rarely generated by an intervention that focuses on the products of a system – e.g., feedback loops, material stocks and flows, numbers, etc. Instead, powerful change, change that creates a viable and sustainable alternative to the established system mindset or paradigm or to the system’s goals, needs to be focused on those goals – on the purpose that makes the system tick or the mindset or paradigm that gave rise to that purpose.
Part of what makes this so difficult is the nature of the system itself. The true goals of a system often prove to be quite different than those goals articulated by the players within that system. Instead of listening to what the actors within the system say about the system’s goals, we’ve learned instead that we need to map a system to see what it actually does.7 What a system does, what it produces or generates, is the best available guide to the system’s goals or purpose.8
And how do you change the goals of a system? During the past five years, numerous articles in Stanford Social Innovation Review have explored systems thinking and system change.9 But to date many of our wicked problems have been left to governments, public institutions, nonprofit organizations and NGOs. And there are good reasons for this. Implementing solutions to wicked problems requires long-term perspectives and cooperation across and among multiple stakeholders who may well have wildly divergent ideas about the problem, the best approach to devising and implementing a solution, who should participate in the conversation, and what outcomes are desirable. The process is very often political – with winners and losers.
Who Gets to Decide?
When a particular problem seems to require an exercise of power – e.g., a change in policy, law or regulation – the need for governmental authority and enforcement can favor public sector approaches over private sector alternatives. A compelling argument supporting this approach decries the rising power of wealthy elites to dictate the terms of our collective future promising change but working to protect their and preserve their own interests while resisting any attempts at systemic change.10
Unfortunately, an attempt to move these resolutions to the public sphere suffer from two major problems. First, deep political divisions in the United States and in many countries around the world have undermined the degree to which public deliberation and discourse can be expected to produce meaningful change. Second, within the United States, the tax base has been so decimated as to make it an unlikely source of the financial means to address truly wicked problems. This represents its own wicked problem. And unfortunate though it may be, it is our current reality.11
Entrepreneurs Find the Keys
We explore the interconnections between complex adaptive systems and wicked problems. We do this, in part, by engaging communities of expertise and interest. But the real magic that helps turn wicked problems into opportunity is supplied by successful serial entrepreneurs. Entrepreneurs are uniquely equipped to discover the keys that will unlock sustainable solutions to wicked problems. They remain a largely untapped resource that can help cities throughout the U.S. and around the world begin to intervene in complex adaptive systems to deliver powerful and sustainable solutions.
This isn’t easy. Each of these entrepreneurs has to begin to listen and learn in ways that stretch them far beyond their comfort zones. They are outsiders. They often know very little about the system. Their expedited learning process is supported by the small army we convene for each of these programs. With the support of stakeholders, organizations and institutions, we identify the wicked problems and secure commitments from validators (sector and subject matter experts) and ninjas/sprinters (the ad hoc startup teams that will help the entrepreneurs explore both problems and solutions). But it is the entrepreneurs themselves that must lead – using our processes or processes they have developed themselves. They must decide whether one of the problems, and one of the solutions they uncover, can form the basis for a new venture.
BurstIQ was the very first venture created by an entrepreneur participating in the program. Frank Ricotta wanted to explore ways to use blockchain to connect people, organizations and services while delivering health data securely. Apostrophe Health followed not long after when Cheryl Kellond realized she could create a solution that would help smaller employers deliver health benefits more efficiently and at a substantial reduction in cost. The year after that Concert Health was formed to help physicians offer an integrated mental and behavioral health solution. Since we hosted our first program in 2015, we’ve supported 5 cohorts – 50 entrepreneurs in all – who planned to start new ventures at some point in the next 12 months. To date eight ventures have been formed and as many as five more are in process.
Entrepreneurs and Investors
In October 2017 the 10.10.10 Cities program focused on Water & Infrastructure. Two new ventures have since been formed from that cohort. Each of them has moved forward at speed to explore an opportunity that began as a wicked problem. In 2016, Eric Marcoullier explored the wicked problem of an aging and isolated population. In 2017, Ari Kaufman turned his attention to water – to “Flint Michigan” sized wicked problems.
Taking the stage in front of hundreds of people, the serial entrepreneur Ari Kaufman talked about his experience in the program. “I didn’t come here with a team, with an idea, or with capital. Yet in the past 10 days, with the team 10.10.10 provided, we talked to 51 people in 25 organizations. We did 71 meetings and phone calls. We spent a combined 479 hours in just 10 days. And I want to show you this.”
Ari, an entrepreneur who had started six previous ventures, who had focused most of his entrepreneurial life in marketing and advertising, held his phone aloft so the audience could see it. He slapped a plastic sleeve on the bottom of his phone. He placed a drop of water in a button on the plastic sleeve. The audience watched, amazed, as the huge screen behind Ari showed a 10 foot high image of his phone simulating real-time analysis of the drop of water – lead levels, toxins and more. “With this, we can make sure we never see another Flint, Michigan.”
To date, Ari has won four pitch competitions including Imagine H2O’s Urban Water Challenge. He’s raised more than $1.5mm from some very excited investors.
Flint’s water crisis gained national and worldwide attention because an entire city – a once vibrant illustration of manufacturing and technology success – became a nightmare. A friend from Flint Michigan who visited the city after the water crisis wondered aloud to me: “I wonder if they should just shut the city down.” Think about this. Imagine shutting down what was once a highly successful city because it no can no longer address a fundamental problem related to the way its citizens survive and thrive. As cities throughout the world come to terms with extraordinary growth, they leverage important benefits of scale,12 but they must also be prepared to address problems at a scale never before seen in the history of the world.
This is why “systems” and “systems of systems” have become such a hot topic,13 why complexity and complex adaptive systems have become the life’s mission of a small army of academics.14 Much of the growing interest in systems is based on an increasing conviction that complex adaptive systems explain the existence and persistence of our wicked problems.15 We want to understand these systems because we have begun to understand the scope and significance of our wicked problems.16
The world’s wicked problems have the potential to turn once thriving cities into modern ruins. The scale of the challenges we face are nearly beyond comprehension:
The United Nations Conference on Trade and Development (UNCTAD) says achieving the Sustainable Development Goals (SDGs) will take between US$5 to $7 trillion, with an investment gap in developing countries of about $2.5 trillion.17
And the level of impact goes beyond cities. In her 2017 Doughnut Economics, Kate Raworth proposes a new way of thinking about our national and international economic objectives. The dominant economic model sees growth as the solution to nearly all our problems. But as Kate points out, the problems we must address take two forms. The first concerns itself with the social foundation. Wicked problems related to the social foundation can be found in areas like:
• Energy
• Water
• Food
• Health
• Education
• Income and Work
• Peace and Justice
• Political Voice
• Social Equity
• Gender Equity
• Housing
• Networks
And you might think that this is enough. If we were able to address all of these problems, life for everyone would be very good indeed or at least very much better than it is today. Perhaps. But there is another dimension that cannot be ignored. Kate associates this other dimension with an ecological ceiling, and the ceiling represents a set of limits beyond which the earth can no longer provide homo sapiens and other species with the necessary means to sustain and support life. Wicked problems in this dimension include:
• Climate Change
• Ocean Acidification
• Chemical Pollution
• Nitrogen and Phosphorous Loading
• Freshwater Withdrawals
• Land Conversion
• Biodiversity Loss
• Air Pollution
• Ozone Layer Depletion
Complex adaptive systems work in remarkable, visible and invisible ways to support the system itself and its goals. Wicked problems are pain points that arise in the experience of people, groups and regions as the system does the things it does to accomplish its goals. If efforts to address a wicked problem become a threat to the system, the system will operate in remarkable, visible and invisible ways to eliminate the threat. Can actors within the system be persuaded to address the wicked problem? Not if their success and survival depends on the system and its support.
This helps explain why successful entrepreneurs have the potential to be valuable in generating solutions to wicked problems. They are often able to operate with a measure of independence, free of the influence of the causal loops and rules (incentives, punishments and constraints) of the system. Further, initial financial support may come from private investment that is, itself, free of system constraints.
10.10.10 challenges entrepreneurs that participate in its programs to do extraordinary things, to focus the next chapter of their lives on a particular wicked problem that has been locked in place by a complex adaptive system. Because we take steps to ensure that each cohort of prospective CEOs is diverse across multiple dimensions,18 we also expect our entrepreneurs to approach each problem with a beginners mind – as outsiders and novices, eager to learn. We want them to develop an understanding of the problem that will shine new light on what has long seemed too inscrutable and intractable to justify interest from entrepreneurs and investors. We are, in effect, staging two interventions: we are hacking systems; and we are also hacking entrepreneurship. Taken together, these hacks represent one way to generate new ventures that in turn create surpassing and sustainable value in the world. What begins with a set of wicked problems and a group of entrepreneurs who have the capacity and tenacity to tackle them is ultimately about aiming the value generated by entrepreneurs and investors at challenges and opportunities we all care deeply about.
Incidentally, Eric doesn’t hate me anymore. At least, I don’t think he does. I’ll ask him when he drops by later this evening.
References
1. My use of “sustainable” and “market-based” in the same sentence may give some readers pause. I do not insist that all solutions and approaches to wicked problems that are sustainable must be – or even should be – market-based. But some can and should be.
2. As far as we know. While there are startup studios and incubators that focus on what we call “the left side of the bowtie” – the time before a new venture is actually formed – we place our focus on the journey entrepreneurs must undertake as they decide what they will do next. We help them through their unique due diligence process as they seek to find “founder opportunity fit.”
3. Rittel, H W J and Webber, M M Policy Sciences, Vol. 4, No. 2 (Jun., 1973), pp. 155-169
4. Rittel & Webber wrote in the context of “planning” and “planners.” Both Robert Moses and his nemesis Jane Jacobs were “planners” in the Rittel and Webber use of that term. A Tale of Two Planners: Jane Jacobs vs. Robert Moses” | National Trust for Historic Preservation (April 14, 2016). Entrepreneurs are also “planners,” when they deal with wicked problems. In this context, they (like other planners) “have no right to be wrong.”
5. Meadows, D H. Thinking in Systems: A Primer (Chelsea Green Publishing, 2008)
6. Meadows, D H Places to Intervene in a System. (Whole Earth, Winter 1997).
7. Omidyar Group, Systems Practice (a Workbook).
8. What, for example, is the goal of the U.S. healthcare system? How would you make this determination? Similarly, what is the goal of the U.S. education system? And what goal governs each of the systems that provide us with water, food, and energy?
9. C. Seelos & Johanna Mair, Mastering System Change. Stanford Social Innovation Review, Fall 2018.
10. Giridharadas, A. Winners Take All: The Elite Charade of Changing the World (Alfred A. Knopf, New York, 2018).
11. William Gibson famously noted “the future is already here – it’s just not evenly distributed.” “The future is already here – it’s just not evenly distributed. The Economist, December 4, 2003” The distribution of wicked problems is similarly uneven. They frequently generate adverse impacts for individuals, groups and even regions that lack economic and political power.
12. West, G. Scale: The Universal Laws of Growth, Innovation, Sustainability, and the Pace of Life in Organisms, Cities, Economies, and Companies (Penguin Books, 2017)
13. C. Seelos & Johanna Mair, Mastering System Change. Stanford Social Innovation Review, (Fall 2018).
14. Including Edward Lorenz (father of chaos theory and the “butterfly effect”), Jay Forrester, Russell Ackoff, Murray Gell-mann, John H. Miller, Scott E. Page, and Geoffrey West.
15. In order to effectively address pressing societal issues such as climate change, social inequality, unemployment, and ecological degradation, scholars and managers can benefit from an enhanced understanding of the dynamic interactions within and across interconnected systems (Whiteman et al., 2013). Systems Thinking: A Review of Sustainability Management Research. Amanda Williams, Felix Philipp, Steve Kennedy, Gail Whiteman (2017).
16. Cabrera D and Cabrera L. Systems Thinking Made Simple: New Hope for Solving Wicked Problems (Odyssean Press, 2015).
17. Niculescu, M “Impact investment to close the SDG funding gap” (United Nations Development Program, July 13, 2017) http://www.undp.org/content/undp/en/home/blog/2017/7/13/What-kind-of-blender-do-we-need-to-finance-the-SDGs-.html
18. Including, among other factors, geography, gender, race, ethnicity, perspective and industry experience.
