Nonlinear

Over the past two weeks, I have spent considerable time in beginning of the year board meetings, as well as speaking with a number of entrepreneurs about the prospects for their companies. In the course of these conversations, I was struck by the linearity of just about all the plans: constructed with a firm belief in rational, predictive growth that approximates a straight line.

Of course, we live in a multi-variate system where nonlinear events (aka chaos) is the norm. It's logical to plan in a linear manner, but only as a guide as Black Swans are more common than we think. It's a rare person whose mind works in a Black Swan way recognizing that shifting sands of technology, competition, and individual execution most often lead to nonlinear performance; for good or for ill. During '08 and '09 the venture industry certainly had its share of nonlinear events that more than made up for the wonderful '99-01 years.

While the planning process is important to determine asset allocations and to culturally be sure team members are marching towards a common objective, I have come to believe that an integral predictor for success is how well a management team deals with unpredictable events, and how well investors and board members, often under time/financial/opportunity pressures, advise them in the process.

I suspect the recent announcement of the iPad represents such a nonlinear moment. Publishers seem to think it represents a grand new opportunity while Sony and Amazon face steep new competition to core initiatives. Investors are wondering if it bodes well for the burgeoning mobile opportunity, or represents a desktop extension used within WiFi comfortable walls.

Time will tell whether the best laid plans will lead to success for these vendors, or if it will be the power and insight of the re-plan that's the ultimate differentiator.