But what happens when those ideas are cast in stone and fundable? Experts at the National Venture Capital Association conducted a survey in conjunction with Dow Jones & Co., and found that almost 75% of U.S. startups plan to raise a traditional A round or a mid-size angel debt round in the coming year. Unfortunately, they will be asking for critical growth funds just as VCs experience a severe capital shortage.

The survey reports that 69% of VCs expect their investments to stay the same or decline next year, not grow. That’s a 21% increase from a similar survey last year. Add to that sobering statistic the fact that VC firm numbers are in double digit decline, from 1,312 in 2000 to 844 last year. Their numbers dropped nearly 5% in the past 12 months.

Last month’s SVASE-East Bay Series focused on what categories are expected to be hot for VCs–medical, hardware, and non-traditional (read: not high tech software or eCommerce) startups headed the list.

What does this mean to startups on the verge of an A-Round quest? Hard to say. We also heard that good ideas that proved out were not seeing a cloud of competitors emerge around their premise, as was often the case in earlier years. So a startup with that elusive “traction”—customers, revenue, and (gasp!) profit margin—may well find their way to growth and expansion funding. Those with less to show may be forced to close their doors, and that’s not good for our now-famous innovation economy.

Phil noted that whether you were talking about the economy, an individual, or a business, the rate of innovation and the rate of change in the environment defined the state of and potential for adaptation to changing conditions. A glance at the graphic shows his perspective. When innovation keeps pace with change, growth results. If change slows but innovation continues to grow, the entity enters the comfort zone. When both innovation and change lag, the entity becomes stagnant. And, when change continues but innovation ceases, uncertainty breeds transition.

This simple but powerful model unlocks for me insights into the cause of fear, uncertainty, and powerlessness felt by many who find themselves or their companies in transition. It also provides a useful prescription of how to remedy matters that would otherwise fall outside our understanding.

Changing things without doing things differently—”rearranging the deck chairs on the Titanic”—is no solution, it’s change for change’s sake, and as a reminder, not all transition is good transition. Similarly, innovating without change creates the appearance of activity without real progress. Even an outsider, though, can tell when innovation and change are resulting in growth, so that becomes a yardstick that the entity has entered the right mix of innovation and change.

Bringing this all back home, we sometimes find Consultiq’s clients out of balance. (We rarely see those in the Comfort zone seeking out services—though they clearly are failing to live up to their Growth potential.) It’s far more likely that they seek outside help to manage a Transition or a kick-start to get things moving after they have become Stagnant.

I’ve heard over and over from successful serial entrepreneurs and those who invest in them that the most effective founders and CEOs stand ready to make significant changes—pivot—at a moment’s notice. They pivot when they get unexpected feedback from their customers. They pivot when resources become tight. They pivot and find a new path when a product development effort runs on the rocks. But very rarely do I hear of them ramping up innovation to convert their ability to change into a powerful driver for growth.

Give it some thought. There’s much to learn from the Kauffman Fellows Program and Phil Wickham’s insight. How does it apply to you and your life—and to your company’s?