Effectuation: A Key to Entrepreneurial Success
The Importance of Effectuation
It all starts with an idea. An idea that starts as a speck within an entrepreneur gathers resources, infrastructure, successes, failures, attitude, lessons, collaborations, and grows into an ecosystem where more ventures thrive and compete. An idea alone is not enough, though. Its realization takes more than a mere business plan. And as they say, it is wiser to learn from the experience of others. These experiences formulated as a series of techniques forms the core of Effectuation.
Is Entrepreneurship Teachable?
When Prof. Saras D. Sarasvathy applied for the Tata Scholarship she was asked to read the biography of Jamshedji Tata and write an essay on it. This sparked her Entrepreneurial dreams, and she tried a handful of ventures before she came to the field of Education with all the valuable lessons she had learned. The question of how much of Entrepreneurship is learnable and how much of it is teachable in a classroom led her to her study on Effectuation.
The Concept of Effectuation
Cause and Effect, in Reverse
The word Effectuation itself comes from the term Cause and Effect. There is a subtle distinction, though, as Effectuation typically deals with cause and effect in the opposite way. Effectuation is more about defining what you want to achieve, listing the ways to achieve it, and picking the most predictable way to achieve it. Entrepreneurs use effectuation to work with what is in control to create the future rather than predicting the future and controlling the outcome.
An Expert’s Insight
Prof. Saras D. Sarasvathy is a scholar and the author of Effectuation: Elements of Entrepreneurial Expertise nominated for the 2009 Terry Book Award by the Academy of Management. She is also Paul Hammaker Professor at The Darden School, University of Virginia, and the Jamuna Raghavan Chair at the Indian Institute of Management, Bangalore. Watch this episode of The PS Show to listen to Prof. Saras Sarasvathy talk about Effectuation and Entrepreneurship, part 1 of a series of talks on Effectuation.
Conclusion
Effectuation is a powerful tool for entrepreneurs looking to start a business. It is a mindset that allows entrepreneurs to focus on what they can control, rather than what they cannot. By using effectuation, entrepreneurs can create the future they want, rather than trying to predict it. With the insights of experts like Prof. Saras D. Sarasvathy, it is clear that effectuation is a key to entrepreneurial success.
Please watch the full-length video here
and the part two of this video