Download - Effectuation
EffectuationEntrepreneurshipRosalynn L. Pangan, RPh
AGSB MBAH 10B
Entrepreneurship
SARAS D. SARASVATHY
http://www.youtube.com/watch?v=Ruvb_kGAMYw
GENERAL OVERVIEW
Effectuation is an idea with a sense of purpose
GENERAL OVERVIEW
Effectual reasoning is a type of human problem solving developed from a cognitive science
Source: www.effectuation.org
Research Experiment Subjects 27 Expert Entrepreneurs {founders of companies from $200M to $6.5B} method Protocol Analysis {80 hours of tape, 500 pages of data} theory Effectuation: Elements of Entrepreneurial Expertise, 2005
GENERAL OVERVIEW
Effectuation is a logic of entrepreneurial expertise.
Science to Entrep
Source: www.effectuation.org
CONTEXT
Focus: achieving desired goal through a specific set of given means
Focus: using a set of evolving means to achieve new and different goals
Source: www.effectuation.org
CONTEXT
Causation Effectuation
“If I can predict the future, I
can control it”
“If I can control the future, I do not
need to predict it”
Source: www.effectuation.org
HEURISTIC VS. ALGORITHM
Problem-solving technique that involves creating a speculative formulation and self-led investigation to reach some desired outcome.
most quintessential heuristic is “trial and error.”
step-by-step procedure with a finite number of steps that seeks a specific outcome
recursive
HEURISTIC ALGORITHM
Source: www.effectuation.org
CA
US
ATIO
N V
S E
FFEC
TU
ATIO
N
Source: Effectuation: Elements of Entrepreneurial Expertise
By Saras D. Sarasvathy
Printed in 2008
5 PRINCIPLES OF EFFECTUATION
BIRD IN HAND PRINCIPLE
start with your means
who I am what I know whom I know imagine possibilities
that originate from their means
Source: www.effectuation.org
AFFORDABLE LOSS
Focus on downside risk
limit risk by understanding what they can afford to lose at each step, instead of seeking large all-or-nothing opportunities
choose goals and actions where there is upside even if the downside ends up happening
Source: www.effectuation.org
LEMONADE
Leverage contigencies
Invite the surprise factor instead of making “what-if” scenarios to deal with worst-case scenarios
experts interpret “bad” news and surprises as potential clues to create new marketsSource: www.effectuation.org
PATCHWORK QUILT
Form partnerships build partnerships
with self-selecting stakeholders
obtain pre-commitments from these key partners early on in the venture, experts reduce uncertainty and co-create the new market with its interested participants
Source: www.effectuation.org
PILOT-IN-THE-PLANE
Control vs. Predict Focus on activities
within their control expert
entrepreneurs know their actions will result in the desired outcomes
the future is neither found nor predicted, but rather made
Source: www.effectuation.org
EFFECTUATION CYCLE
Means
Goals
Interact
Gather stakeholder
commitments
Others
Self
What are the 5 Principles?
5 P
RIN
CIP
LES
Source: www.effectuation.org
SUMMARY
Source: www.effectuation.org
Rosalynn L. Pangan, RPhAGSB MBAH 10BEntrepreneurship