At Infintec we meet a lot of entrepreneurs – some more successful than others!
So what makes a successful entrepreneur?
Well one answer is based on Effectuation theory, developed by Professor Saras Sarasvathy, which attempts to explain “what makes entrepreneurs entrepreneurial.
Effectuation is a set of (5) decision-making principles expert entrepreneurs are observed to employ in situations of true uncertainty.
BIRD IN HAND PRINCIPLE
– start with your means –
We have been taught that entrepreneurs are true visionaries. Research shows that expert entrepreneurs are no more visionary than you and me. They are, however, very creative! When expert entrepreneurs set out to build a new venture, they are creative with their available means: who am I?, what do I know?, whom do I know?, What do I have? Expert entrepreneurs imagine possibilities that originate from their available means.
AFFORDABLE LOSS PRINCIPLE
– focus on the downside risk –
We have been taught that entrepreneurs are insane risk-takers. About 80 percent of the researched expert entrepreneurs, however, were found to limit their risks to what they can afford to lose at each step, instead of seeking large all-or nothing bets. So don’t let this myth keep you from becoming an entrepreneur. Focus on limiting the downside to an affordable level that can be controlled and do not try to predict the upside as this is impossible under true uncertainty.
CRAZY QUILT PRINCIPLE
– form partnerships –
Expert entrepreneurs build partnerships with self-selecting stakeholders. By obtaining pre-commitments from these key partners early on in the venture, expert entrepreneurs reduce risk and co-create the new market with its interested participants. The quilting partners provide additional means with which the team can be creative with and limit the risks of the new venture. Don’t pay for means and increase risk, share revenues and limit investments.
– leverage contingencies –
Expert entrepreneurs invite the surprise factor. They know that the future is uncertain. Learning faster than your competitor is key. Take small organic steps and validate learning. Instead of making ‘What if?’ scenarios to deal with worst-case scenarios, experts interpret bad news and surprises as potential clues to create new markets and adjust value propositions.
PILOT IN THE PLANE PRINCIPLE
– control versus prediction –
By focusing on activities within their control, expert entrepreneurs know their actions will eventually result in a desired outcome. An effectual worldview is rooted in the belief that the future is neither found nor predicted, but rather made. So take action. Set small affordable steps and learn faster than your competitors while creating a future you and I want to live in.
- A thinking framework
- a set of heuristics
- doing the do-able
- how to get the sellable products and services established
It is not
- a system to tell you what to do
- an algorithm
- “not planning”
- a way to launch an entire business
EFFECTUAL LOGIC IS LIKE 1ST & 2ND GEAR. You need them to start your business but eventually you shift away from effectual logic
At Infintec we understand entrepreneurs and help them move through all the gears. We believe in long term relationships – we become one of your QUILTING partners!