Columnist . Grif Sadow
The Hero’s Journey
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People can make the future happen without needing to worry about predicting the future, determining the perfect timing to start, or finding the optimal opportunity.
As entrepreneurs, we constantly have to make decisions creating and identifying opportunities as we find ourselves in that critical “0 to 60 mph” start up phase of a new venture. So how do we know that we are making the right ones? Or following THE process that will guarantee our desired outcome?
In past classrooms, many of us have been taught to begin with a specific goal and then implement a given set of means for reaching it. This is called “causal reasoning”, the belief that if we can predict the future, then we are able to more successfully control it.
In 2001, Saras Sarasvathy, a cognitive scientist, studied how expert entrepreneurs thought and how they started businesses. These entrepreneurs seemed to believe that the future is shaped by people. That people can make the future happen without needing to worry about predicting the future, determining the perfect timing to start, or finding the optimal opportunity.
From these results, Sarasvathy introduced a type of human solving principal called “Effectuation”. Using effectual reasoning, goals emerge gradually from deploying a set of means available to the entrepreneur now. Effectual entrepreneurs believe, “If I can control the future, I do not need to predict it.” Sarasvathy found that 65% of the respondents in her study used effectual logic 75% of the time in solving problems and that 89% used effectual more than causal reasoning.
Simply put, effectual and causal reasoning are opposites. A “causal” chef will cook a meal by having the client choose a menu or recipe prior to shopping. An “effectual” chef would be asked by the client to create something with the ingredients available.
The five elements of effectuation consist of a unique world view along with 4 principles and are core to using the “effectual cycle” as a venture develops.
• Bird in Hand Principle – Starting with action created from the tools already available, who you are, what you know, and who you know already.
• Affordable Loss Principle – Looking at the potential downside of loss that is acceptable rather than possible profits.
• Lemonade Principle – Staying flexible and leveraging surprises into opportunities, while not being tethered to existing goals.
• Crazy-Quilt Principle – Forming committed partnerships with people and organizations, jointly creating together the future—product, firm, and market.
• The Pilot-in-the-Plane View. Believing the future is neither found nor predicted but rather made; focus is on activities an entrepreneur can control to create their future.
These principles and view create a process that expert entrepreneurs have used in the early startup phase of growth, lowering risk by getting customers and income early, setting affordable loss, spreading risk to others, and finding truly new and useful opportunities in the market by leveraging constraints and new information.
What excites me as a coach is that there is a “yes, and” possibility for entrepreneurs here. First, there is a place for both causal and effective reasoning, as well as, other decision making models to help us make more informed decisions. Second, effectuation evokes many of the creative and transformative tactics and tools I use with my clients; looking at who they are, what they know, and who they know already. Helping them to shift perspectives, look at what is possible, create healthy partnerships, learn while acting, and understanding the innate ability and responsibility they have to take charge of their own personal and professional futures.
Further, great entrepreneurs are not made from certain genetics or personality traits, risk-seeking behavior, money, or unique vision. There is a scientific method and common logic that expert entrepreneurs seem to share. That anyone, both novice and experienced entrepreneur can follow in the highly unpredictable start-up phase of a venture.
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