The Entrepreneurial Method • We have been living in the dark (grey?) ages preceding Novum Artificium • In other words. we throw away millions of people • We waste the potential in human nature just as our prescientific ancestors did not realize the potential in nature • But we are beginning to spell out entrepreneurial effectuation – just as Bacon began spelling out scientific experimentation .

I don’t have a brilliant idea • Bird-in-hand principle: Start with your means and do the doable .

I don’t have enough money • Affordable loss principle: Invest only what you can afford to lose .

I am not a risk taker • Pilot-in-the-plane principle: Create the future – not bet on it .

I am afraid to fail • Lemonade principle: Embrace and Leverage surprises .

I don’t know how to make it happen Who I am What I know Whom I know What can I do? (Affordable loss) Interactions with other people Effectual stakeholder commitments • Crazy Quilt principle: Build a network of self-selected stakeholders .

Effectual Logic = Non-predictive control High Plan PREDICTION Persist Persist Adapt Plan Adapt Co-create Low = Non-predictive control Low CONTROL High How do you control a future you cannot predict? You co-create it through stakeholder commitments .

Expert Entrepreneurs Build Markets Expanding cycle of resources Actual courses of Action possible New means Who I amare We What I know We know Whom I know We know What can I do? We do? (Affordable loss) Interactions with other people Effectual stakeholder commitments New goals Actual Means Converging cycle of constraints NEW MARKETS AND NEW FIRMS .

The Market for Engineering KBL produced 6 iron ploughs in 1904 They remained unsold for two years .

70 0.40 100-300.40 20-30.50 0.25 0.37 0.000 3 0.000 4 0.000 2 0.40 50-80.The Market for Electric Bulbs Year Cost Price Sales Price Quantity 1 1.40 > 1 Million .

The Market for Money The moment of “change” .

The Entrepreneurial Method • The scientific method is about unleashing the power of nature to develop new means to achieve our ends • It is about finding out about existing worlds • The entrepreneurial method is about unleashing the power of human nature to create new ends as well as new means • It is about making new worlds .

Markets and Worlds: Made through the Entrepreneurial Method Not like a jigsaw puzzle More like a crazy quilt .

org . SARASVATHY NewHorizonsinEntrepreneursh ip www.effectuation.EFFECTUATION Elementsof EntrepreneurialExpertise SARAS D.

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