What Makes Entrepreneur

Different forms of reasoning

⊹ Managerial Thinking (Casual Reasoning)

⊹ Strategic Thinking (Creative casual thinking)
⊹ Entrepreneurial Thinking (Effectual Reasoning)

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Effectual Reasoning Vs
Causation reasoning
The future is unpredictable Rooted in prediction,
yet controllable, casual models begin with
entrepreneurs create an effect to be created,
based on the premise “To
opportunities, effectual
the extent we can predict
models begin with given the future, we can control it
means and seek to create
new ends, based on the
premise “ To the extent we
can control the future, we do
not need to predict it.
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Effectual reasoning:the
process
 Who they are – their traits, tastes,
and abilities?
 What they know – their education,
training, expertise, and experience
 Whom they know – their social and
professional networks.

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Effectual reasoning:principles

⊹ The affordable loss principle

⊹ The strategic Parternships principle
⊹ The Leveraging Contigencies principle

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 Effectual reasoning:Logics
⊹ Entrepreneurs are actually in a
business of creating a future which in
tails having to work together with the
wide variety of people over a longer
period of time.
⊹ Marketers and entrepreneurs
collaborate together to convert the
result of human imagination into
creation and fulfilment of human
aspirations using financial resources
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Types of
Thinking
⊹ Managerial Thinking

⊹ Strategic Thinking

⊹ Entrepreneurial Thinking

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1
Managerial Thinking- Causal Reasonin
• Selecting between given means to achieve pre-
determined goals
2 Strategic Thinking- Creative
Causal Reasoning
Generating new means to achieve pre-determined
goals
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“
3
Entrepreneurial Thinking-
Effectual Reasoning
Imagining possible new ends using a given set of
means
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Process of
effectuation used
by experet
entrepreneur
“
It is process theory that explain the process
of entrepreneur that create new ventures.

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Classic Caution Model from
marketing textbooks

Process of Effectuation used by Expert

Entrepreneurs

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Creation Of u-haul
⊹ In 1945, Leonard Shoen set out on his effectual journey that led
to the creation of U-Haul, with just $5,000.
⊹ Shoen, however, did not do elaborate market research or
detailed forecasting and fund-raising in the sense in which we
use the terms today. Instead, using effectual means, (who he
was, what he knew, and whom he knew), he plunged into
action, creating the market as he grew the business.

Learnings:-
⊹ Effectual reasoning may not necessarily increase the probability of
success of new enterprises, but it reduces the costs of failure by
enabling the failure to occur earlier and at lower levels of investment.

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TAHNK you
!!!!!

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