ENTREPRENEURIAL THOUGHT

PROCESS: EFFECTUATION
PRINCIPLES
DR. MERCY E.I.OGBARI
WHAT IS EFFECTUATION?
• To Effectuate means to bring about, to effect, bring to action, accomplish.
• Its is a term to describe the entrepreneurial thought process.
• Effectuation is a non predict control concept
• Effectuation is a logic of thinking, discovered through scientific research, used by
expert entrepreneurs to build successful ventures.
• It is the act of bringing things to action- making things happen.
• Effectuation describes the act of working with things within your control to co-
create all kinds of new features with people under uncertain conditions.
• Effectuation is the other side of the coin to the traditional business planning.
Casual reasoning vs Effectuation
Casual reasoning/ thinking is used when trying to predict the market place better.,
what the future holds for the business.
Effectuation Principles -1 Bird in
Hand( Means)
who are we?

• What are our values?

• What are our beliefs?
• What do we think should be our role in society?
• What value do we want to create in the future?
• Why do we think this matters?
• What matters to me?
who do we know?
• Who do we consider network partners with whom we can co-create new business
models with?
• Who do we consider to be our most demanding clients?
• Who do we know, that knows… well you’ll probably got it.
what do I have? (Hard &Soft Skills)
• Do we have slack production capacity that I can use?
• Is there a budget?
• What are the current sales channels can we use?
• What R&D resources can we utilize?
• Is there an empty floor available in one of our buildings?
What do we know?
• What are our core activities?
• What is that we have superior knowledge about?
• What do we consider our core competences?
• What assets do we own?
• Massive load of means… Means with which you can be
creative with to dream up all sorts of creative and imagined.
• These ends should be inspiring and connected to the current
strategy and mission of the organization in order to increase
the odds of being able to move on to the next step.
• Of course, you should always challenge the status quo, make
sure you connect with the people whose minds you want to
influence to shift paradigms
Effectuation Principles -2 (Affordable
Loss)
Affordable Loss Cont.
Effectuation Principle-3 Crazy Quilt( form
partnerships -
• The crazy quilt symbolizes a collaboration between partners.
Every partner is represented as a unique peace of cloth.
• These pieces of cloth are sewed into a quilt by a thread
symbolizing the pre-commitment each partner offers one
another.
Crazy Quilt
Effectuation Principle -4 (LEMONADE
PRINCIPLE) leverage contingencies
• In an unfamiliar and rapidly changing market, learning faster than your competitor
is key.
• When moving forward under uncertainty, you will come across quite a few
surprises. Some positive, often wrongly perceived as luck, and some negative with
even the potential to kill your entire project.
• In our opinion, you should never kill a project. If there is a lemon that convinces
you to do so, slice the lemon and juice it. Study the juice and understand what the
lemon is trying to teach you. It should offer you directions to change course and
not simply abandon ship.
Lemonde
Effectuation Principle -5 (PILOT IN THE
PLANE PRINCIPLE) - don’t predict, co-create
• Albert Einstein defined INSANITY as: “Doing the same thing over and over again
and expecting different results”.
• If we keep applying causal linear thinking in situations where the future can’t be
predicted, we will never become successful.
• We need to understand that the world has changed.
• We can’t keep up with the speed of change if we don’t change our approach and
mindset.
Pilot in the Plane
Questions