effectuationprinciples12entreprenuerialconcept.ppt

Entrepreneurial concept of effectuation

1. Effectuation
(decision making heuristics learned by expert entrepreneurs
creating new products, firms and markets in uncertain situations)
Stuart Read, Professor
www.effectuation.org

2. 2
•Effectual principles in red
Where to Start
•Causal principles (blue) what is taught in bschool

3. 3
•Means. The basis for decisions
and new opportunities:
–Who I am
–What I know
–Whom I know
Where to Start
•Goals. Given (based on predictions)

4. 4

•Affordable Loss.
Calculate downside potential and risk no
more than you can afford to lose.
Risk, Return and Resources
•Expected Return.
Calculate upside potential
and pursue the (risk
adjusted) best opportunity.

5. 5
Partnership. Build your “future” together with customers,
suppliers and even prospective competitors.
Attitude Toward Others
Competition. Set up transactional
relationships with customers and
suppliers.

6. 6
Surprise
•Leverage Surprises.
Surprises can present new opportunities.
•Avoid Surprises.

7. 7
Underlying Logic & What to Do
To the extent we can predict the future, we can
control it.
 PLAN
To the extent we can control the
future, we don’t need to predict it.
 CO-CREATE

8. Effectuation
(decision making heuristics learned by expert entrepreneurs
creating new products, firms and markets in uncertain situations)
Stuart Read, Professor of Marketing
www.effectuation.org

9. Effectuation
(decision making heuristics learned by expert entrepreneurs
creating new products, firms and markets in uncertain situations)
Stuart Read, Professor of Marketing
www.effectuation.org