Field Note #84. On "Effectuation"

1. Saras Sarasvathy, Effectuation Workshop (2018), avail. online
2. Saras Sarasvathy, Big Idea Interview (2012), avail. online

The Main Ideas.

Effectuation is a decision-making approach that rejects prediction-based protocols when dealing with uncertain environments.  As such, it is an especially useful framework for entrepreneurship and indeed investing (esp. in less mature domains like crypto).  That said, I've found the approach more explicitly relevant to business-building of any type.

The starting point for the effectuation process is the Bird in Hand Principle (see full notes on website).

Simply begin with an inventory of the personal status quo:

  • What do I know?
  • What have I done?
  • Whom do I know?

Then, determine actionable steps in answering the corollary, "What can I do now? It is crucial to pin this step to actions that can be taken right away and not deferred or contingent upon the receipt of something else.

The "fetishistic disavowal"— the "yes, but..."—is a tell-tale sign of sidestepping and failing to properly answer this action-oriented question based on available means present now.

Adopting this approach also "atomizes" work streams, such that the entrepreneur is not drowning in an avalanche of uncertainty and impossibly futile predictions.

Effectuation logic: start with the means; accumulate the goal.

Contrast this with standard "business school" logic and the popular imperative to "work backwards" that embrace Causal Theory: start with the goal; accumulate the means.

The Image.

The Details.

You've successfully subscribed to Sandeep C. Ramesh
Great! Next, complete checkout for full access to Sandeep C. Ramesh
Welcome back! You've successfully signed in.
Unable to sign you in. Please try again.
Success! Your account is fully activated, you now have access to all content.
Error! Stripe checkout failed.
Success! Your billing info is updated.
Error! Billing info update failed.