Principles of Effectuation Cycle

Principles of Effectuation Cycle

I’ve attached a document that will help narrow down the five main principles of Saras’s Sarasvathy Effectuation theory. In brief, the five principles are:

·      Bird in hand: start with the means, meaning that instead of setting goals first, entrepreneurs see where they stand on who they are, what they know and whom they know first.

·      Affordable loss: This principle focuses on what an entrepreneur can cope with losing at each step without it being all or nothing risk. 

·      Lemonade:  instead of making contingency plans to avoid surprises, entrepreneurs usually think that surprises could help them with information and clues on new market, that could change their means and set new goals.

·      Patchwork quit:  This relates to selecting stakeholders and forming partnerships. If there are pre-commitments with interested participants of the particular new market, it helps reduce the uncertainty. Furthermore, it adds to means such as resources, as well as, it crystalizes the goals.

·      Pilot in the plane: the belief that the future is made not predicted, due to doing activities that are within their control that will achieve the desired outcomes.

effectuation-3-pager.pdf by Youssef