What is effectuation all about? Is it a new way of thinking? It is definitely a way of thinking, but a little different, a thinking supported by data and research on how entrepreneurs create or bring new ideas to life.
What are the fundamentals of Effectuation?
The premise of effectuation stands on 5 principals:
- The Means
- Focusing on the downside
- Creating with Partnerships
- Leveraging contingencies
- Having a world-wide view
How do these principals differ? Well, the Business Model Canvas and the Entrepreneurs framework’s provide us a template to start working with, but they do not provide a way of evaluating the idea as much. For instance the BMC gives you template to identify what your idea is, what the value is, who are your stakeholders, how are you going to establish your customer support, how do you generate revenue and how do you or can you generate additional revenue.
What Effectuation focus’s on is to give you a means to understand the problem. This is very different from the frameworks.
Let us understand this a little in detail.
As an entrepreneur, it is very important to understand yourself first. Who am I? This can be a spiritual question, but a practical one. Who am I defines who you actually are, what are your strengths, what are your weakness, what do you know and what you do not know.
As an Entrepreneur it is very important for you to accept yourself first.
I know I can drive a car.
I know that I cannot drive a car.
As an Entrepreneur, if you take my example:
- I know that I can build something which creates value
- I know that I cannot sell globally on day 1.
When you start working with this preamble, it will give you a realistic perspective and allows you to be grounded all the time.
The means begins with with self, understanding who you are, what your limitations are.