Why Do Entrepreneurs Need To Know About Effectuation: Prof. Sarasvathy Explains

Effectuation is a buzzword in the field of entrepreneurship. What is effectuation really? This video explains.

Effectuation is a buzzword in the field of entrepreneurship. What is effectuation really? This video explains.

It all starts with an Idea. An idea that starts as a speck within an entrepreneur gathers resources, infrastructure, successes, failures, attitude, lessons, collaborations and grows into an ecosystem where more ventures thrive and compete. An idea alone is not enough, though. Its realization takes more than a mere business plan. And as they say, it is wiser to learn from the experience of others. These experiences formulated as a series of techniques forms the core of Effectuation.

Is Entrepreneurship teachable?

When Prof. Saras D. Sarasvathy applied for the Tata Scholarship without which she couldn’t have gone to college, she was asked to read the biography of  Jamshedji Tata and write an essay on it. This sparked her Entrepreneurial dreams and she tried a handful of ventures before she came to the field of Education with all the valuable lessons she had learnt. The question of how much of Entrepreneurship is learnable and how much of it is teachable in a classroom led her to conduct her study on Effectuation.

Prof. Saras started off with defining what makes an Entrepreneur an expert and gathered details of those who fit this definition. Out of the 245 (around the world) that qualified as ‘Expert’ entrepreneurs, she studied 45 expert entrepreneurs. The results were fascinating because these were not just 45 inspiring stories but were a detailed study based on a 17 page problem set of 10 typical entrepreneurship challenges. The participants were asked to talk as they solved the problem set. This proved to be a comparative study of what goes on in their minds as the individuals handled each of these challenges. This proved to be valuable data for the academia in the field of Effectuation.

Cause and Effect, in reverse

The word ‘Effectuation’ itself comes from the term Cause and Effect. There is a subtle distinction though as Effectuation typically deals with cause and effect in the opposite way. Effectuation is more about defining what you want to achieve, listing the ways to achieve it and picking the most predictable way to achieve it. Entrepreneurs use effectuation to work with what is in control to create the future rather than predicting the future and controlling the outcome.

Watch this episode of The PS Show to listen to Prof.Saras D. Sarasvathy talk about Effectuation and Entrepreneurship, part 1 of a series of talks on Effectuation. Prof.Saras D. Sarasvathy is a scholar and the author of Effectuation: Elements of Entrepreneurial Expertise nominated for the 2009 Terry Book Award by the Academy of Management. She is also Paul Hammaker Professor at The Darden School, University of Virginia and also the Jamuna Raghavan Chair at the Indian Institute of Management, Bangalore.

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About the Author


Entrepreneurship and entertainment have been the key themes in her work life. In a career spanning over 18 years, she has launched a film magazine, hosted a film-based radio talk show and co-founded read more...

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