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# Effectuation

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### Effectuation

1. 1. Rosalynn L. Pangan, RPhAGSB MBAH 10BEntrepreneurship
2. 2. SARAS D. SARASVATHY http://www.youtube.com/watch?v=Ruvb_kGAMYw
3. 3. GENERAL OVERVIEW
4. 4. GENERAL OVERVIEW Research Experiment Subjects27 Expert Entrepreneurs {founders ofcompanies from \$200M to \$6.5B}methodProtocol Analysis{80 hours of tape, 500 pages of data}theoryEffectuation: Elements ofEntrepreneurial Expertise, 2005 Source: www.effectuation.org
5. 5. GENERAL OVERVIEW Source: www.effectuation.org
6. 6. CONTEXTFocus: achieving desired Focus: using a set ofgoal through a specific evolving means to achieveset of given means new and different goals Source: www.effectuation.org
7. 7. CONTEXTCausation Effectuation “If I can control the “If I can predict future, I do not need to the future, I can predict it” control it” Source: www.effectuation.org
8. 8. HEURISTIC VS. ALGORITHMHEURISTIC ALGORITHM Problem-solving  step-by-step procedure technique that involves with a finite number of creating a speculative steps that seeks a formulation and self-led specific outcome investigation to reach some desired outcome.  recursive most quintessential heuristic is “trial and error.” Source: www.effectuation.org
9. 9. Source:CAUSATION Effectuation: Elements of Entrepreneurial Expertise By Saras D. SarasvathyVS Printed in 2008EFFECTUATION
10. 10. 5 PRINCIPLES OF EFFECTUATION
11. 11. BIRD IN HAND PRINCIPLE  start with your means  who I am  what I know  whom I know  imagine possibilities that originate from their means Source: www.effectuation.org
12. 12. AFFORDABLE LOSS Focus on downside risk limit risk by understanding what they can afford to lose at each step, instead of seeking large all-or- nothing opportunities choose goals and actions where there is upside even if the downside ends up happening Source: www.effectuation.org
13. 13. LEMONADE  Leverage contigencies  Invite the surprise factor instead of making “what-if” scenarios to deal with worst-case scenarios  experts interpret “bad” news and surprises as potential clues to create new markets Source: www.effectuation.org
14. 14. PATCHWORK QUILT Form partnerships build partnerships with self-selecting stakeholders obtain pre-commitments from these key partners early on in the venture, experts reduce uncertainty and co-create the new market with its interested participants Source: www.effectuation.org
15. 15. PILOT-IN-THE-PLANE  Control vs. Predict  Focus on activities within their control  expert entrepreneurs know their actions will result in the desired outcomes  the future is neither found nor predicted, but rather made Source: www.effectuation.org
16. 16. EFFECTUATIONCYCLE Means Gather stakeholder Goals commitments Interact
17. 17. 5 PRINCIPLESSource: www.effectuation.org
18. 18. SUMMARY Source: www.effectuation.org