“How can you Control the future, you cant predict?” That was the question, Professor Sarasvathy at IIMB 4Startup has attempted to answer through her extensive research on Expert Entrepreneurship. She said, any start-up venture needs to deal with a fear of uncontrollable and unpredictable future. But good news is there is an approach to reverse this fear into cheer. She further explains, usually, most of us at grown-up stage are wired to think rationally based on learnings and experiences. This approach could be called Causality which is based on relationship of events. But there is another approach which is not based on analysis and wisdom but based on feeling the pulse of action at the edge. This second approach, Effectuality, is based on taking smaller and calculative steps forward by sensing and learning along the way to success.
To explain further, most business situation demands exerting utmost Control for desired future outcome by conducting extensive research to make it Predictable success. But we rarely get balanced weight of both in any situation. If both are low, we tends to Adopt to situation and try to conduct more research to increase Predictability. If we get better Predictability, we tends to Plan and try to increase Control bit for situation. If we gets lucky with increased Control and Predictability, we need to Persist on current strategy. But when disruption is in air, Predictability goes down in markets. This is where Blue Ocean gets created where Corp avoids sailing into, but Entrepreneurs come-in for fishing using co-creation strategy. But surprisingly, in these Blue Oceans, it has been observed that, Expert Entrepreneurs hate three types of fishes; Business Planners, Market Researchers and Venture Capitalists.
To make more sense and address the curious “How” question around it, she defines a five principals approach in her research.
- Bird-in-Hand Principal
- Instead of defining goals and working on its means, It is better to know your means which are your current and immediate capability and capacity.
- Affordable-Loss Principal
- Instead of estimating ROI and assessing associated Risk, it is better to estimate the investment which might not bit if lost. It is more like “Risk little and fail cheap”.
- Crazy-Quilt Principal
- Instead on focusing on competitors, it is better to focus of building alliances/stakeholders who are committed to venture.
- Lemonade Principal
- Instead of worrying about unexpected outcomes, it is better to be ready to convert any adversaries into advantage to create new market and product features.
- Pilot-in-the-Plane Principal
- Instead of relying on inevitable trends established by market forces, it is better to roll out pilot and work on create trends.
I feel, this theory is not just applicable for Startup but anyone even in the Job. In our offices, sometime, we have to take risky and newer assignments, where we dont have liberty of research for future predictability.