Michael Faschingbauer’s book offers a very good overview of how to successfully progress in unclear, uncertain situations.
“Effectuation” is based on the observation of successful entrepreneurs and thus offers approaches that have also been tried and tested in practice.
If it is a situation with a known risk, you can work very well with forecasts and analyses and thus reach your goal. However, if the goal has not yet been clearly defined and something new is to be found in an unpredictable environment, Effectuation can help: Here you assume that you can help shape the uncertain future.
The main difference to the linear-causal approach: You think and act cyclically. People who work with Effectuation change their environment until the framework conditions permit success.
Effectuation is to be understood as a supplement to causal thinking. It is important to use the right method at the right moment.
Effectuation is based on four principles:
Principle of middle orientation:
The user thinks about it:
- Who am I?
- Who am I?
- How do I know?
- Who do I know?
The answers to these questions constitute the means available. The first step is to think about the results that can be achieved with these means.
The path is determined by the user of the Effectuation Method on the basis of the means he encounters. It defines fixed objectives only in work stages of days or weeks. Causal thinkers have a fixed goal in mind, although the framework conditions are highly vague.
Principle affordable loss:
The user thinks about what can go wrong, what is the worst thing. If you find that even then the consequences are not so dramatic that you can’t live with them, you should get started. However, if the possible consequences are unbearable, plan B is used. One advantage of this method is that decisions are made more quickly than with causal ways of thinking.
Principle Circumstances and coincidences:
The author explains this principle using the example of how the GEOX idea came about:
The Italian Mario Moretti Polegato was in Reno, Nevada, when he drilled holes in the soles of his shoes to ventilate his feet because of the heat. This idea was so successful that today he is an entrepreneur employing 3,500 people.
Principle agreements and partnerships:
Cooperation in Effectuation mode works best when both have a self-interest and are enthusiastic about your cause.
The search for the right partners could be expensive. It is therefore important to handle your own information as openly as possible in order to quickly consolidate your own network.
The larger a company becomes, the more difficult it is to apply effectuation. The organisational structures and processes become more complicated, the uncertainties of the initial phase dissolve and framework conditions are created that promote causal thinking.
In an increasingly complex world with heterogeneous target groups, there are probably more right ideas than ever before. They just have to be found.
- Only 28% of successful companies have drawn up a formal business plan.
- 20% had found their business idea rather by chance,
- 71% of founders adopted ideas from previous permanent positions and
- only 12 % had conducted market research before the foundation.
Really brilliant ideas often arise only through personal involvement. This is exactly the point where Effectuation can be particularly helpful.