Five+Principles+of+Effectuation


 * //**Unlike causal processes of opportunity development**//, which start with a desired outcome and focus on the means to generate the outcome (resources, planning, market research, etc. - the traditional approach to management), ** effectuation ** processes start with what one has (who they are; what they know; and whom they know) and select among possible outcomes. Here are five principles of effectuation thinking:
 * 1) Patchwork quilt: create something new with what you have on hand
 * 2) Affordable loss: commit in advance to what you’re willing to lose instead of calculating expected returns
 * 3) Bird-in-hand: negotiate with stakeholders to commit resources to your project
 * 4) Lemonade: use surprises to create benefits instead of problems
 * 5) Pilot-in-the-plane: use people as prime driver of opportunity, not resources external to the individual

Causal processes of opportunity development have been popularized in business schools because they borrow from the received wisdom of management theory and practice; causal processes work in established companies with established markets characterized by reasonable certainty and sustainability. In contrast, start-ups do not enjoy the luxury of being established (by definition) and confront uncertainty and doubt head on. Effectuation thinking challenges the accepted practices of management and provides - paradoxically - a more rational approach to developing opportunities for start-ups. || ||