Corporate Effectuation | What managers should learn from entrepreneurs! Book/Article Review| Corporate Effectuation In the book Corporate Effectuation – What managers should learn from entrepreneurs! by Thomas Blekman, Mr. Blekman goes through the process of explaining that the leading way of management theory which focuses on prediction and control limits our ability to create successful business ventures. He posits that entrepreneurs can learn to think and act effectually, that is using the logic that entrepreneurs use in solving problems in highly uncertain market environments.Effectuation is considered to be the set of decision making principles expert entrepreneurs are observed to employ in situations of uncertainty. The alternative to effectuation is causation which uses the tools of causal reasoning by beginning with a specific goal and a given set of means to reach it. Mr.
Blekman suggests that effectuation should be used rather than causal reasoning by starting with only a set of means which in the process of deploying, natural goals emerge.Effectuation is based primarily on 5 guiding principles which are core to the effectual cycle as a new venture develops. 1. Bird in Hand Principle – Start with your means. Don’t wait for the perfect opportunity.
Start taking action, based on what you have readily available: who you are, what you know, and who you know. 2. Affordable Loss Principle – Set affordable loss. Evaluate opportunities based on whether the downside is acceptable, rather than on the attractiveness of the predicted upside.
3.Crazy-Quilt Principle – Form partnerships with people and organizations willing to make a real commitment to jointly creating the future. Don’t worry so much about competitive analyses and strategic planning. 4.
Lemonade Principle – Leverage contingencies. Embrace surprises that arise from uncertain situations, remaining flexible rather than tethered to existing goals. 5. Pilot in the plane Principle – Co-create the future with things within your control and with self-selected partners.
The book first builds the foundation of the effectual principles in the first wo chapters and connects with other scientific frameworks and management theories in the remaining chapters. It was an interesting read in that it blended research and everyday business practices together by using interesting examples to help illustrate the effectual principles in various settings and situations. After having read this book, I began to notice that I could connect most well known successful entrepreneurs to great effectual thinkers. For example Steve Jobs, had an amazing career of influence, and creativity.He was the ultimate innovator and true visionary in that he was able to conceive, make and market a legendary line of products under the Apple brand. In my view his success was due to his ability to be a great effectual leader.
The importance of effectual thinking is utterly important in the world of corporate venturing. In order to survive and enable continued growth within the dynamics of today’s business environment, managers need to begin to think like entrepreneurs by cultivating their effectuation talents over time.This will benefit them in their ability to find success in unexpected times and directions by thinking how to go over, under, around and through the walls created through causal thinking. Secondly, effectual thinking tactics allow managers to stop trying to predict the future, but rather, create it by using creativity, resilience and sheer guts. Ultimately, corporate effectuation is a necessity in coping with the unpredictable business environments associated with large corporations.
Bibliography Blekman, T. (2011). Corporate Effectuation - What managers should learn from entrepreneurs. The Hague: Sdu Publishers bv.
