Sarasvathy on Effectuation in HBR
March 15, 2012 6 Comments
A concise summary of the “effectuation” approach to entrepreneurship by its creator and champion, Saras Sarasvathy (our 2009 Hibbs Distinguished Lecturer), in the Harvard Business Review. Building on her mentor Herbert Simon, Saras characterizes effectual thinking as a mode of cognition involving experimentation, feedback, and incremental learning — in contrast to the Kirznerian notion that entrepreneurial opportunities are discovered, evaluated, and exploited in single flash of insight, or the mainstream entrepreneurship literature’s idea that entrepreneurs perceive an opportunity, then immediately assemble the resources necessary to exploit it. Saras compares the effectual method to the scientific method:
The idea that anybody can be taught to figure things out, that there is a logic to discovery and invention, would have struck our ancestors as radical and strange. Until quite recently — until science education became institutionalized and widespread — the creation of new knowledge depended on either genius or luck.
I believe we are in a similar situation now with regard to entrepreneurship. . . . The idea that anyone can be taught to be an entrepreneur, to effect things for themselves, might seem ridiculous. But consider this. Every large corporation that exists today began as a small, entrepreneurial company started by ordinary people. In retrospect, their achievements seem incredible, almost magical, by no means ordinary or learnable by ordinary people. We do not think of entrepreneurial action as a skill, one as teachable in schools as scientific reasoning. I believe it is time to change this picture.