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@patrick_oshag powerful question was a good nudge to reflect on effectuation. A set of principles that has deeply influenced on how I think about business.
Effectuation is the name for first gear in founder decision making
Effectuation is the name for first gear in founder decision making
Number one Job of a founder is decision making
And an early stage founder decides in a complete opposite way compared to a corporate leader
And an early stage founder decides in a complete opposite way compared to a corporate leader
In early stage
Means based decision making
>>> way powerful than>>>
Goal based decision making
Means based decision making
>>> way powerful than>>>
Goal based decision making
Effectuation summarizes this decision making into five principles
1 Bird in hand Principle -
Start with your means.
Don't fall into the trap of 'great idea' mythology.
Not idea brainstorming but start with means audit - "Who I am, Whom am I know and What I know"
Start with your means.
Don't fall into the trap of 'great idea' mythology.
Not idea brainstorming but start with means audit - "Who I am, Whom am I know and What I know"
Affordable loss Principle -
Always take affordable bets.
Decide based on downside not upside or expected value.
This almost teaches a lesson in ergodicity. Avoid Ruin
Always take affordable bets.
Decide based on downside not upside or expected value.
This almost teaches a lesson in ergodicity. Avoid Ruin
Crazy quilt Principle -
Partner with self selected stakeholder.
Dance with the girl that wants to dance with you.
Don't be hung up on your version of the vision, create a together vision.
Partner with self selected stakeholder.
Dance with the girl that wants to dance with you.
Don't be hung up on your version of the vision, create a together vision.
Lemonade Principle -
Savor the surprise.
Infact seek surprises not avoid them.
Surprises are the rocks under which lessons are hidden
Savor the surprise.
Infact seek surprises not avoid them.
Surprises are the rocks under which lessons are hidden
Pilot in the plane Principle
Prediction is lethally harmful to a business life
Control of the direction of journey is more important than the destination
To extent we control the future we can predict it
Prediction is lethally harmful to a business life
Control of the direction of journey is more important than the destination
To extent we control the future we can predict it
Combine Effectuation paper on "What makes Entrepreneurs Entrepreneurial" with Richard Zeckhauser on "Investing in Unknowable & Unknown" I have never seen a better treatment to Knightian Uncertainty
