WEEK 6 CASE STUDY

 EFFECTUATION

Ferdinand Taslim (TP072735)

Effectuation is a way of making decisions. Entrepreneurship and management experts have mainly accepted Effectuation theory. Its continued spread in research has been helped by its strong theoretical foundation and clear rules for making decisions based on thinking processes (Klenner & Carpen, 2022). It's often used in starting new businesses, but it can also be useful in big companies. It helps people deal with things that are uncertain and come up with new ideas. In companies, effectuation can be a good method for finding ways to grow and be more creative. Effectuation is about using what you already have, working with others, and setting goals that you can actually achieve with what you've got.

In big companies, effectuation can be really helpful in making new products and planning for the future. Companies can use it to find out what customers want and make things just for them. And when companies want to try something new, they can use effectuation to see if it's a good idea and how they can make it work with what they already do. Efectuation is useful for business, whether they're starting from scratch or already established.

Jovan Richaldy Chandra (TP071536)

Effectuation is a way of thinking and acting in uncertain situations, can definitely be used in companies, not just for starting new businesses. Effectuation can help individuals make smart decisions and navigate challenges effectively.

Perhaps the most compelling difference between the effectuation mindset and standard strategic thinking is the approach to identifying an opportunity (Sebastiao, 2014). The big difference between effectuation and other ways of doing business is that effectuation focuses on what you can control in an uncertain situation. Other approaches might rely more on planning and predicting outcomes, but effectuation is more about taking action based on what you have available right now.

The effectual approach and the traditional (causal) approach aren't necessarily opposites. They can sometimes overlap or be used together. The traditional approach often involves planning and predicting outcomes based on existing information, while the effectual approach focuses on being flexible and adaptable in uncertain situations.

Effectuation and Lean startup have some differences; they both emphasize learning from experimentation and adapting to feedback. Effectuation is more about using your existing resources and opportunities to create value, while the Lean Startup approach focuses on quickly testing ideas and iterating based on customer feedback

Rafael John (TP072612)

Effectuation can be used in companies, not just for entrepreneurship. It is an approach that emphasizes creating opportunities based on available means and engaging committed stakeholders, rather than discovering pre-existing opportunities through a search process. The key difference between effectuation and other approaches in entrepreneurship is that effectuation starts with the entrepreneur and their resources, rather than a predetermined idea or plan.

Effectuation and the traditional causal approach are not mutually exclusive. Certain situations call for an effectual approach, while others require a more predictive, causal approach. The choice between the two depends on the amount of pre-existing information available and the specific circumstances of the decision-making situation.

Effectuation does not mean "not planning." Instead, it involves a different approach to planning, where goals are gradually set based on available means, rather than starting with specific objectives. This approach is particularly useful in uncertain environments, where long-term goal setting may be challenging or ineffective.

Lean Startup (LS) has gained considerable traction in the startup scene, especially within digital firms where the concept finds the concept's genesis (Solaimani et al., 2022). Effectuation and Lean Startup are compatible. Both approaches share the assumption that uncertainty is not faced with more planning. Instead, they promote iterative design and learning through feedback loops, which can be complementary and enhance each other's effectiveness, especially in highly innovative and uncertain environments.

Marcello Irawan (TP072752)

Effectuation is an entrepreneurial mindset that involves a dynamic and interactive process for inventing new things (Sarasvathy et al., 2008). Effectuation doesn't mean skipping planning altogether. It just suggests a different way of planning compared to normal methods. In effectuation, planning isn't only about guessing and controlling outcomes based on what you already know. Instead, it's about always changing plans based on what's happening around you.

Effectuation understands that lots of times, things are uncertain, especially in starting new businesses. It tells entrepreneurs to accept this uncertainty instead of trying to get rid of it by planning everything perfectly. This doesn't mean not planning at all; it just means planning in a more flexible way.

Entrepreneurs who use effectuation still think about their strategies and set goals, but they do it in a more flexible and changing way. They focus on using what they already have and working with others to create opportunities, instead of only relying on guesses and analysis.

In short, while effectuation might mean less focus on detailed, long-term planning compared to normal ways, it still involves planning. It's just planning that's more about being able to change quickly when things don't go as expected.

Stanislaus Raymond Soecoko (TP077043)

Effectuation and the Lean Startup method are two different ways entrepreneurs start businesses. Lean Startup has been impacting how startups and incumbents innovate their business models (Bocken & Snihur, 2020). They both want to help entrepreneurs do well, but they have their own strategies.

Effectuation is about using what's already there, like skills and resources, to create something new. It's about being resourceful and flexible, even when things are unsure. Instead of trying to know what will happen in the future, entrepreneurs using effectuation take action based on what they can control and learn from what they do.

The Lean Startup method is about testing ideas quickly in real life. It's about making a simple version of a product, showing it to customers, and learning from their feedback. Instead of spending lots of time and money on a big, perfect product, entrepreneurs using the Lean Startup method focus on getting something out there fast and then making it better based on what they learn.

Even though Effectuation and the Lean Startup method are different, they can work together. For example, Effectuation can help entrepreneurs come up with good ideas and find ways to make them happen. Then, the Lean Startup method can help them test those ideas and see if they'll work in real life. By using both ways, entrepreneurs can increase their chances of success in starting and growing their businesses.

Daniel Kurniadi Khodyat (TP073665)

Effectuation theory describes entrepreneurial decision-making, it has been popular in entrepreneurship research for the last two decades, but still underexplored in contexts such as established company’s decision-making (Henninger et al., 2020). The big difference between Effectuation and other ways of doing things is how they deal with uncertainty. Effectuation says it's okay not to know everything and focuses on what you can do right now with what you have. It's about being flexible and adapting as you go along, rather than trying to predict everything in advance.

On the other hand, other methods like traditional planning rely more on trying to guess what will happen in the future based on what's known now. They might spend a lot of time analyzing data and making plans to try to control outcomes.

Effectuation is about using what's available to you, like your skills and resources, to create something new. It's about being creative and open to new possibilities, even when things are uncertain.

So, the key difference is that Effectuation sees uncertainty as a normal part of business and embraces it, while other methods try to avoid uncertainty by planning everything out in advance.

References:

        Klenner, N. F., Gemser, G., & Karpen, I. O. (2022). Entrepreneurial ways of designing and designerly ways of entrepreneuring: Exploring the relationship between design thinking and effectuation theory. Journal of Product Innovation Management, 39(1), 66-94.

            Sebastiao, H., PhD. (2014, June 12). How Effectuation + Lean Startup = Lean Entrepreneurial Thinking & Acting (LETA). https://www.linkedin.com/pulse/20140612225801-11777433-how-effectuation-lean-startup-lean-entrepreneurial-thinking-acting-leta

            Benegal, S. (2014, April 24). Entrepreneruship- Effectuation & Lean Start up [Slide show]. SlideShare. https://www.slideshare.net/sachidananda_bs/entrepreneruship-effectuation

               Solaimani, S., Van Eck, T., Kievit, H., & Koelemeijer, K. (2022). An exploration of the applicability of Lean Startup in small non-digital firms: an effectuation perspective. International Journal of Entrepreneurial Behaviour & Research, 28(9), 198–218. https://doi.org/10.1108/ijebr-04-2021-0270

              Mansoori, Y., & Lackéus, M. (2019). Comparing effectuation to discovery-driven planning, prescriptive entrepreneurship, business planning, lean startup, and design thinking. Small Business Economics, 54(3), 791–818. https://doi.org/10.1007/s11187-019-00153-w

            Shirokova, G., Morris, M. H., Laskovaia, A., & Micelotta, E. (2021). Effectuation and causation, firm performance, and the impact of institutions: A multi-country moderation analysis. Journal of Business Research, 129, 169-182.

           Sarasvathy, S. D., Dew, N., Read, S., & Wiltbank, R. (2008). Designing organizations that design environments: lessons from entrepreneurial expertise. Organization Studies, 29(3), 331–350.

          Bocken, N., & Snihur, Y. (2020). Lean Startup and the business model: Experimenting for novelty and impact. Long Range Planning, 53(4), 101953.

          Henninger, P., Brem, A., Giones, F., Bican, P. M., & Wimschneider, C. (2020). Effectuation vs. causation: Can established firms use start-up decision-making principles to stay innovative?. International Journal of Innovation Management, 24(01), 2050002.