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Entrepreneurship is a method anyone can learn. Decades of research into how expert entrepreneurs think and act led to Effectuation, a powerful, proven set of principles created by UVA Darden Professor Sarasvathy for startup success.
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The Principles of Effectuation
Whether you're new to entrepreneurship or have been creating new ventures for a while, you'll find that there is a science to it – a common logic that expert entrepreneurs use across industries, regions, and time. This approach is called effectuation. It offers a method for tackling problems and growing your business. Effectuation is based on taking action and exploring possibilities, rather than trying to predict the future. By using this approach, entrepreneurs can be more flexible and adaptable, and they can better navigate uncertainty and risk. So, whether you're just starting out or are an experienced entrepreneur, you can benefit from using the principles of effectuation in your decision-making.
When expert entrepreneurs set out to build a new venture, they start with their means: who I am, what I know, and whom I know. Then, the entrepreneurs imagine possibilities that originate from their means
Expert entrepreneurs limit risk by understanding what they can afford to lose at each step, instead of seeking large all-or- nothing opportunities. They choose goals and actions where there is upside even if the downside ends up happening
Expert entrepreneurs build partnerships with self-selecting stakeholders. By obtaining pre-commitments from these key partners early on in the venture, experts reduce uncertainty and co-create the new market with its interested participants
Expert entrepreneurs invite the surprise factor. Instead of making “what-if” scenarios to deal with worst-case scenarios, experts interpret “bad” news and surprises as potential clues to create new markets
By focusing on activities within their control, expert entrepreneurs know their actions will result in the desired outcomes. An effectual worldview is rooted in the belief that the future is neither found nor predicted, but rather made
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Whether you come to this site as a entrepreneurial newbie or a seasoned creator of new ventures, you’ll discover that there is a science to entrepreneurship — a common logic we have observed in expert entrepreneurs across industries, geographies, and time. We call it effectuation
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