The influence of effectuation on the learning contract

Darden, by the Economist ranked at the fourth best Business School worldwide, ranked above Harvard amongst others, has developed their own entrepreneurial method. They claim that entrepreneurship can be learned, just as the scientific method is fuelled by the logic of experimentation, the entrepreneurial method operated trough the logic of effectuation.

Darden claims that it is not (only) 1) a set of personality traits and not (only) 2) a set of circumstances, however a entrepreneurial expertise which consists of tacit as well as learnable and teachable aspects of experience that are related to high performance in specific domains.

In their paper Darden defines 3 categories of findings: process elements, principles and logic.

The first and most important process element are:

–       expert entrepreneurs begin with who they are, what they know and whom they know, and immediately take action and start interacting with other people,

–       can do mentality (versus ought to do)

There are 4 more which I will not mention here.

 

Effectuation Principles

The effectuation principles are:

The crazy quilt principle is a principle of means-driven (as opposed to goal-driven) action.

The emphasis here is on creating something new with existing means than discovering new ways to achieve given goals.

The affordable loss principle prescribes committing in advance to what one is willing to lose rather than investing in calculations about expected returns to the project.

The bird-in-hand principle involves negotiating with any and all stakeholders who are willing to make actual commitments to the project, without worrying about opportunity costs, or carrying out elaborate competitive analyses. Furthermore, it is who comes on board that determines the goals of the enterprise, not vice versa.

The lemonade principle suggests acknowledging and appropriating contingency by leveraging surprises rather than trying to avoid them, overcome them, or adapt to them.

The pilot-in-the-plane principle urges relying on and working with human agency as the prime driver of opportunity rather than limiting entrepreneurial efforts to exploiting exogenous factors such as technological trajectories and socioeconomic trends.

Effectual logic

Effectual logic is based on this premise: to the extent we can control the future we do not need to create it. Effectual models focus on control. They begin with given means and seek to create new ends using non- predictive strategies. The models based on the previous ideas looks as follows:

effectuation20111112123047 kopie

 

Consequences for the learning contract?

The learning contract consists of 5 questions:

–       Where do I come from,

–       Where am I now

–       Where do I want to be

–       What do I need to get there

–       How do I know that I have arrived?

In my perspective clear goals are important in the learning contract, at least putting focus more on goals than on means. Taken the effectuation principles into account however, the learning contact could be amended as follows:

 

–       Where do I come from (Who am I),

–       Where am I now,

o   What do I know

o   Who do I know

–       Where do I want to be

o   what are my vision and mission

o   Where can I go as a next step, given my current set of resources

–       What do I need to get there

–       How do I know that I have arrived?

Stress should be more strongly on the first step, on means rather than goals. It might be much easier for our students at Team Academy to start doing business as they can start even with a vision by only answering the first 2 questions. My proposal here is rather straightforward: lets make these changes and experiment with this slightly adapted learning contract.

 

Sources:

–       Darden Business Publishing; The entrepreneurial method UVA-ENT-0073

 

–       Clayton Christensen The innovators dilemma

 

–       The Team Academy Learning contract

 

 

 

 

 

 

 

 

 

 

 

 

effectuation20111112123047 kopie

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