# Effectuation ## The Idea in Brief Most planning starts with a goal and searches for optimal means to achieve it. Effectuation inverts this: start with what you have — who you are, what you know, whom you know — and let goals emerge from action. The logic shifts from "predict to control" to "control so you don't need to predict." --- ## Key Concepts ### Means-First Thinking Causal reasoning asks: given this goal, what resources do I need? Effectual reasoning asks: given these resources, what goals become possible? The chef analogy makes it concrete. Causal: you're given a menu, shop for ingredients, cook in your own kitchen. Effectual: you're dropped in a strange kitchen, explore what's in the cupboards, and cook something from what you find. Three categories of means: (1) Who you are — traits, tastes, abilities; (2) What you know — education, expertise, experience; (3) Whom you know — networks, relationships, access. ### The Three Principles **Affordable loss over expected return.** Don't optimise for upside; constrain downside. The question isn't "what's the potential return?" but "what can I afford to lose?" This keeps you in the game long enough for opportunities to emerge. **Partnerships over competitive analysis.** When you don't assume a pre-existing market, competitive analysis is meaningless. Instead, build relationships. The network of stakeholders you assemble determines which market you end up creating. **Leverage contingencies over avoid surprises.** Causal thinking treats surprises as deviations from the plan. Effectual thinking treats them as inputs. "Ready-fire-aim" — you can't see all the good things that happen if you never start. ### The Control Inversion Causal logic: *To the extent we can predict the future, we can control it.* Hence the obsession with forecasting, market research, scenario planning. Effectual logic: *To the extent we can control the future, we do not need to predict it.* The future isn't "out there" to be discovered — it gets created through the actions of the players. The urn metaphor: Instead of counting balls to predict which colour you'll draw, add your own balls to shape the distribution. Find others with balls of the same colour. Eventually, you've built the urn. --- ## Implications **In early-stage ventures:** Effectuation dominates when the future is genuinely unknowable — new products in new markets. As markets stabilise and become predictable, causal reasoning becomes more appropriate. Most entrepreneurs struggle to transition. **In career decisions:** Your next move can be planned causally (target role, acquire skills, execute) or effectually (inventory your means, take adjacent actions, see what emerges). Effectuation works better when you don't yet know what you want. **In corporate strategy:** Large organisations default to causal reasoning — goals cascade down, resources allocated to achieve them. But some problems are better suited to effectual logic: give teams resources and constraints, let goals emerge from experimentation. **On failure:** Effectuation doesn't increase the probability of success. It reduces the cost of failure by enabling failure to occur earlier and at lower investment levels. Spreading risk across stakeholders means no single failure is catastrophic. --- ## Sources - Saras Sarasvathy, "What Makes Entrepreneurs Entrepreneurial?" — the foundational paper; study of 30 expert entrepreneurs solving identical decision problems - [[The Barbell Strategy]] — related concept: combine extreme safety with small high-risk bets - [[Optionality]] — related concept: prefer choices that keep options open - [[Explore vs Exploit]] — related concept: balance trying new things against using what works --- ## See in Notes - [Growth Market Traps](/growth-market-traps/) — Effectual thinkers avoid obvious markets precisely because prediction is possible there; someone with deeper pockets will always predict better