By John Stayton
Executive Director of Graduate & Executive Programs
School of Business and Economics at Sonoma State University
A surprising career path that many of our graduates have embarked upon is the path of entrepreneurship. This is surprising because most of them did not come into the program with the intention of becoming an entrepreneur. So far, they seem to have a high success rate. I believe the way we are preparing our graduate students to become successful entrepreneurs, as well as successful change agents for their employers, is also surprising.
The most important theory of entrepreneurship that you never heard of (but is known by every scholarly researcher of the field) is called "effectuation". The concept was developed by Saras Sarasvathy, who researched expert entrepreneurs to find out how they behave and solve problems. She discovered that they followed a different logic in their process of creation than was previously understood. Conventionally, we believed that entrepreneurs (like managers) set goals and then plan a path to achieve those goals, which Sarasvathy terms causation. She discovered that in actuality, expert entrepreneurs take into account the resources they have (financial, connections, knowledge, etc.) and consider the possible outcomes (or "effects") that could come from employing those resources in different ways. In other words, effectuation is about leveraging resources to create the future in conditions of uncertainty. Causation assumes an entrepreneur knows the business opportunity and sets a future goal with a strategy for reaching it, while effectuation assumes entrepreneurs are resourceful in using their resources to create new enterprises without knowing the outcome in advance.
Sarasvathy describes a very simple analogy. Some people like to cook from recipes. They know the outcome they want and set about acquiring the ingredients and using the kitchen tools required to produce their dishes. That is causation. Other people look at the ingredients and tools they have on hand, imagine a variety of outcomes, and choose a direction that seems like the right one at the time. They may taste the dish along the way and change the ingredients to achieve a desired effect. That is effectuation.
While our students learn how to plan and execute strategies, they also learn that they are responsible for their experience and have the power to create their lives and livelihoods in the ways that they want. For example, in our Executive MBA program, students take several personal assessments to learn about their personality styles, strengths and weaknesses. They are provided with tools and resources, including coaching sessions with a teacher. Then they imagine how they want to develop as individuals and as leaders. They choose a personally compelling path and develop a Strategic Learning Plan. In the process of executing the plan, they often shift directions as they learn and achieve results. By the completion of the program, they have transformed as individuals and leaders through a process that they created. In other words, they learn effectuation.
Because our graduates realize they have more choices than they previously thought, and an increased ability to create their own future, they are more likely to be resourceful in creating new enterprises, as well as to be more resourceful in advancing new initiatives that make a positive impact for their employers. They have embarked on the path of thinking like an expert entrepreneur.
References:
Sarasvathy, S. D. (2001). Causation and effectuation: Toward a theoretical shift from economic inevitability to entrepreneurial contingency. Academy of management Review, 26(2), 243-263.
Sarasvathy, S. D. (2009). Effectuation: Elements of entrepreneurial expertise. Edward Elgar Publishing.