Whether you are an entrepreneur, a leader, a team member or even a parent during this time of uncertainty, it is becoming increasingly difficult to make informed decisions regarding all matters big and small. In times like now it is important to focus on the treasures we still have at hand; it is important to filter our decisions despite all the maybes; luckily effectuation is a tool of many that you can use to help. Effectuation is the processes of opportunity identification and new value creation; it is the set of decision-making principles entrepreneurs employ in situations of uncertainty, it is based on determining goals according to the resources (time, talent, treasure) in possession.
Five Core Principles of Effectuation Logic
- The Bird in Hand Principle. You can start with what you have.
- The Affordable Loss Principle. Focus on possible gains, and possible losses and how you can minimize those losses.
- The Crazy Quilt Principle Cooperate with parties you can trust. These parties can limit the affordable loss by giving pre-commitment.
- The Lemonade Principle. Look at how to leverage contingencies. Surprises are not necessarily seen as something bad and seen as opportunities.
The Pilot-in-the-plane. In this stage, all the previous principles are put together. The future cannot be predicted. Focus on what is important here and now. Treat every idea with complete neutrality and be the Human Switzerland. Rephrase questions or advice to begin with “I wonder if…” or “What would happen if…”Ask “What’s the real challenge here for you?”