Swedish Schumpeter Lecture 2016: Effectuation

On October 17 Swedish Entrepreneurship Forum held Swedish Schumpeter Lecture 2016. This year’s lecturer was Professor Saras D Sarasvathy, Darden School of Business University of Virginia. She spoke on the topic “Two Decades of Effectuation Research:  Implications for Entrepreneurship and Economic Development Policy”. She is best known for having developed “Effectuation” about the entrepreneurial way to make decisions and use their resources.

Before Sarasvathy started her lecture Johan Eklund, professor and managing director Swedish Entrepreneurship Forum, gave a short introduction. In a TED-talk he once noted that Sarasvathy had said that we live in a world created by entrepreneurs who have little idea why they became successful. Clarifying this phenomenon is one of Sarasvathy’s main research subjects – Effectuation, he explained.

– How do you control a future you cannot predict, asked Sarasvathy as she started the lecture.

The future is fundamental unpredictably but humans want control.  Most people view entrepreneurs as either visionary or risk taking. Sarasvathy continued the lecture by talking about the four basics of Effectuation, where the first point is to only work with what is within your control.

– Effectuation makes no assumptions about: personality traits, aspirations, access to resources or environment of entrepreneurs.

Effectuation is all about matching – if you have one personality you will build one particular venture. The second of the basics is to co-create – Get partners on board as self-selected stakeholders i.e. to gather commitments from stakeholders. This gives the entrepreneurs new means and expanding cycles of co-created resources.

– Ask what people voluntarily can contribute to your idea.

The third point concerned the idea that innovation is a continual transformation, rather than new combinations. In many cases, manufacturers can modify their production lines to be able to accommodate similar products.

– Entrepreneurship is a method rather than a mystery, Sarasvathy continued as she put forward her forth point.

When we talk about science we know there is a method anyone can apply and use. Entrepreneurship is a method, and it is teachable and learnable, just like the scientific method. Sarasvathy finished her lecture by establishing that a lot of money is spent chasing very successful companies. However, she thought more resources concerning entrepreneurship needs to be spent on the broad masses, similarly to education spending.



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