Presentation for HEA-funded workshop 'Effectual thinking in entrepreneurship education' The workshop disseminated findings and the learning smartphone app for promoting effectual enterprise learning. Participants explored about how to incorporate more effectual approaches into teaching entrepreneurship and enterprise. This presentation forms part of a blog post which can be accessed via: http://bit.ly/1aIAyaW For further details of HEA Social Sciences work relating to active and experiential learning please see: http://bit.ly/17NwgKX

1. EFFECTUAL THINKING
IN ENTREPRENEURSHIP
EDUCATION
Dr Nick Williams, Dr Tim Vorley,
Dr Rob Wapshott and Natalie Norton
HEA Seminar December 2013

2. Outline of the Day
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•
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10.30 - Introduction & Icebreaker
11.10 - Seminar Presentation on Effectuation
11.45 - Effectual Thinking Task
12.30 - Lunch
13.30 - Effectual Thinking Task Feedback
13.50 - The Effectuator App
14.20 - Roundtable Discussion
14:50 - Conclusion & Close

3. SOME CONTEXT…

4. Teaching entrepreneurship
• Are entrepreneurs born or made?
• Can entrepreneurship be taught? Or does
education suppress entrepreneurial tendencies?
• Courses have focused on:
– 1) orientation and awareness;
– 2) new enterprise creation; and
– 3) small business survival and growth.

5. In UK HEIs
• Late 1970s – adoption of entrepreneurship
education
• 1980s – final year option for business school
students and postgrads
• 1990s – over half of all HEIs offering courses
and modules in new venture creation and small
business management
• Mid-2000s – entrepreneurship education
widespread
Source: Hannon (2007)

6. Business plans
• Studying entrepreneurship is not just about
starting businesses (Gibb, 1996)
• Business plan still dominant
• Debates about the usefulness of business plans

7. What are we aiming for?
• Aim is that students become more enterprising /
entrepreneurial
• Develop a portfolio for learning and teaching
• Neck and Greene (2010) propose teaching
entrepreneurship using a portfolio of practicebased pedagogies, as opposed to a single or
static approach

8. The role of research
• Karlsson and Moberg (2013) contend that
curricula are often dated and not informed by
current entrepreneurship research
• Research helpful in better understanding
entrepreneurial learning and the development of
entrepreneurial competences, as well as how to
incorporate new theories (Fisher 2012;
Fayolle, 2013).

9. ICE BREAKER
IDENTIFYING YOUR STRENGTHS
AND NETWORKING

10. Who‘s who
• Too many people and too little time
• Need to get to know other people and
make new connections
• You need to make the effort but we will
give you a kick-start

11. What are your strengths
• On the paper provided list 5 strengths that
make you effective either at work, at home
or in life in general
• Think of examples of what you mean and
when you have used these skills
One of my skills is establishing partnerships. I
build and shape good teams by identifying
people who can work together…

12. Articulating Strengths
• Many times our strengths are in our area of
―unconscious competence‖ and seem natural
• Often we might not realise what all our
strengths are or even important.
Some people are very skilled at listening
and then asking insightful questions
• Knowing strengths can help a person – and
their team – make the most of it!

13. Speed networking
• Networking is important in all spheres of life
• Time is short so we need to do it quickly…
• Find people that you have not met before
• Introduce yourself, share your skills/assets and
explain why it is valuable
• Try to find out a memorable fact

14. Speed networking
STAND UP & GET STARTED
YOU HAVE UNTIL THE BELL

15. Points for reflection
• What was it like sharing your strengths?
• What was it like listening to someone
describe his/her strengths?
• What is the value in knowing our own
strengths?

16. EFFECTUATION PRESENTATION
AN INTRODUCTION TO
EFFECTUATION

17. Entrepreneurial Conventions
Three big questions about entrepreneurship
1. A entrepreneurs born or made?
2. Are opportunities created or found?
3. What makes entrepreneurs different?

18. Dispelling Some Myths
Many myths around entrepreneurship
1. Entrepreneurs Are Introverted Loners
2. Entrepreneurs See Business Building As
A Path To Riches
3. Nothing Succeeds Like Success
4. Entrepreneurs Are Risk-taking
Gamblers.
5. With A Great Idea and
Enthusiasm, Anyone Can Achieve
Entrepreneurial Success.

19. Entrepreneurial Successes
• We see these entrepreneurs
as successful – but what is
success?!
• Why do we consider them so
successful – they did not set
out to achieve what they are
known for now.
• Are we looking at the right
thing?

20. WHAT IS EFFECTUATION

21. Entrepreneurship as Rational
• This approach underlies much entrepreneurship
research (Foss & Klein, 2005; Sautet, 2002)
• Entrepreneurs thought to notice or discover a
tangible opportunity such as a new product or
venture
• To implement an entrepreneurial idea a normative
decision-making process is followed
• Involves gathering relevant information and
systematically evaluating alternatives before
choosing the optimal option

22. A Managerial Approach
Causal reasoning to achieve a given goal –
following pre-existing pathways
M1
M2
M3
M4
M5
GOAL

23. A Strategic Approach
Causal reasoning to achieve a given goal –
involves creating of new pathways
M1
M2
M3
M4
M5
GOAL

24. Effectual Approach
• Effectuation and considers entrepreneurship as a
series of decisions (Sarasvathy, 2001)
• Decision-making can be applied in uncertain settings
• Entrepreneurs imagine outcomes using these means
and move into action without elaborate planning
• All entrepreneurs begin with three types of means:
1.
Who they are – their traits, tastes and abilities;
2.
What they know – their education, training, expertise, and
experience;
3.
Whom they know – their social and professional networks.

25. An Entrepreneurial Approach
• Effectual reasoning - imagining new possibilities
using a given set of means
E1
M1
M2
M4
E2
M3
M5
E3
E4
E5

26. Effectual Reasoning
• Sarasvathy (2001) find effectual reasoning
offers an alternative to causal rationality
1. While causal reasoning focuses on expected
return, effectual reasoning emphasizes
affordable loss;
2. While causal reasoning depends upon
competitive analyses, effectual reasoning is built
upon strategic partnerships; and,
3. While causal reasoning urges the exploitation of
pre-existing knowledge and prediction, effectual
reasoning stresses the leveraging of
contingencies.

27. Theory of Effectuation
Expanding Resources
Who WE are
What WE know
Who WE know
NEW
MEANS
What can WE do?
(Affordable loss)
NEW
VENTURE
/ MARKET
CREATION
Interactions with
other people
Effectual
Stakeholder
Commitments
NEW
GOALS

28. Taking & Managing Risk
High
Risk
Low
EFFECTUATION
Low
High
Return

29. Principles of Effectuation
• Bird in Hand Principle - Start with your
means rather than wait for the perfect
opportunity. Start taking action, based on
what you have readily available
• Affordable Loss Principle - Set
affordable losses and evaluate
opportunities based on whether the
downside is acceptable, rather than on
the attractiveness of the predicted upside.

30. Principles of Effectuation
• Crazy-Quilt Principle - Form
partnerships with people and
organizations willing to make a real
commitment to jointly creating the
future--product, firm, market--with you.
• Pilot the Plane – Take control and
remember that the future is in the
making and not predetermined

31. Principles of Effectuation
• Lemonade Principle - Leverage
contingencies Embrace surprises that
arise from uncertain
situations, remaining flexible rather than
tethered to existing goals.

32. EFFECTUAL THINKING

33. Preparing Dinner
When you go to cook
dinner how do you cook?
1. Have a specific
menu, shop for the
ingredients, follow the
recipe
or
2. Have a look in the
fridge, see what‘s in date
and make dinner
accordingly

34. Cooking Dinner
• Both causal and effectual
approaches will get
dinner cooked
• Both for causal and
effectual approaches
demand skills and
training
• But…

35. Having Prepared Dinner…
… effectual reasoning requires more…
Imagination
Risk-taking
Spontaneity
Salesmanship

36. U-Haul (example of effectuation)
• Discharged from the Navy in
1945 aged 29 Leonard
Shoen and his wife, Anna,
wanted to rent a van to move
their things from Los Angeles
to Portland Oregon
• No one at that time seemed
willing or able to serve that
need by renting a van oneway.

37. The U-Haul case
• Seeing Shoen and his wife started the U-Haul
company (with the help of $5,000 from the her
family).
• He painted his trailers bright orange with
advertising on the truck ―U-Haul Rental
Trailers, $2.00/day‖

38. The U-Haul case
• They were not an ―overnight success‖ and in the
beginning, they were broke and had to move in
with her parents.
• Shoen convinced friends, family, and customers
to make down payments and then lend him
money to buy his first trucks
• He contracted with service station outlets to help
sell the rentals
• He offered early customers a discount if they
established a U-Haul rental agent at their
destination!

39. The U-Haul example
• By 1949, they had already
built a coast-to-coast moving
service
• Today, the annual mileage of
North American U-Haul
trucks, trailers and tow
dollies would travel around
the Earth 194 times per
day, every day of the year

40. Effectuation and U-Haul
• Means: Shoen started with what he knew:
– He had his own needs (to rent a trailer one way) and
figured others would want to do the same
– He started with small amounts of cash.
• Attitudes towards others: Shoen partnered with
suppliers, investors, customers
• Risk, return: Affordable loss—
– Shoen didn‘t start with a big investment. He
improvised as he went along.

41. INTERNATIONAL
EFFECTUATION

42. Going Global
• Lot of talk about ‗instant
international‘ and ‗born global‘
businesses
• Entrepreneurs do not follow
causal reasoning when
exploring international markets
• Despite limited experience
entrepreneurs are effectual at
internationalising

43. International Effectuation
• Evidence about entrepreneurs developing
international operations suggests:
– the entrepreneurs had a limited knowledge of
the international market,
– they did not know how to and did not prepare
an internationalisation plan
– the actions of entrepreneurs preceded the
collection of market information
• Internationalisation characterised by new
means, stakeholder commitment and new goals

44. SO WHAT?

45. Effectuation Successes
• These entrepreneurs are the
same as everyone else but
they are successful because
they are master effectuators
• These entrepreneurs simply
adopt a different approach to
problem solving – they
believed the future is shaped
by human action and they
shape it

46. The Effectuator
App

47. The Effectuator App
An iPhone app to get you to imagine more
entrepreneurial possibilities and make better
use of your means

48. Adding & Outlining Ideas
Add you Idea Describe the Idea
Rate your Mean Use your Networks

49. Effectuating Ideas
Effectuate your idea to maximise your means
and networks and develop the enterprise

50. Toolbox Content
• The ‘Toolbox’ contains some
additional background and
resources on effectuation
• Additional recommended
reading on effectuation
• General info about app
development team and
funder
• Standard terms of use
agreement