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Effectuation

A framework of approach and thinking developed through scientific research and used by experienced entrepreneurs to build successful businesses across industries, geographies and times.

Dr Saras Sarasvathy’s Theory of Effectuation describes an approach to decision-making and taking action in business processes where you determine your best possible next step by assessing the resources available to achieve your goals, while constantly balancing those goals with your resources and actions.

Effectual reasoning differs from causal reasoning, where there is a predetermined goal and the process to achieve it is carefully planned according to a given set of resources. Sarasvathy argues that causal reasoning is not appropriate for business processes that are inherently characterized by uncertainty and risk.