Case Study Group: Based on FEP-KLTSA Business Challenge

 Case Study Group: Based on FEP-KLTSA Business Challenge

Mohammed Ashraf Hasanain(TP078045)

: The use of effectuation in companies 

 Decision making type known as effectuation can be useful not only for the start-up entrepreneurs, but also for the large and well-established companies. It was designed to help entrepreneurs find a direction in highly unsteady societies, stressing the use of the limited resources and volatile strategizing. Effectuation is actually very valuable to companies as it creates new ways of doing things on existing ideas, changing market trends within organizations, and promoting creativity in organizations.

In larger organizations, it is used in facilitating timely response to emerging threats and opportunities within the laid down structures. Companies must avoid focusing on the risks because there are numerous things out of one’s control yet can attack problems iteratively with existing strengths. The issue with this sort of planning is that it is different from more conventional ways of predicting planning for future organization needs based on the current market trends.

Furthermore, with effectuation there are partnerships and the leveraging of stakeholder relations which improves collaboration and the option of utilizing resources. This is especially true in cases where the company needs to adapt or diversify, for example in the development of new products or markets.

In conclusion, one must admit that effectuation as a concept stem from the field of entrepreneurship, however, it serves rather as a theoretical framework for companies. They found that when organizations embrace effectual thinking, businesses are apt to adapt, innovate and manage to perform well amidst low levels of predictability. (Zou,2020)

Mohammad Abdelrahman (TP073489)

 The main difference between implementation and other approaches to entrepreneurship: 

The fact that effectuation is applied to the same in different contexts makes the fundamental difference between effectuation and other approaches in entrepreneurship because it relies on flexibility and resources that are available in the environment. Automotive marketing can be defined as an older model of managing the company’s marketing strategies and operations that involves the estimation of conditions dominant in the future market to create long-term goals. As opposed to causation, effectuation is an approach that is concerned with what is possible given the situation at the entrepreneurs’ present moment and the available resources and contacts that they can harness.

While implementation begins with goals and expands on the various ways to achieve the set goals within a specific context, effectuation begins with resources or means and allows goals to emerge through trial and error and with reference to stakeholders. Over time, this method of forecasting is particularly applied when predicting future events is hard due to uncertainty and dynamism. It allows an entrepreneur to stay compact, set incremental accomplishments and shift with the emerging information and opportunities available.

Compared to P&L that focuses on detailed preparations with rigid implementation, effectuation indeed provides a common-sense and timely solution that helps the entrepreneurs to exploit rather than avoid the chaos efficiently. (Chen,2022)

Abdel Rahman Ashraf Hasanain(TP077708)

: The possibility of excluding the effective approach to the traditional approach

It is a significant point to note that the effectual logic and the cause (traditional) logic in entrepreneurship are complementary rather than competing. Mainly, there is the traditional approach – known also as causal reasoning – which implies the setting of particular objectives and systematic action, calculated to attain these goals by prediction and market study. This method is ideal with conditions expected to remain constant in the future as the formula depends on predicting trends in the future.

The effectual approach is more flexible and less rigid in comparison to the efficient one: firstly, it aims at utilizing the available resources and secondly, it implies exploiting existing relationships. Effectual reasoning also used in practice during which entrepreneurs work with what they have, and the goals evolve on the basis of new information or changes in context over time.

These two approaches may be different from each other, yet certain aspects of them can be combined. By continually applying causal logic in the micro-Environment, entrepreneurs can switch from causal to effectual logic when a new change is detected in the macro-Environment. Integrating both approaches can help the action to be more free-forming and can be more focused on its strong points depending on the situation and the phase of business development. It makes sense since this business strategy increases the strength and the prospects of acting in different conditions. (Nicolas,2021)

Adel Zeinab (TP078282)

? Does effectuation mean: “not planning”

Effectuation is a concept in the entrepreneurship literature and it didn’t imply that there was no planning but it implies a different mode of planning from that of the traditional one. Consequently, entrepreneurs commence from where they are and fashion opportunities through their control knolls that are resources, capability and relationships available to them in an emergent manner instead of constructing opportunities based on a vicarious, unmanageable future.

• Bird-in-hand Principle: Begin with what you have (control, input, or means) like abilities, information or assets.
• Affordable Loss Principle: Emphasize the element of calculated risk taking; avoid putting your ‘money where your mouth is’ for the sake of earning high returns, which you could otherwise lose.
• Lemonade Principle: Leveraging of opportunities where there is uncertainty, chaos and other challenges.
• Crazy Quilt Principle: They should form partnerships and collaborations with others to take advantage of the resources and strengths of the partner.

Thus, even though effectuation can be considered as the type of activity that implies not having the same amount of long-range planning as may be seen in rational usually, it does not mean that planning is not present here at all; it is simply more flexible and adaptable to the context and conditions of the growing entrepreneurship. (Dargham,2021)

Hana Okamura (TP074493)

Execution compatibility and null startup.

we established that Effectuation and Lean Startup are two of the number entrepreneurship theories

 which can work in certain condition, but which also have some disparities.

Effectuation in particular, emphasize the use of available resources, the search for partnerships and creating opportunities for goals, and the flexibility of goals due to available means. I'm not so much convinced that it is about minimizing uncertainty, but it is more about regulating what is around you using what you have.

On the other hand, Lean Startup strategy is adapted for faster and constant customer validation, failing fast, or changing directions when receiving valuable feedback from the market. It is a little more oriented towards generating and selecting hypotheses regarding the further development of an effective business model.

Altogether, it can be concluded that, although these approaches may seem quite divergent and even contradictory at first sight, they can indeed function in synergy. For instance, Effectuation could be employed to discover initial resources and partners and could be combined with the Lean Startup tools to match the business model with customer needs and wants through continuous testing and learning feedback. It could also be useful to combine factors from both approaches in a balanced way, which would create an adequate and holistic strategy in entrepreneurship. (Dahle,2020)

: References

Chen, H., & Xu, Q. (2022). Synergy of Effectuation and Causation: An Emotional Complexity Perspective. Frontiers in Psychology, 12. https://doi.org/10.3389/fpsyg.2021.732936

Dahle, Y., Nguyen-Duc, A., Steinert, M., & Reuther, K. (2020). Six Pillars of Modern Entrepreneurial Theory and How to Use Them. In Springer eBooks (pp. 3–25).

 https://doi.org/10.1007/978-3-030-35983-6_1

Dargham, A. (n.d.). Effectuation principles: a theory for entrepreneurs | DAA Capital Partners. https://www.daacap.com/effectuation-principles-a-theory-for-entrepreneurs/

Li, Y., Zou, B., Guo, F., & Guo, J. (2020). Academic entrepreneurs’ effectuation logic, role innovation, and academic entrepreneurship performance: an empirical study. International Entrepreneurship and Management Journal, 18(1), 49–72. https://doi.org/10.1007/s11365-020-00702-w

Nicolas. (n.d.). Effectuation: a logic of entrepreneurial expertise | Makers of Liberty.  https://makersofliberty.com/effectuation-a-logic-of-entrepreneurial-expertise/