Effectuation: What makes people entrepreneurs?

"What makes some people entrepreneurial and others not?" asked researcher Saras D. Sarasvathy at the end of the 1990s. For a study, she spoke to entrepreneurs from a wide range of industries, all with over 15 years of experience and very successful companies. What she found contradicted the common myths: that you first need a clear goal. That success comes from precise planning. Goal → resource procurement → follow through.

These myths still characterize the image of entrepreneurship today and make it difficult for many in the media industry to identify with them. It comes across as cool, numbers-driven, strategic - as if economic activity is automatically the opposite of journalistic or creative work. Yet the picture is incomplete. Entrepreneurship doesn't just mean planning, but above all designing, reacting, entering into relationships - and often: improvising.

This is exactly what Sarasvathy's study showed. Many of the interviewees did not start with a goal, but with what they had at their disposal. They developed their projects step by step, along new opportunities, often together with others whom they were able to win over to their ideas. Sarasvathy derived five principles from her research, which together form an approach to action: Effectuation. She deliberately chose a vague term, derived from the English "to effectuate". Loosely translated, it means "to set something in motion", "to bring to effect" or "to act out of the possible".

In the journalistic, digital or social media context, many companies do not start with a clear business model, but with an idea, a passion, a tool, a team. In the beginning, it is often unclear what the product actually is, who it can work for and where the revenue will come from. This is not a shortcoming, but exactly what a start-up is in the true sense of the word: a company in search of a viable business model (Eric Ries). This search is experimental, fragmentary, iterative and requires a different kind of entrepreneurial thinking than traditional business management has to offer.

Those who work with hypotheses, prototypes and platform feedback cannot rely on complete planning. Much is created along the way - from assumptions, feedback and next steps.

In this context, the principles of effectuation seem like a description of practice:

Effectuation is therefore a part of economics that has so far received little attention in the creative industries, although it describes decision-making logics that have long been part of everyday working life, especially in the start-up scene: Proceeding with limited resources, step-by-step development, cooperation instead of control. In my opinion, the reason why this connection has hardly been successful so far has to do with an often little-reflected separation between the disciplines. This is partly based on traditional attributions, such as the idea that economic interests and creative integrity are fundamentally at odds with each other. This is reinforced by role models such as editor-in-chief versus commercial publishing management.

This is precisely where there is potential. On the one hand, for more openness towards flexible, iterative working methods on the business side. And for a connection to structural knowledge on the part of the creative teams. They have often been acting entrepreneurially for a long time, but without knowing what actually works and where there are methodical approaches for improvement. You don't have to start from scratch every time.

If you know us from POCKETS, you won't be surprised that I'm adding something here: For example, numbers are also part of effectuation. A good financial model helps to make assumptions and possibilities visible and discussable, enables mental test runs and considerations, and helps to keep developments in the business model verifiable even in hectic situations. It should be less of an architectural drawing than a scaffolding: provisional, changeable, but helpful to bring structure to ideas and to translate projects into a language that remains connectable beyond the editorial office, product or code - to fellow Crazy Quilt members, investors, juries or the community.

With effectuation, Sarasvathy has not only described a model, but also initiated a movement in economics. Studies show that effectuation is becoming increasingly important as a resilient strategy in unpredictable environments (VUCA, BANI).

Let us therefore not treat entrepreneurial action under uncertainty as a makeshift exception, but rather understand it as a relevant, sustainable competence. Combined with economic knowledge, this approach is neither improvised nor naïve - it is well-founded, comprehensible and can be developed further. Flying on sight, keeping an eye on the instruments. Not a stopgap, but state of the art.