Effectual Reasoning: A Glimpse at What Makes an Entrepreneur Entrepreneurial

By: Brett A. Hoover [Follow me on Twitter and LinkedIn]

A scientist at heart, I am a sucker for a good academic article. I read one such article a few weeks ago. It explored the differences between Causal and Effectual thinking and their approaches to starting and growing a business.
Causal thinking is what MBA’s do (and are taught to do): begin with a pre-determined goal and a given set of means, then seek to identify the optimal alternative to achieving the given goal. Effectual thinking is what entrepreneurs do: given a set of means (abilities, knowledge, and network) it allows goals to emerge contingently over time from the varied imagination and diverse aspirations of the entrepreneur and the people they interact with. Think of it as the MBA conqueror (Alexander the Great) versus and entrepreneurial explorer (Amerigo Vespucci). The prose articulates not just how MBAs and Entrepreneurs are different, it also outlines when their schools of thought excel and when they tend to fail (and
why). As you can imagine, in the end, it’s best to be a bit of both.

In short:
1) MBAs plan, Entrepreneurs execute.
2) MBAs focus on the end, Entrepreneurs fixate on the means.
3) MBAs avoid surprises, Entrepreneurs embrace and utilize them.
4) MBAs try to control the future, Entrepreneurs seek to create it.
5) MBAs grow and sustain, Entrepreneurs innovate and start.

If you have the time, and don’t mind a little ‘academic’ reading, I highly recommend this article. Click the following link to open the .pdf file.

Effectuation: What Makes Entrepreneurs Entrepreneurial?

Slainte Mhath!