The Misconception of ‘No Planning’ in Effectuation

The Misconception of ‘No Planning’ in Effectuation

A common misconception about the method of effectuation is that it means ‘no planning' which is not true at all. While effectuation does indeed deviate from conventional strategic planning, it does not imply an absence of planning. Instead, effectuators engage in a special kind of planning—one that is adaptable, flexible, and iterative (Sarasvathy, 2001).

 

Effectuation is the process of progressively improving the plan of action through experimentation and feedback. The ventures begin with limited resources and often vague objectives, but through a series of calculated steps and methods, effectuators develop their ventures based on the situations (Read et al., 2016). They do not wait for the perfect plan; rather, they start with what they have and who they are, building upon their means to forge new opportunities.

 

In the effectuation approach, action is given priority over extensive preparation. This does not mean that planning is entirely forgotten. On the contrary, planning in effectuation is akin to ‘planning as learning.’ It is a dynamic process that allows effectuators to make frequent revisions and enhancements to their plans in response to fresh feedback and past experiences (Sarasvathy, 2001, p. 252). This iterative process is important to adapting to the evolving landscape of entrepreneurship.

 

 

Effectuation requires a high level of planning, but this form of planning is more dynamic and adaptable to varying situations and conditions (Dew et al., 2016). As effectuators are required to adapt rapidly to the evolving situation and react accordingly, planning within this methodology becomes an iterative process.

Reference List:

Sarasvathy, S. D. (2001). Causation and effectuation: Toward a theoretical shift from economic inevitability to entrepreneurial contingency. Academy of Management Review, 26(2), 243-263.

Sarasvathy, S. D. (2008). Effectuation: Elements of entrepreneurial expertise. Edward Elgar Publishing.

Read, S., Sarasvathy, S. D., Dew, N., & Wiltbank, R. (2016). Effectual entrepreneurship (2nd ed.). Routledge.