MCQ
James MadPlease check the Instruction for MCQ doc then go read Effectuation to BMI article.
3 years ago
5
files (2)InstructionsforMCQ.pdf
2013.10UseEffectuationtoBMI.pdf
InstructionsforMCQ.pdf
Article: Effectuation to BMI
Please craft a questions that is derived from the overall idea of each article
● This assignment requires you to submit a singleMCQwith 5 possible answers.
● MCQ should be novel, useful, non-obvious + high-impact + application + evergreen + you featured themost important topic of theweek's reading
● Attach source (the name of the article) + page # ● Put an Asterix (*) next to the correct answer ● Avoid single-worded and contestable possible answers
● Mimic the idea of this strongMCQs!
● Example of strongMCQ:
Wisdom of Crowds:Which of the following does NOT characterize wise crowds?
*a) Intelligence: A crowdmade of particularly smart individuals.
b) Diversity: Each person has private information and opinions.
c) Independence: People's opinions aren't determined by the opinions of those
around them.
d) Decentralization: People are able to specialize and draw on local knowledge.
e) Aggregation: Amechanism exists for turning private judgments into a collective
decision.
Source:Wisdom of Crowds; Chapter #; Page #...
2013.10UseEffectuationtoBMI.pdf
How do they do that?
Are there any universal methods or principles
they use?
What is effectuation?
Entrepreneurs constantly make decisions and take action.
The result? Effectuation
effectuation IS effectuation IS NOT
*research experiment
subjects
27 Expert Entrepreneurs
{founders of companies
from $200M to $6.5B}
method
Protocol Analysis
{80 hours of tape, 500
pages of data}
theory
Effectuation: Elements of
Entrepreneurial Expertise,
2005
DEFINITION
A logic of thinking that uniquely serves entrepreneurs in starting businesses
Provides a way to control a future that is inherently unpredictable
EFFECTUAL LOGIC IS LIKE 1ST & 2ND GEAR
A thinking framework
a set of heuristics
doing the do-able
how to get the sellable products and
services established
a system to tell you what to do
an algorithm
“not planning”
a way to launch an entire business
WHAT DOES EFFECTUATION DO?
Ideas - Effectuation advances ideas toward
sellable products and services with proven
customers.
Stakeholder Commitments - Using
effectuation, the entrepreneur interacts in
search of self-selecting partners to co-create
the venture with.
Decisions - Experts entrepreneurs use a set
of techniques that serve as the foundation for
making decisions about what to do next.
the expert entrepreneur
develop specialized mental framework
You need them to start your business but eventually you shift away from effectual logic.
To answer these questions, Dr. Saras Sarasvathy, a cognitive scientist, conducted a study* of expert entrepreneurs.
This document is intended to be introduced in an educational workshop as one of several supporting materials. Version 0.9. Copyright © 2011 The Rector and Visitors of the University of Virginia
Expert entrepreneurs have learned the hard way that the most in-
teresting ventures are built in a space in which the future is not only
unknown, but unknowable. Still yet, entrepreneurs do shape this
unpredictable future. They use techniques which minimize the use
of prediction and allows them to shape the future. These five prin-
ciples, listed below, make up effectual logic.
Pilot-in-the-plane { control v. predict}
By focusing on activities within their control, expert entrepre-
neurs know their actions will result in the desired outcomes.
An effectual worldview is rooted in the belief that the future is
neither found nor predicted, but rather made.
Bird-in-hand {start with your means}
When expert entrepreneurs set out to build a new venture,
they start with their means: who I am, what I know, and
whom I know. Then, the entrepreneurs imagine possibilities
that originate from their means.
Affordable Loss {focus on the downside risk }
Expert entrepreneurs limit risk by understanding what they
can afford to lose at each step, instead of seeking large all-or-
nothing opportunities. They choose goals and actions where
there is upside even if the downside ends up happening.
Patchwork Quilt {form partnerships }
Expert entrepreneurs build partnerships with self-selecting
stakeholders. By obtaining pre-commitments from these key
partners early on in the venture, experts reduce uncertainty
and co-create the new market with its interested participants.
Lemonade { leverage contingencies }
Expert entrepreneurs invite the surprise factor. Instead of
making “what-if” scenarios to deal with worst-case scenarios,
experts interpret “bad” news and surprises as potential clues
to create new markets.
contrasts with...
contrasts with...
contrasts with...
contrasts with...
contrasts with...
Inevitable trends
Causal reasoning accepts that established
market forces will cause the future unfold.
Pre-set goals or opportunities
Causal reasoning works inversely by
assembling means after a goal is set.
Expected return
Causal reasoning first targets a return,
then works to minimize associated risk.
Competitive analysis
Causal reasoning presumes that competi-
tors are rivals to contend with.
Avoiding surprises
Causal reasoning works to minimize the
probability of unexpected outcomes.
Principles of Effectuation
This document is intended to be introduced in an educational workshop as one of several supporting materials. Version 0.9. Copyright © 2011 The Rector and Visitors of the University of Virginia
COMMITMENTSINTERACTIONS
GOALS NEW
NEW MEANS
MEANS GOALS
LEVERAGE SURPRISE
PRODUCTS, MARKETS, AND FIRMS
NEW
AFFORDABLE LOSS
New commitments help crystallize the goals.
Surprises add to means and change goals.
The Effectual Cycle
Overview of Effectuation in Action *heuristic vs. algorithm
An algorithm is a step-by-step proce-
dure with a finite number of steps that
seeks a specific outcome. It’s recursive.
A heuristic is a problem-solving tech-
nique that involves creating a speculative
formulation and self-led investigation to
reach some desired outcome. The most
quintessential heuristic is “trial and error.”
The cycle always starts here
Putting it all together...
Effectual logic happens in mind of an individual, where it provides a way of
thinking about making decisions when non-predictive control is required.
The effectual cycle represents the thinking process in a form used in creat-
ing products, markets, and ventures. It’s not a prescriptive “do this, do that”
algorithm, but rather a set of heuristics* that uniquely and universally apply to
the challenges that entrepreneurs are bound to face.
Next, interact with people to gather stakeholder commitments
who am I what I know
whom I know what can I do?
The individual begins with an inventory of his/her means, from
which s/he imagines goals. The goals s/he chooses to pursue
are within his/her affordable loss. Goal construction and goal
achievement are different sides to the same coin.
Next, interactions drive the process of enlisting others to
join in co-creating the new venture. Committed stake-
holders will influence the entrepreneur by morphing and
appending the original idea into one that a whole network
of stakeholders are committed to. The cycle continues as the effectual entrepreneur grows closer and
closer to a defined, sellable product(s), complete with committed
customers and stakeholders comprising the new market.
MEANS GOALS
INTERACTIONS COMMITMENTS
interact with other
people
gather stakeholder
commitments
New means add to the resources.
This document is intended to be introduced in an educational workshop as one of several supporting materials. Version 0.9. Copyright © 2011 The Rector and Visitors of the University of Virginia
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