MEANS WHO I AM WHAT I KNOW WHO I KNOW EFFECTUATION IN ACTION NEW FIRMS, NEW PRODUCTS OR NEW MARKETS NEW MEANS NEW GOALS EXPANDING CYCLE OF RESOURCES MEANS CONSTRAINTS CHANGES IN THE ENVIRONMENT CONVERGING CYCLE OF CONSTRAINTS ON GOAL GOALS WHAT CAN I DO? INTERACT WITH PEOPLE I KNOW STAKEHOLDER COMMITMENTS

Entrepreneurs Step 2 Push creatively to increase return Step 2 Try to reduce risk through insurance, etc. Step 1 Pick a comfortable level of risk Step 1 Pick a target return Risk Return High Low High Bankers Risk Return DIFFERENTIAL APPROACH TO RISK BETWEEN ENTREPRENEURS AND BANKERS

ELEMENTS THAT IMPACT ENTREPRENEURIAL VENTURE SUCCESS FIRM Economy Popularity of Space with Press Competition Vertical Industry Strategy Choice of Market Segment Channel(s) Definition of Customer Buyer Customer Pain: Aspirin or Vitamin? Relationships with Prospective Investors Existing Investors Location Popularity of Space with Investors Existing Customers Relationships with Prospective Customers Capital Directors Advisors Partnerships LeaderTeamCulture Technology Business Model Execution Position Less — Within the Firm's Control — More

FEASIBILITY VALUE MARKET PERSONAL Is it worth doing? Financial feasibility Can I do it? What will it take to do it? Whom else do I need? ASSESSING OPPORTUNITY “DOABILITY” Do I want to do it? What turns me on about it? Why do I want to do it? Exit strategies Is it doable? Technological feasibility Market feasibility Economic feasibility

Managerial Thinking (Causal) Distinguishing Characteristic Selecting between given means to achieve a pre-determined goal Entrepreneurial Thinking (Effectual) Distinguishing Characteristic Imagining a possible new end using a given set of means GIVEN MEANS GIVEN GOAL IMAGINED ENDS GIVEN MEANS M1M1 M2M2 M3M3 M4M4 M5M5 M1M1 M2M2 M3M3 M4M4 M5M5 CAUSAL vs. EFFECTUAL REASONING

CONTINGENCIES CHANGE YOUR MEANS WHICH GIVES YOU NEW MEANS TO LEVERAGE WHICH MAY GENERATE NOVEL OUTCOMES Information Events People What you know Who you are Who you know by asking yourself "Now what can I do with my revised means?" i.e. new venture directions THE CONTINGENCY PATH TO NOVEL OUTCOMES

Working with inputs outside your control Working with inputs within your control Outcomes assumed to be within your control Outcomes assumed to be outside your control Causal = Predicted Outcomes Effectual = Novel Outcomes WORKING WITH AND WITHOUT CONTROL Causal = Plan and make calculated bets Effectual = Be open to changing goals Causal = Need to chase resources Effectual = Self-selected stakeholders Low Impetus to ActCompelling Impetus to Act Inaction: Learned HelplessnessHigh Impetus to Act