Current in Entrepreneurship Blog

It's hard to make decisions in an uncertain world. But according to UVA Darden School of Business Professor Saras Sarasvathy, a pioneer in entrepreneurial thought at the University of Virginia, we can learn from expert entrepreneurs on how to move forward and build the future we want.

In the latest episode of the Hidden Brain podcast, "Innovation 2.0: How Big Ideas Are Born," Sarasvathy shares the five habits of expert entrepreneurs she discovered through studying their thought processes and decision-making during the initial stages of launching new ventures. These habits are the foundation of her groundbreaking concept, effectuation.

Effectuation: A New Approach to Entrepreneurship

Professor Sarasvathy, a rockstar at the Darden School of Business, upends the traditional view of entrepreneurship that relies on prediction. Her theory, effectuation, focuses on "non-predictive control."

“Effectual thinking,” says Sarasvathy, “is a way to minimize reliance on predictive information while making decisions under great uncertainty. You achieve this by constantly dividing the world into things within your control and things outside your control. You strategically ignore the uncontrollable and leverage what's in your control to shape and co-create the future. This approach results in the creation of entirely new realities."

The Five Habits of Effectuation

One habit of expert entrepreneurs is the Bird in Hand Principle. Think of the founders of Airbnb, who started with a spare bedroom and an air mattress, or the inventors of Post-It Notes, who transformed a not-so-sticky glue into a highly profitable product line for 3M. These examples demonstrate that you don't need a grand idea to begin. Instead, you can start with resources already within your control – your bird in hand.

Whether you're a budding or seasoned entrepreneur, a manager, or simply someone looking to navigate the increasing uncertainty of the world, tune into the April 29th episode of the Hidden Brain podcast to learn more about the five habits of expert entrepreneurs: The Bird in Hand, the Affordable Loss, the Lemonade, the Crazy Quilt, and the Pilot in the Plane Principle.