Hi, Effectuation and Lean startup seem to question the traditional way of entrepreneurial thinking. These methods advocate learning from the customer experience directly, rather than conducting a market survey and launching the new product/service.
Is there any difference between these methods?
The basic relationship between the two is as follows: effectuation is a mindset by which individuals and organizations can approach the lean launch / startup process, with the shared core objective being to create, test, and evaluate opportunities and business models as quickly and inexpensively as possible. The essential elements of LETA are:
(1) Creating (vs. discovering) opportunities, (2) Engaging committed stakeholders in shaping, testing, and validating opportunities and business models to exploit them, and (3) Integrating affordable loss calculations to best leverage your resources in that process.
The basic relationship between the two is as follows: effectuation is a mindset by which individuals and organizations can approach the lean launch / startup process, with the shared core objective being to create, test, and evaluate opportunities and business models as quickly and inexpensively as possible. The essential elements of LETA are:
(1) Creating (vs. discovering) opportunities, (2) Engaging committed stakeholders in shaping, testing, and validating opportunities and business models to exploit them, and (3) Integrating affordable loss calculations to best leverage your resources in that process.
Whereas effectuation calls for entrepreneurs to manage uncertainty by taking action to create the future, in the lean startup methodology, entrepreneurs discover the future through testing carefully designed hypotheses.
I agree with Smaeil Alaghemand , effectuation is more like a mind-set and Lean Start-up method more like hypothesis-driven set of entrepreneurial questions. My opinion is that we can call the Lean Start-up method a practical use of effectuation mindset in this case.
An interesting point of view is given by Eisenmann et al. (2018) in Hypothesis-Driven Entrepreneurship: The Lean Startup - Some experienced entrepreneurs might regard the lean startup approach as “old wine in a new bottle.” Indeed, the core concept behind hypothesis-driven entrepreneurship—test then invest—has been practiced in well-run new ventures for decades. Likewise, product development professionals have long recognized the value of small batches and rapid prototyping.
I agree with Ca Dr. Gaurav Bhambri . I wonder if Effectuation is the right attitude for an entrepreneur though. It is true that many times you need to live with the resources you have at hand, but shouldn't entrepreneurship be the competence to discover/create a business opportunity and be able to gather the resources you need, whatever and wherever they are? Doesn't Effectuation lead to micro SMEs instead?
Dear Dr Avinash Shivdas . See the following useful link: https://journal.sbm.itb.ac.id/index.php/ProceedingSBMITB/article/download/3498/1379
Kindly see also the following useful link: http://publications.hevs.ch/index.php/attachments/single/785
Also check please the following very good RG link: Article Comparing effectuation to discovery-driven planning, prescri...
Dear Mr Wazwaz
Thank you for sharing
Though there is a detailed description in this paper. The difference is not very clear in this paper.
Thank you all for the responses. I wish to add to the answers by adding a video from Stanford : https://www.youtube.com/watch?v=6s7hDxVGfFk&list=PLEicUtB6DIRrr7dY40QHRPM1C6iulI16t&index=2
A lean startup is a method and a way to achieve business Effectuation.
The traditional effective methods, with market research, long processes of production of products or services, while lean startup is a simpler method that starts from the idea, prototype construction, validate it with the client according to their needs with constant innovation, and learn and launch the safest product or service on the market.
I think it is a safer methodology for the entrepreneur, because it works based on the unsatisfied needs of the client, in an uncertain market, validating itself, and gaining experience for the launch of the product or service.
Effectuation calls for entrepreneurs to manage uncertainty by taking action to create the future, but in the lean startup methodology, entrepreneurs discover the new products for the existing company.
Implementation is a process of long study, while lean startup is a process of practical study and experiences with evidence of less time and much more effective for working together with the client.
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