Innovators Are Effectual Thinkers

Innovation is less about causal thinking than it is about effectual thinking.

I confess I didn’t know “effectual” was a word until I was recently directed to the ground breaking research of Dr. Saras Sarasvathy, a professor at the University of Virginia’s Darden School of Business. She interviewed 45 successful entrepreneurs. (Or, more accurately, asked them to think out loud about how they would handle a hypothetical business start-up.) From that, she was able to identify some common patterns and strategies that are different from those of other types of business executives.

She and a co-researcher found that successful corporate executives devote considerable time and resources to making future predictions, which they use to guide their decisions. They tend to set very specific goals and then determine how to achieve them (causal thinking). Veteran entrepreneurs are more focused on their personal strengths and what resources they have, and build out from there. Instead of creating concrete goals, they improvise their way toward a shifting array of objectives. Their decisions are based as much on where they start as on where they want to end up.

Instead of responding to a future they envision, these entrepreneurs set out to create a future they believe is feasible given what they have to work with and the effects of the actions they take (effectual thinking).

The differences that Sarasvathy has identified between these two mindsets helps to explain why innovators so often feel out of place in a corporate environment.

I’ve written before about the need for what I call outcome-based thinking and the crucial importance of flexible objectives in the innovation process. I’ve also argued that entrepreneurs are in many respects the ultimate innovators. While Sarasvathy’s research and the growing body of work that has grown up in its wake focuses on entrepreneurs, I think all innovators can identify with and learn from it.

Some of the key findings that carry over:

1)      Start where you are and figure out how to leverage the resources available to you.

2)      Figure out what’s doable with the least risk and build on it.

3)      Look for collaborators and potential alliances.

4)      Identify customers first and worry about competitors later.

5)      Instead of trying to control the future, create it.

Perhaps the most important difference she identified between entrepreneurs and corporate executives is that corporate executives strive to manage the future by predicting it. Whereas, entrepreneurs believe that if they can direct the future, they don’t need to be able to predict it. That may be the essence of an innovator mindset.

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