Inside the Mind of the Expert Entrepreneur: the Explorer’s View of Strategy

Abstract

Although firms tend to rely on business plans and objective oriented approaches to their future, this paper presents an alternative model of strategy: the explorer's view of strategy. Saras Sarasvathy, a researcher at University of Virginia, found that serial or expert entrepreneurs operate under a different mode of thinking, which she calls effectuation. This paper traces how effectuation has roots in military history. Then, it explains how Sarasvathy arrived at her findings. It then presents Sarasvathy's five findings. 1) Entrepreneurs primarily form their objectives based on the resources available to them. 2) They focus on what they could lose rather than what they could expect to gain. 3) They focus on partnerships rather than competitors. 4) They continually refine their product or services by dialoguing with their stakeholders. 5) They deviate from their originally conceived business objective. Following that is an analysis of when effectuation is better employed by a firm than the classical approach to strategy. Finally, it concludes with two concrete examples. One of them shows how a big firm can utilize effectuation, and the other demonstrates how a big firm can face drastic losses by using the classical approach to strategy in an unsuitable context.

Digital Technologies as External Enablers of New Venture Creation in the IT Hardware Sector

“…For individual start-ups, a range of factors, such as entrepreneurial experience and expertise (Cook & Yamamoto, 2011), team composition (Amason, Shrader, & Tompson, 2006), a high level of conscientiousness (Zhao, Seibert, & Lumpkin, 2010), individual differences in time preferences (Chapman, 2005), and/or the systematic use of business planning (Chwolka & Raith, 2012), might moderate or alter the tendencies discussed above. However, on the sector level, such individual differences should largely cancel out, leaving the main effects derived from ABV and the intertemporal choice literature to predominate.…”

Exploring the Creation of Organisation Strategy when Commercialising a New Technology

“…One of the less common uses of Sarasvathy's theory of effectuation (Sarasvathy, 2001a) is as a tool to examine the decision making processes within established organisations. Cook and Yamamoto, (2011) describe the use of effectuation based logic and propose that its use can be beneficial to larger organisations, in particular for strategic planning in uncertain markets.…”