how do successful entrepreneurs discover and capture major new opportunities professor Sarah sarasvati interviewed serial entrepreneurs who'd founded multiple high-growth ventures to find out what they had in common a compelling picture emerged the notion of effectuation this recognizes that the entrepreneurial journey is more than just taking the most efficient path to an easily defined future it's a process of exploration and when you're exploring objectives change with new facts from the market and with new resources the best entrepreneurs balance decisions between the resources at hand and affordable losses sarasvati with Professor Stewart Reed and others captured effectual
entrepreneurship in a process diagram it uses two feedback loops to help develop your value proposition the loops allow you to test your value proposition on your customers and key partners and to course-correct your idea as you rerun the loop the clarity that this process provides can help you move from thinking about it to actually doing it a good start is to concentrate your meager resources and invest what you can afford to lose the center of the diagram shows the process of exploring the idea each stage helps to define the proposition further you who you are
and what you know what you can do your value proposition people you know represent your first potential customer segments very early feedback can end a poor idea but it can develop a good one begin to search for stakeholders further bolstering your network this track can lead you to acquiring greater means to pursue your idea your new insights and competencies develop your key partners key resources and key activities or it can result in a completely new set of goals reshaping or value proposition in the light of this learning the first loop is complete as we go
around the loop we talk to customers dump bad ideas grow stakeholders and iterate goals chelating this information works in two it refines your product and your knowledge of your customers a network growing through referrals and recommendations greatly increases the reach of a new venture building such a network can greatly help a new business reach wider markets through this activity you make your ideas real and ultimately a new firm a new product and even a new market is created that's the process of effectuation you
