Saras Sarasvathy, a University of Virginia professor, is generating buzz with her research on the entrepreneurial mind. Her work looks at the thought processes of highly successful entrepreneurs to see what distinguishes them from the rest of us.
Sarasvathy studied a group of 45 highly successful entrepreneurs, whose companies each boasted revenue upwards of $200 million. To analyse their entrepreneurial methods, Sarasvathy presented each subject with a business case study involving a potential product. The entrepreneurs answered questions about how they would start up the venture, and Sarasvathy recorded and studied their answers.
Among her findings? Highly successful entrepreneurs demonstrate thinking that shies away from excessive planning or trying to predict the future. They approach problems by improvising, and aren't bound by a specific goal but instead adapt to situations to create new objectives.
In short, they employ a type of reasoning that Sarasvathy calls effectual reasoning. Put simply, this means that they look at the set of means they have to work with, and from it create goals that are adaptable.
Corporate executives in management roles, on the other hand, are better at figuring out which of their given means will help them reach a goal they have already determined. This, she says, employs causal reasoning.
Inc. explains Sarasvathy's take on it like this: Entrepreneurs are "Iron Chefs: at their best when presented with an assortment of motley ingredients and challenged to whip up whatever dish expediency and imagination suggest." Corporate leaders "decide they are going to make Swedish meatballs. They then proceed to shop, measure, mix, and cook Swedish meatballs in the most efficient, cost-effective manner possible."
The good news? Sarasvathy believes that just as anyone can learn the scientific method, anyone can learn to think like an entrepreneur. She notes that people who grew up around a family business are more likely to reason effectually, while those who grew up around MBA grads typically reason causally. (I grew up in a household with a parent who was both an entrepreneur and had an MBA, so I'm not sure exactly where I fit in there.) Entrepreneurial reasoning isn't exclusive to born risk-takers or those with wealth or business connections. It can be developed.
Obviously just thinking the part isn't enough to make you the next Ford or Carnegie, but it might get you moving in the right direction.
To learn more about effectual reasoning, check out effectuation.org and this interview with Saras Sarasvathy.
By Jane Long as published in Brass a publication in partnership with Peoples State Bank.
