Decision Making — Causal vs Effectual
In this blog, we will gain an appreciation of the core differences between what is called as Causal Logic and Effectual Logic.
The Effectual Worldview: Expert Entrepreneurs believe that the future is shaped by people. They believe that if they can make the future happen, they don’t need to worry about predicting the future, determining the perfect timing to start, or finding the optimal opportunity. Sarasvathy calls this “effectual logic” which sits opposed to “causal logic” taught to managers in more certain (or predictable) circumstances.
Effectuation vs. Causation
Aspiring entrepreneurs in MBA classrooms have long been taught the principles and tools of causal reasoning — the exact inverse of effectual reasoning that drives entrepreneurial success. Using causal reasoning, one begins with a specific goal and a given set of means for reaching it. Using effectual reasoning, one starts with only a set of means; in the process deploying them, goals gradually emerge.