Friday, February 04, 2011

Are you an Effectual or Causal Thinker?

A recent article in Inc. magazine called "How Great Entrepreneurs Think" revealed the findings of University of Virginia professor Saras Sarasvathy. She discovered that entrepreneurs relied on "effectual reasoning" whereas corporate executives relied on "causal reasoning."

Below is a breakdown of the 2 types:

Effectual Reasoning (Entrepreneur)
- Values improvising over planning
- Develops goals on the fly & then reacts creatively to problems
- Doesn't need to predict the future because contingency plans are the fun part
- Operates using "Ready, Fire, Aim"

Causal Reasoning (Corporate Executive)
- Values concrete goals and steps for achieving goals
- Takes the MBA approach
- Values quantitative analysis and market research
- Operates using "Ready, Aim, Aim, Aim"

In her study of successful entrepreneurs Professor Sarasvathy found that only 12% had done market research and 60% had not written a business plan before launching their companies. It seems that effectual thinkers feel that taking "aim" is a distraction that takes valuable time away from actually "doing" what needs to be done.

Having worked in a corporate environment for 15 years and earning an MBA I lean toward the causal approach because it was beat into me. To jazz up the sales of your business I believe you need a combination of effectual and causal thinkers. Each type will hold the other accountable for decisions they have made or need to make.

1 comment:

variable data printing said...

I think alot of it depends on what type of personality you are. For example if you have a type "c" personality, you like to be organized and have things layed out for you. Thus, you would be a casual thinker.