Reaction Paper to the article "Causation and Effectuation: toward a theoretical shift ftom economic inevitability to entrepreneurial contingency" by Saras D. Sarasvathy

Reaction Paper to the article "Causation and Effectuation: toward a theoretical shift ftom economic inevitability to entrepreneurial contingency" by Saras D. Sarasvathy

The world has witnessed great life-changing inventions such as James Watts with steam engines or great marketing innovations like Steve Jobs with Apple.  Industries were born, companies were created and the question is what the impulse that leads to those firms was, how did those great inventors, innovators present their ideas to the word, and how did they turn them into business?

Saras D. Sarasvathy, a professor at the University of Washington, distinguish two opposite way of thinking that serve entrepreneurs in business creation: the model of effectuation and the model of causation. 

The existing model of causation relies on the definition of a specific goal and then the development of means to reach this goal (market analysis, marketing strategy development, etc.)

Effectuation model relies on pre-existing means (characteristics of the decision maker, contingencies, circumstances) and focus on the choice of a goal achievable with these means. 

                                                

Each model has advantages and drawbacks:

Causation requires time and efforts to implement a marketing strategy, while effectuation relies on the existing strengths of the entrepreneur and on the firsts customers to define a market, allowing business creation with limited resources. Effectuation is effective in situation of an unpredictable future, while causation relies on predictable aspect of the future. Finally, effectuation allows new market creation while causation relies on existing market and competitive strategies.

Lets look at an example:

Lockheed (now Lockheed Martin) is an American aeronautical company, famous for its work on jet fighter (P80, F104, F16) developed using a causation model, following an objective defined by the US government. However, some engineers from Lockheed wanted to extend the use of stealth technologies. 

They worked as a part of a skunk work, a special group inside lockheed with a high degree of autonomy and limited constraint from the hierarchy. Using the effectuation model, they reused the coating and shaping used on the F-117 stealth bomber and imagined the Sea Shadow, an experimental stealth ship with very unconventional features for a naval vessel. The Small-Waterplane-Area Twin Hull (SWATH) design allowed the ship to remain stable even in very rough sea and its stealth technology made it invisible to the Soviet RORS satellites. Its technologies were also applied to the submarines and navy destroyer.  

By focusing on existing mean and contingencies, engineer developed a successful new design and created a new use for their technology. In this case, effectuation has been a valid alternative to causation.