Effectual Reasoning – A piece of Wisdom for both Startups and Life

As we all know, lately there is a lot of hype – “fuzz an buzz” – related to the subject of entrepreneurship. Damn, nowadays it seems like everybody is working with or starting their own startups. Me being a notorious Devil’s advocate and a supporter of long-term thinking, have a somewhat of a critical standpoint toward this phonomenon of just striking gold and doing it fast. In my opinion, beautiful visions and mision are worth far more than their weight in gold.

The other day I was discussing with a very inspiring professor of Entrepreneurship. To challenge him and this academical subject, I decided to ask the professor for the most intresting and appealing idea wihtin his field that he have come accross. My expectations was to yet again to see emperor’s new clothes. Though as it turned out, I couldn’t have been more wrong.

So what did the professor give me? It was a paper on the philosophy of “Effectual reasoning”.

What is Effectual Reasoning?

Effectual vs. Causal Thinking

As the word “effectual” is inverse of “causal” and originates from the science of entrepreneurship. Causal rationality, or predictive reasoning, “begins with a pre-determined goal and a given set of means, and seeks to identify the optimal – fastest, cheapest, most efficient, etc. – alternative to achieve the given goal” and is often applied in strategic thinking (Sarasvathy, 2001). Thus the underlying logic is that the future is both predictable and controllable.

Causal thinkers are like great generals seeking to conquer fertile lands (Genghis Khan conquering two thirds of the known world)

 

However, effectual reasoning differs in the sense that it does not begin with a specific goal and that the future is unpredictable, but controllable and still to be made (Sarasvathy, 2001). According to Sarasvathy (2001) effectual reasoning begins with a given set of means and allows goals to emerge contingently over time from the varied imagination and diverse aspirations of the founders and the people they interact with”. Thereby effectual reasoning adjusts and adapts goals according to the surrounding contingencies and unfolding unexpected events.

“Effectual thinkers are like explorers setting out on voyages into uncharted waters (Columbus discovering the new world)”

It is clear that effectual reasoning is “inherently creative” philosophical approach that breaths execution and thus demands something more beyond the regular and domains specific skills and abilities, such as imagination; spontaneity, risk-taking and salesmanship (Sarasvathy, 2001). These features can be compiled into five conceptual principles.

The Five priciples of Effectual Reasoning

The first principle goes by the name “bird-in-hand” and refers to the process where the individual inspect their own means. In general, the means are divided into three categories that involves the audit of: “who they are” – their abilities and traits; “what they know” – experiences and knowledge; and, “whom they know” – social and professional networks (Effectuation, 2011; Sarasvathy, 2001).

The second principle is “affordable loss” which essentially is an evaluation of the potential downside risk for the overall project, if the worst case scenario would occur (Effectuation, 2011). The idea with the affordable loss principle is that it pre-established. That is how much resources is allowed and affordable to lose for a given project. If the pre-determined limit is reached, then the project is automatically rejected.

The third principle is called “lemonade” and revolves around the element of surprise (Effectuation, 2011). This means that contingencies and surprises are the norm for all projects and therefore ought to be welcomed and leveraged, instead of perceived as a misfortune.

The fourth principle is named “patchwork quilt” principle and is about building and establishing strategic partnerships (Effectuation, 2011). Thus, this principle encompasses trust and how to leverage this through collaboration.

The final principle is “pilot-in-the-plane” and is the combination of the previous four principles into an entity that forms “the belief that the future is neither found nor predicted, but rather made” (Effectuation, 2011). In a nutshell, the effectuation as philosophy is about iterating and leveraging competences and means in the most effective and adaptive way.

Thus, the priciples can be summarised in the following picture:

FivePriciples

Serendipities – The Core of Effectual Reasoning

The element of surprise is generally perceived as an undesirable and avoided state for any human-being and situation. This Despite the overlooked and powerful opportunities that serendipities potentially can provide with. A serendipity is defined by oxford dictionary as “the occurrence and development of events by chance in a happy or beneficial way”. In other words, serendipities is an actual word for unpredictable occurances and situations that provide with the most insightful knowledge, wisdom, and happiness for us all. Thus, serendipities are the core of effectual reasoning. (To read more about it, check this blog post).

Serendipities are the occurrence and development of events by chance in a happy or beneficial way”.

On that note, embrace surprises and unpredictive event. These might be the things/opportunities you are actually looking for. And apply the philosophy of effectual reason to make and form your future. Do it. Do it now.

/Drill

 

References:

Effectuation, 2011. Principles of Effectuation. [Online] Available at: http://www.effectuation.org

Sarasvathy, S.D., 2001. What makes entrepreneurs entrepreneurial?.

 

Time Mangement –  A Misunderstood Art

Running-Sand-Through-Hour-Glass

The general trend in wester civilization and society for the past 200 years is to constantly become more productive. In other words, get more things done in the same amount of time (or same amount of work in less time). This idealization or worship has lead to a vicious circle of increasing stress and loading that often appear unmanageable.

Nothing new. We all know this.

In this blogg post I will introduce the best practices that i have come accross in the aspect of time management. The main reason why I consider this as a such an important topic is not to enable you to do more things, but to have more time for what really is important: to spend time with our loved ones. 


Procastination – The Thief of Time 

I am a procastinator. I said it and I am now officially out of the closet. For you who do not know what a procastinator is, I have listed an inofficial definition below:

“A procrastinator is a person who delays or puts things off — like work, chores, or other actions — that should be done in a timely manner. A procrastinator is likely to leave all the Christmas shopping until December 24th. Procrastinator comes from the Latin verb procrastinare, which means deferred until tomorrow.”

Thus a procrastinator can be summarized into the following picture:

Many procrastinations have the tendency of exploring the “weird” and fascinating world of YouTube. I was no exception. During one of mine adventures in the YouTube-world, of course a day before an important project dead-line (student syndrome), I found a video lecture held by Randy Pausch under the title: Time Management. Little did I know that this seemingly harmless “procrastination-webb-click” would result in a suicide for my inner procrastinating-self.


Randy Pausch – The Guru of Time Management

Randy is by far one of the most inspiring human-beings I know. At first glance Randy appears as geeky engineer with great sense of humor. However, what makes Randy so extraordinary is because he is a man of his word. Literally. Randy has only months left to live as a result of a severe cancer. Despite this devastating reality, he is holding lectures and doing his work. Why? Why on earth is he not spending his last amount of time with his family instead? Well, according to him this is possible because he manages his time so well.

So what are the methods and practices that Randy Pausch uses? Here is a few:

  1. Always plan – The most important thing about time management is planning. Without one you will fail every single time. Randy said it so well with “not having a plan is planning to fail”.

    “Not having a plan is planning to fail”

  2. Covey’s Quadrant – This framework is all about priotising the things you need to do (see figure below). This framework super useful and has helped me alot! The idea is that the matrix have rows of: “important” and “not important”. While the columns have: “due soon” and “not due soon”. By putting all the things you will do in this framework, you will see what is the thing you need to work on right now and what is redundant. 2717821786_29c33f7c87
  3. Empty email inbox – When was the last time you had an empty inbox? If your answer is ” I don’t remeber” Oh boy you have a long way to go. In the end of the day always have an empty inbox, learn how to put your email into folders. NOTE your email should never be your todo – list!
  4. One drawer policy – Buy a box where you put all your important papers ALWAYS. This will save you a lot of headaches and time.
  5. Multiple desktop screens – Once you have them you will never give up them.
  6. Keep a time diary – Keep a diary on how you spend your every quater of your day. By doing this you get hard data on how you really spend your time.
  7. Pacts are golden – When somebody asks for your time, always make a pact. For example, if your friend asks your help in moving stuff, say that you will come if he can get 3 more guys to help. Another classic is that you give them only 3 hours, no less or no more.
  8. Eat the ugliest frog first – Do the most burdensome task first thing in the morning. So simple, but it will make you so much more productive.
  9. Limits and Deadlines – The people that have limited time always get so much more done. A great example of this is students who have families, their time is limited and they adapt according to it. Therefore, always use deadlines! They are a means to an end to make you achieve more with less.

Here is the transcript of Randy’s presentation.


The Power of Habits

procrastination is a habit and habits are powerful. Professor Barbra Oakley (creator of the most viewed MOOC on Coursera – Learning about Learning) acknowledges this fact and has observed the process of making and establishing habits. According to her the use of pomodoro technique is an effective way to develop a productive or “good” habit. The name pomodoro origins from italian word for “tomato”, though the actual technique has very little to do with the fruit (recently I learned that tomato is not a vegetable!). Instead it uses a timer. The fundamental idea is that you set the timer for e.g. 15 – 25 min and start to work on your given project. When the time is up, you take a 5 min break before repeating this cycle. After 4 cycles take a longer break of 30 min and then start the procedure all over again. It is simple, but super effective! There are many pomodoro applications available, I myself uses one on my mobile.
It is worth mentioning that this method focuses more on learning new things. Thus I will make a more extensive post later on this specific subject. 

The Illusion of  Time Management

There is a clear misconception regarding time management that the concept is resulting in more time. This is both wrong and naive. As Laura Vanderkam put it in her TED talk: “everybody got 24 hours (or 168 hours a week), no more or less“. This means that cultural and pop icons such as Beethoven and Roger Federer are in the same position as you – we have the same 24 hours a day. So what does time management provide us with then? Simply put, it allows to make more of what we already have, but does not increase our original resource – the time. However, istead she points out that time is highly elastic. What this means is that if we truly must and need to do thing, we somehow find the time to do so. For example, stressful people who seem to have no extra time availabe, will arrange it, if it’s truly urgent. A very intresting view of things. Laura Vanderkam gives us also some good news: we have more than enough time. It is a mere illusion that we don’t have it.

“Time is highly elastic.”

Essentially this elastic nature of time comes from the fundamental priciple of all time management:

“I don’t have time” = It’s not a priority

So when somebody next time tells you that she don’t have time, then in other words you are not that person’s priority. It is the harsh and raw truth. No need to cry over that. Intrestingly, people alos make time literally elastic. A study conducted shows that people often exaggerate their amount working hours by about 5 to 10 percent.

Not surprising.

But what really is surprising is that people who states that they work over 70 hours had it wrong by 25 hours. Same with those who stated they work 65–74 hours were off by close to 20 hours. Likewise, those who stated 55–64 hours were still about 10 hours north of the truth. You get the trend.

Therefore when working with time management, there are many illusion and biases that distort our understanding of the reality. Hence, to truly improve our use of time, we must become 110% objective and true to ourselves. Break the illusion!


Efficient vs. Effective

Mårten Mickos is the author of the great blog – School of Herring. In one of his posts he defines the distinction between efficient and effective. At first glance both concepts appear the same, so what is the difference then? Stunningly it is like day and night.

Efficient can be compared with the physics metric of effect, which is defined as the amount of work done over time. Essentially this means that the more efficient one are the more work you do. Effective on the other hand focuses more on doing the right things.

Metaphorically speaking, this could be compared with a wall and a wrecking ball. The job is to break the wall over 1 day. If one were efficient one would use 100 random swings to break the wall. If one were instead effective, then she would use say seven correctly focused swings to break the very same wall. However, the downside with the latter alternative is that it probably will require some time-consuming calculations. The point is there is two ways of doing the work within the given timeframe. The quote below is another illustration of this idea:

“Give me six hours to chop down a tree and I will spend the first four sharpening the axe.”

―Abraham Lincoln

Regardless the point is clear. There is a huge difference between efficient and effective.


Slow is the New Fast

I believe that doing things effectively is the ultimate core of time management, not doing things efficiently. The reason for me to say this is that the outcome of a good time management may result in higher efficiency (being efficient), but it is certainly not generating/leveraging the same value opportunities as being effective. Seth Godin makes a similar interesting distinction between the concepts of “long work” (efficient) and “hard work” (effective) which I find very compelling and close to the truth of what great time management actually is.

“I choose a lazy person to do a hard job. Because a lazy person will find an easy way to do it.”

―Bill Gates

Being effective means sometimes to be slow (or appear lazy as Bill Gates put it) and taking small baby steps before you can make a run. This means that temporaily you may be frusrated at the pace of progress, but in the long run it will pay-off. Big time. Bill Gatesunderstood the importance of being effective and it payed him off. Also doing things “slower” than other gives you new insights that other efficient people may oversee or miss. For instance, it can be something concrete like a simple and beautiful solution, or it can take form in new valuable intangible assets.

“What new intangible assets?” you may ask. Let me tell a true story that I came across the other day. It is about a NBA basketball player called Isaiah Thomas. He is currently one of the greatest in the game, however the road to greatness has not come easily. Hard facts speak for themselves, Isaiah Tomas is 5ft 9 in (1.75 m) in professional league where the average player is listed at 6 ft 7 in (2.01 m). This obvious and clear disadvantage made Thomas always underrated as a player. But made him more dedicated and more effective when developing his game. As a result, he “slowly” developed new intangible talents, such his outstanding cool mentality, which makes him into the winner he is today. Thus, although he may physically have the smallest heart in the league, he clearly proves that his heart is greater than anyone else’s on the basketball court.

Slow is the new Fast. Period.


Rome wasn’t Built in a Day

Rome wasn’t buil in a day. This is especially true for huge project, such as Sagrada Família. Despite this I am convinced that almost all building project take to much time and consume to much financial resources. Is this true for all bulding projects?

No.

Randy Pausch had gave an amazing example. The whole original Disneyland park was built in just 366 days. Amazing. How did they do it? This was Walt Disney’s blunt reply:

“We used every one of them.”

Walt Disney

This is being effective in a nutshell. Not that one can utilize ones man-power to the fullest extent, but to put all the different multi-dimensional resources to its best use. This involves having the perfect preparation and strategical plan (remeber, slow is the new fast) and to prefectly execute it. Therefore the conclusion is that being effective is a multi-dimensional process, while efficient is a one-dimensonal view.

My advice is to widen that view of yours! Become more effective rather than efficient! Remeber that efficient people are often too obsessed with the one-dimensional perspective and therefore have a tendency to drown in work and become burnout. Being effective is the key to a successful time management take is slower in order to become faster. While being efficient isn’t a bad thing, I share a word of caution: Rome wasn’t built in a day, but it sure burnt down in one.

nero-rome


Time is the only luxury we do not have

Finally, the key take from this post is that time is a precious commodity, which we need to defend with all our might and power. After all “we might have less of it than we think”.

Rest in peace Randy Pausch (1960-2008)

/Drill