Do you need an MBA in order to teach entrepreneurship? Do you need specific prior training to start up a business? Some successful entrepreneurs say that higher education may actually get in the way of creativity in the new project. They say that a smart entrepreneur can get a project off the ground without integrating the management models that are taught in business schools.
Others maintain that specific training is absolutely essential for achieving success, and the statistics seem to be on their side, pointing to lower failure rates of start-ups headed by managers with a formal business education. Now we know that both sides are right, each in their own way. Although an MBA is not necessary in order to start up a business, it is if you want to a company to be profitable and solvent in the long term.
’EFFECTUATION’ VERSUS CAUSATION
How do we train entrepreneurs? Professor Saras Sarasvathy, from the University of Virginia, discovered a behavioural pattern in successful entrepreneurs. She called this behaviour effectuation, as opposed to the traditional model of causation, which is successfully applied in company management. She found that although companies are governed by causation – they identify an objective, gather the necessary resources in order to achieve it and manage themselves to this end–, she also found that this pattern does not work in the initial phases of a project, because a start-up is not a company yet, and therefore it doesn’t necessarily have to follow the same pattern. She discovered that the entrepreneur makes the project and not vice versa.
Effectuation is made up of five principles and a processes design, along the lines of the lean start-up. The entrepreneurs start out with an awareness of their competencies and skills –in other words, the resources they have available– (P1 a bird in the hand) and concentrate on determining how much they can stand to lose (P2 assumable loss) and not the return on investment. They then establish how they will manage contingencies (P3 contingencies management), which are bound to occur, with a view to taking advantage of them instead of avoiding them. Next, they incorporate strategic allies (P4 co-creation) in order to minimise uncertainty and increase access to the market and (P5 pilot on control) they always maintain control over the project in such a way that (according to this model) it isn’t necessary to make future forecasts because the project is being built day by day, as it goes along.
This process accepts that objectives, resources and alliances are adjusted to the real state of affairs as the project develops, and in this way contact with the real market and adjustments are continuous. The start-up is not a company yet; it is a learning process. This model makes a very important contribution because it provides a methodological framework for designing practical learning processes that provide support leading to entrepreneurial success.
Originally published in La Vanguardia Monográficos Especiales: Marín Manuel. “’Efectuación’: el arte del emprendedor” La Vanguardia Monográficos Especiales, June 28th, 2016: 6.
ABOUT THE AUTHOR
Manuel Marín has an engineering degree from ETSII in Barcelona (UPC) and has completed the PADE course at IESE. He has collaborated with EADA since 2009 as an associate professor in the Strategy, Leadership and People Department and as Coordinator of the Entrepreneurship Center. An entrepreneur and publisher for 22 years, he has founded companies in this sector in Spain, Mexico, Puerto Rico, Colombia, Argentina and the U.K. Since 1990, he has been an independent consultant, a mentor of various projects in the start-up phase and a Senior Consultant in the technology consultancy QUANTION as well as in AECOM INTERNATIONAL DEVELOPMENT EUROPE, where he managed the Projects Execution Division until 2008.