IMD Discovery Event Effectuation

1. IMD Discovery EventEffectuation Stuart Read November 25-26, 2010

2. Effectuation • Effectuation is a set of expert entrepreneur heuristics, learned in the uncertain setting of new venture creation • It manifests in 4 principles that invert what we teach in management • Bird-in-Hand Principle • Affordable Loss Principle • Crazy Quilt Principle • Lemonade Principle • One of the fundamental foundations of effectuation is co-creation • In that spirit, we will facilitate your teaching effectuation to each other • Team(s) devoted to each principle • Understand, develop this afternoon • Have a good dinner • Teach tomorrow morning

3. IMD Discovery EventEffectuation Stuart Read November 25-26, 2010

4. Group 1: Working with your Means to create a Starter(and teach the class about using your Means in uncertainty) • Effectuation principle number 1: Bird In Hand • Instead of trying to start acting in uncertainty with a given goal or a specific objective, work with the Means you have at hand to form the basis for decisions and new opportunities. Your means: • Who I am • What I know • Whom I know • Apply this principle to the uncertain context of cooking dinner • You have a variety of ingredients, equipment and people in the IMD kitchen that you should consider part of your Means • There is no given menu (no predefined goal) • What will you do?

5. Thursday Evening Constraints Safety Health Dinner starts at 7pm Must feed 60 people Friday Morning Presenting (thoughts on these questions): What did you find hard about starting with your Means? How did starting with your Means help you? Why do expert entrepreneurs start with their Means? What is one implication of starting with your Means for your organization? What is one implication of starting with your Means you personally? Be safe, work to extract insights about the Means principle, and have fun!

6. Group 2: Working with your Means to create a Main Course(and teach the class about using your Means in uncertainty) • Effectuation principle number 1: Bird In Hand • Instead of trying to start acting in uncertainty with a given goal or a specific objective, work with the Means you have at hand to form the basis for decisions and new opportunities. Your means: • Who I am • What I know • Whom I know • Apply this principle to the uncertain context of cooking dinner • You have a variety of ingredients, equipment and people in the IMD kitchen that you should consider part of your Means • There is no given menu (no predefined goal) • What will you do?

7. Thursday Evening Constraints Safety Health Dinner starts at 7pm Must feed 60 people Friday Morning Presenting (thoughts on these questions): How did starting with your Means help you? What did you find hard about starting with your Means? Why do expert entrepreneurs start with their Means? What is one implication of starting with your Means for your organization? What is one implication of starting with your Means you personally? Be safe, work to extract insights about the Means principle, and have fun!

8. Group 3: Working with your Means to create a Main Course(and teach the class about using your Means in uncertainty) • Effectuation principle number 1: Bird In Hand • Instead of trying to start acting in uncertainty with a given goal or a specific objective, work with the Means you have at hand to form the basis for decisions and new opportunities. Your means: • Who I am • What I know • Whom I know • Apply this principle to the uncertain context of cooking dinner • You have a variety of ingredients, equipment and people in the IMD kitchen that you should consider part of your Means • There is no given menu (no predefined goal) • What will you do?

9. Thursday Evening Constraints Safety Health Dinner starts at 7pm Must feed 60 people Friday Morning Presenting (thoughts on these questions): How did starting with your Means help you? Why do expert entrepreneurs start with their Means? What did you find hard about starting with your Means? What is one implication of starting with your Means for your organization? What is one implication of starting with your Means you personally? Be safe, work to extract insights about the Means principle, and have fun!

10. Group 4: Working with your Means to create a Dessert(and teach the class about using your Means in uncertainty) • Effectuation principle number 1: Bird In Hand • Instead of trying to start acting in uncertainty with a given goal or a specific objective, work with the Means you have at hand to form the basis for decisions and new opportunities. Your means: • Who I am • What I know • Whom I know • Apply this principle to the uncertain context of cooking dinner • You have a variety of ingredients, equipment and people in the IMD kitchen that you should consider part of your Means • There is no given menu (no predefined goal) • What will you do?

11. Thursday Evening Constraints Safety Health Dinner starts at 7pm Must feed 60 people Friday Morning Presenting (thoughts on these questions): Why do expert entrepreneurs start with their Means? What did you find hard about starting with your Means? How did starting with your Means help you? What is one implication of starting with your Means for your organization? What is one implication of starting with your Means you personally? Be safe, work to extract insights about the Means principle, and have fun!

12. Group 5: Create an exercise to teach the class about effectual partnerships • Effectuation principle number 2: The Crazy Quilt Principle • Instead of focusing on competition, build your “future” together with customers, suppliers and even prospective competitors who identify that they want to co-create with you through their pre-commitment to an idea co-developed through some novel combination of your Means with your partners’. • In case it is useful, effectuation principle number 1: Bird In Hand is described as: • Instead of trying to start acting in uncertainty with a given goal or a specific objective, work with the Means you have at hand to form the basis for decisions and new opportunities. Your means: • Who I am • What I know • Whom I know

13. Thursday Afternoon Constraints Your exercise must be something which you can role play, or which you can script for others to role play in the class on Friday morning One suggestion is to compare a traditional transactional partnership interaction with an effectual co-creative one. Friday Morning Presenting (your exercise should address these questions): How does level of goal specificity enable, constrain or shape partnerships? How do each stakeholders’ Means enable, constrain or shape possibilities? How should each party filter ideas? What makes an effectual partnership work on an ongoing basis? How do you initiate pre-commitment? What are some of the cultural aspects of partnership in different areas of the world? Be sure your output cleanly communicates the principle of partnership and addresses the questions - and have fun!

14. Group 6: Create five unique experiments you can conduct in class that will teach the effectual principle of Affordable Loss • Effectuation principle number 3: The Affordable Loss Principle • Instead of trying to base decisions on expected return (which is done by calculating the upside potential of one or many opportunities and pursuing the (risk adjusted) best opportunity), calculate downside potential and risk no more than you can afford to lose.

15. Thursday Afternoon Constraints Your experiments must be something which you can present to, and use in the class on Friday morning One suggestion is to think broadly about all the different situations in which we face risk in our daily personal and work lives, and look for decisions where its easy to see that the decision could be guided by an upside calculus, or an approach that manages and limits the downside. Friday Morning Presenting (your experiments should bring out discussion on these): What are some of the cultural aspects of Affordable Loss in different parts of the world? How does Affordable Loss encourage or discourage commitment (between firms and between people)? Might Affordable Loss encourage ignoring big opportunities? What resources should be included in the Affordable Loss assessment? Why is Affordable Loss a difficult idea for large firms? Be sure your output cleanly communicates the principle of Affordable Loss and addresses the questions - and have fun!

16. Group 7: Create a video to teach the class the effectual principle of Contingency • Effectuation principle number 4: The Lemonade Principle • Instead of trying to anticipate surprise, avoid it, overcome it or adapt to it, think about contingent events, information and meetings as new resources that you can add to your existing means. • In case it is useful, effectuation principle number 1: Bird In Hand is described as: • Instead of trying to start acting in uncertainty with a given goal or a specific objective, work with the Means you have at hand to form the basis for decisions and new opportunities. Your means: • Who I am • What I know • Whom I know

17. Thursday Afternoon Constraints Your video must be recorded with the provided camera (please see instruction sheet for camera) Your video must be recorded in a single file (no stop/start, no editing) Your video must be uploaded to YouTube (please see instructions) prior to moving to apero/dinner, so that it can be shown in class on Friday morning Friday Morning Presenting (your video should address these questions): What are examples of products created through surprise? What are examples of companies changed by surprise? What is the process by which surprise is turned into opportunity? Are there ways to create surprises for yourself? Are there management styles that leverage contingencies? Be sure your output cleanly communicates the principle of contingency and addresses the questions - and have fun!