“Everyday I'm hustlin' hustlin' hustlin' hust-hustlin'”
Rick Ross - “Hustlin’”
We are big fans of the Lean Startup methodology popularised by Eric Ries. We’ve taken the best bits from Lean Startup, combined it with thoughts from Ash Maurya, embraced Design Thinking and merged the results with Agile Software Engineering practices to produce Lean Service Creation, our way of working.
The other night my colleague Tom McQueen and I had dinner with Will Cardwell. Will asked us about the way we work and once we’d explained it, he surprised us by talking about an entrepreneurial and innovation thought framework called Effectuation. Having heard the pitch, we had to dig in to really understand what it’s about and if we could utilise it in our work. What follows here is a brief summary of our reading about Effectuation.
Effectuation is a principle introduced by Saras Sarasvathy in 2001 as part of her research at Carnegie-Mellon University. Lately, a rivalry has sprung up between this thought framework and the Stanford University/Silicon-Valley based Lean Startup framework, both competing for attention as the thinking model for aspiring entrepreneurs. It’s like a throwback to the East Coast - West Coast Hip Hop wars of the 90s. The battle for attention has not, thankfully, resulted in any drive-by shootings.
Anthony Pantoja summarises it neatly: “Imagining new ends using a given set of means”. It contrasts with typical business planning where causal thinking is typically applied by choosing best means to achieve a goal.
Is it similar to Lean Startup?
Effectuation starts with Bird in Hand - which means starting out with your means and an achievable goal in mind:
- Who am I?
- What I know?
- Whom I know?
That sounds somewhat similar to the “find a problem worth solving” and “get out of the building” principles used in Lean Startup.
The framework continues with
- Evaluating affordable loss, which means evaluating problems worth solving by whether the downside in these opportunities is affordable.
- Lemonade: Embrace surprises and be flexible. Lean Startup talks about pivoting.
- Crazy Quilt: Build partnerships with people.
- Pilot in plane: Focus on activities that you can control. Future is not found or predicted, but it is made.
A simplified comparison of these to Lean Startup:
- Affordable loss = Revenue/Loss in Lean Canvas
- Lemonade = Pivot
- Crazy Quilt = Get out of the building, partnerships/customers in Lean Canvas
- Pilot in plane = Validation
What does it all mean?
While there seem to be similarities in both of these frameworks, I’m thinking the essence of Effectuation is what we at Futurice tend to call “Hustling”.
Roughly, it refers to reaching out to people and trying to identify the ones we could potentially help with our skills in digital business, design and tech, and then iterating our approach based on feedback and findings. Incidentally, this is how we’ve been building our business at Futurice’s London office, so we’re accidental practitioners of Effectuation. Have we made innovations along the way? Maybe nothing grand, but we’ve certainly gained valuable knowledge on what types of skills and services we as a company want to offer in the UK market.
Compared to Lean Startup, Hustling is the major difference. Rather than trying to map a potential customer, and a problem to solve to a canvas, an innovation is born out of reaching out to people you know and talking to them about topics that you know something about. And avoiding risks you cannot afford.
I can personally say I like this way of thinking as it resonates with my thoughts about validating new product ideas by selling them first before investing massive sums of money in product development. It may have the potential to develop into a more formal framework for innovation or not - it’ll be interesting to see.