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These are challenging times. The world, including tourism, has almost come to a standstill hurting tourism jobs and people dependent on the sector indirectly. An overwhelming majority of service providers and servers have been idle and waiting for tourism to resume; their misery increased with every passing day. While some decided to continue at a very minimal scale of operations, others contemplated getting into other business. Most people only contemplated but did not muster the courage to chase it.

Conventionally, managers are trained to figure out the best means to achieve a set goal. This approach is called causation. They set a target and try to figure out what actions will lead to it, will cause it. That then is their course of action. Their underlying belief is that “If I can predict the future, I can control it.” However, the future got uncertain, and their predictability parameters obfuscated. People felt strangled, as they had specific skills which were of little use in the present scenario.

However, many people and organisations did not give up and ended doing quite well during the pandemic induced curbs. The people who could wade through these difficult times thought differently. Their approach was to have new products and services given the resources at their disposal. They used creative and transformative tactics to focus on evolving means to achieve new and different goals. This approach is called Effectuation, a concept suggested by Prof Saras Sarasvathy (University of Virginia). Let us try to understand this.

Put simply, these individuals begin with assessing their strengths and weaknesses and the resources at their disposal. They explore their contacts who are their early customers and suppliers, and begin there. These stakeholders help them expand the market during the early days of the enterprise. The idea is to limit risks by understanding what one can afford to lose, creating their market opportunity, and trusting people.

The future is unpredictable. The changes caused by the unpredictability were not included in our calculations or have not even heard of. Nobody predicted COVID. Tomorrow there might be other similar events. Effectuation helps in dealing with an unstable business environment. A world changing at a breath-taking pace requires the utmost strategic flexibility and action. In this complex dynamic world, businesses must find new ways of coping with the challenges and remain successful. Effectuation has five fundamental principles.

1. The bird in hand principle. We have many examples of successful entrepreneurs who started small- in their garages. This principle suggests that one should create value (future ventures) with what is available to them and, however, limited their resources are. They may not chase a predetermined goal.

2. The affordable loss principle suggests that one should offset risk by staking what one can afford to lose. Entrepreneurs must choose goals and actions where there is an upside even if something goes wrong. Focusing on downside risk, one must keep the fixed costs low, have lower burnout rates, and offer Minimum Viable Product (MVP).

3. The crazy quilt principle suggests putting together various types of partners who are willing to commit to co-creating the future, thereby reducing uncertainty. It is futile to search for possible partners who might not be interested or who do not respond. These initial partners are the first customers who offer constructive criticism, spread a positive word of mouth, offer referrals, and sometimes even provide resources.

4. The lemonade principle. There is a saying – when life gives you lemons, make lemonade. This principle acknowledges that there will be mistakes. However, “bad” news and surprises must be treated as potential clues to create new markets. Unlike the causal thinker who is trained to put efforts on aspired goals, the creative individuals use these ‘surprises’ that come their way.

5. The pilot in the plane principle suggests that one should be in the driver’s seat and control the situation. Writing is clear – the future is what you create, not what you predict. Effectual thinkers know their actions will lead to desired outcomes, and they focus on activities within their control.

So instead of waiting for things to turn favourable, it is time to act with those in your control!




The views expressed in the column are of the authour, and may or may not be endorsed by the publication.

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