I recently received a link to the following article on “What makes entrepreneurs entrepreneurial?”. This is a great paper- with at the author Saras D. Sarasvathy‘s analysis of two types of reasoning- causual reasoning and effectual reasoning. Causual reasoning is what I would call more traditional “MBA” reasoning… that is, a given, specific goal is targeted within a given set of means to achiving the goal. Effectual reasoning imagines a number of possible goals, given the available means, allowing for a selection of the right goal given the means available. Or in the words that some of my clients and friends will recognize, Casual reasoning is convergent, effectual reason is divergent (analysis versus synthesis)… Metaphorically speaking causual reasoning is about being a settler, while effectual reasoning is about being an explorer. What makes this particular version of this article interesting is that it is hosted at Khosla Ventures’ website… and the commentary that is handwritten on the article gives the original article much more depth in contrasting the view of the author’s academic focus with the commentor’s entrepreneurial focus. All in all, this is a great article discussing the distinction between the two reasoning styles. Data for the basis of this article was taken from 27 different entrepreneurial firms, all that had been grown and run to the tune of $200 Million to $6.5 Billion.
What is important to think about when reading this article is how you are approaching your venture, especially with regard to what stage your venture is in. Neither method of reasoning is “more right”… and both must be employed in getting a venture off the ground and successful.