Lean Startup punts on the question of how to choose an idea by claiming that first, the founder “has a vision”. But where does it come from? And what makes a good vision as opposed to a bad one?
Effectuation, on the other hand, directly tackles the question of the idea. If you haven’t heard of it, it’s based on the only proper academic study into what makes repeatably successful entrepreneurs successful. Here’s the low-down:
Effectuation’s goal: A reliable path to a good business (but probably not a billion dollar one).
Core assumption: Much of the “common wisdom” surrounding entrepreneurship is just myth based on a few high-profile outliers; the data shows a better path.
In a nutshell: Successful entrepreneurs don’t pick an arbitrary vision and then figure out how to get there; instead, they look at the resources they already have—people, partners, skills, expertise, credibility—and figure out how to use them to attack an opportunity that isn’t fatally risky and which they can go after right now.
To look for Effectual ideas, ask yourself which resources you have:
- Who are the people who would help you, even for a small (but important) favour?
- Which companies take you seriously enough that they might partner?
- Which industries do you know or have credibility in?
- Which important skills do you have (or have access to)?
Now, which opportunities or goals might you go after by combining those resources? They’ll look very different from the sort of ideas you get when you sit down to “think of a startup idea”, because they’re anchored in you.
There’s more to Effectuation, including shifting goals, multiple simultaneous goals, and a propensity toward early partnerships. The authors are a bit academic, but there are some real jewels in there. The comparison is a bit unfair, since Lean Startup and Effectuation solve different problems, but I’m currently finding the latter to be a more critical piece of building a business than the MVP-style stuff we typically bang on about.