let’s ACT!.

The uncertainty remains. No bad news for those who like to be entrepreneurial.

“We would, but the situation is still too uncertain …”. How often have you heard sentences like this in recent weeks? By now it should be clear to us: The uncertainty does not simply go away. The coming months remain largely unpredictable. It is time that we not only “accept” uncertainty and “learn to live with it”, but also understand it for what it is: an opportunity to act, to do, to make. Just like those who have always steered straight into the unknown to shape the future: Intrapreneurs, innovators and makers.

Prediction does not work now

“If we collect more data and make more in-depth analyses, we can make better decisions.” Who would contradict this logic? In fact, the very people who, under uncertainty, have already brought so many valuable things into the world. “Nobody knows anything,” says Marc Randolph, founder of Netflix and six other startups. You have to do something, build, sell, make… in order to judge whether an idea is worthwhile. And at the beginning of a new path, you learn to do more in an hour of doing than in three months of thinking.

What Randolph describes here based on his own experience is what research calls “effectuation”: a logic according to which, among other things, entrepreneurs bring something new into the world by “simply making something” under uncertainty. Acting without having to predict and plan everything beforehand. Let´s pause here for a moment: We are not talking about actionist or heroic ad hoc actions, but rather about action based on a handful of principles.

Using Maker-Principles

Doing something “when nobody knows where to go” can succeed. If you turn to Maker-Principles, you neither have to pose as the fearless hero nor risk your head and neck. For those who have successfully done management in a corporate environment for years, however, these principles turn quite a few things they perceive as “professional” upside down. Note the contrast between the Maker-Principles and the classic management principles!

With these four Effectuation Principles for makers, you can get started immediately:

1. Start with the means at your disposal.

Take the initiative based on what is immediately available to you (both personally and at company level) (who you are, what you know, who you know and what else you have). Do not waste your time with trying to set SMART goals to achieve an optimal result – based on your prediction.

2. Define your “affordable loss”.

Pursue interesting but uncertain opportunities, even if you cannot predict the benefits or returns. Instead, limit your investment: only invest resources up to a level you can afford to lose.

3. Leverage contingencies.

Surprises are good in an uncertain context. New developments encourage you to creatively reassess your options and continuously develop your goals.

4. Get self-selecting stakeholders on board early.

Do not even try to find the “right” partners – start with those who are available and willing to get involved early in the process. It is about creating something together that benefits everyone who gets involved.

Figure: maker-principles (effectuation) vs. classic management principles (causation)

Nothing is more practical than a good theory

Experienced entrepreneurs like Marc Randolph have learned to act according to these principles intuitively through years of practice. They get into doing and making when everyone else is still tinkering with their tables.

We can apply these principles today for shaping the future in uncertain times thanks to the global research of entrepreneurs like Randolph over the last 20 years (see literature below). The principles are anything but new. In the light of current events, they gain significance, also – or especially so – way beyond entrepreneurship. The principles are in fact the exact opposite of what we have learned as causal management logic. However, causal management implicitly assumes a predictable future. But predictability is exactly what we lack today. The environment turned VUCA. And under VUCA, it is rational to deliberately switch to the principles of the maker-mode.

Always highly relevant in innovation

The ability to switch between maker-mode and causal management logic depending on the context or situation is particularly important for innovators.

Innovation begins when people question the status quo and develop new solutions. This puts them in a field of particularly high uncertainty: Will customers love my idea? Will I be able to do business with it? Can I (technically speaking) realize my idea at all? These are all important questions to which there are no clear answers at first.

Reduce uncertainty as quickly as possible

The more radically an innovation is conceived, the higher the degree of uncertainty. Reducing “critical unknows” quickly, cheaply, and systematically is the main task in the early innovation phase. And this is the main purpose of innovation tools such as the Lean Canvas, Design Thinking or Lean Startup.

Figure: Reducing uncertainty as a central task in early innovation phases

All these tools prove to be effective much earlier in the process than the classic business planning and stage-gate in corporate innovation. However, they only develop their full effectiveness when makers have taken the initiative, taken the first steps and already reduced the greatest uncertainties. Step by step, it then makes sense to gather an interdisciplinary team around the project to further reduce the “critical unknows”. Only when the uncertainty has been significantly reduced by this principle-based approach can the management of an innovation project be confidently transferred to a classic causal management logic.

Never plan again?

Even if it may have sounded like that: We do not question good planning. However, the more uncertain the initial situation, the less time you should spend on planning. Save planning for later! If you want results, you should create them (in an effectuation manner) instead of trying to predict them. “We would, but the situation is still too uncertain …?” It will not get more certain, so let’s act.

First steps to get into action

Enough talk. What needs to be done now, so that you as a maker in your company can get started?

1. Recognize a case for action

Make yourself aware of your most burning case for action. What is it that drives you? It can be an attractive opportunity, a problem that gets on your nerves, an idea that excites you, something you’re burning for or something you feel the need to act upon from your role.

2. Apply principle 1 “Start with your means”

Write down what is available to you that you can apply: What knowledge and resources can you access? What relationships? What can – based on your resources – be the first step?

3. Apply principle 2 “Determine affordable loss”

Determine what you are prepared to lose in case of failure. What can you put at stake – even if it could be lost? What concrete next steps can you take within your affordable loss?

4. Apply principle 3 “Leverage contingencies”

Look at your environment: Which of the (changed) circumstances, contingencies, setbacks, changes in context do you perceive? And how can you use them as a lever? How can you make lemonade out of the lemons of uncertainty?

5. Apply principle 4 “Invite volunteers”

Make a list of people you could approach and win over for your project. Consciously avoid being too strategic and invite people to participate in the process openly. Allow the people who come on board to have a say in how your project will develop.

Literature tips:

Our award-winning books on the subject:

Michael Faschingbauer; Effectuation: How successful entrepreneurs think, decide and act; Schäffer-Poeschel 2017 (3rd edition)

https://www.amazon.de/Effectuation-erfolgreiche-Unternehmer-entscheiden-Systemisches/dp/3791036793/

https://www.amazon.de/Effectual-Entrepreneurship-Stuart-Read/dp/1138923788/

Article written by Michael Faschingbauer and Stefan Posch, ICG Austria.