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Comparing effectuation to discovery-driven planning, prescriptiveentrepreneurship, business planning, lean startup, and designthinking
Downloaded from: https://research.chalmers.se, 2020-09-05 02:27 UTC
Citation for the original published paper (version of record):Mansoori, Y., Lackéus, M. (2019)Comparing effectuation to discovery-driven planning, prescriptive entrepreneurship, businessplanning, lean startup, and design thinkingSmall Business Economicshttp://dx.doi.org/10.1007/s11187-019-00153-w
N.B. When citing this work, cite the original published paper.
research.chalmers.se offers the possibility of retrieving research publications produced at Chalmers University of Technology.It covers all kind of research output: articles, dissertations, conference papers, reports etc. since 2004.research.chalmers.se is administrated and maintained by Chalmers Library
(article starts on next page)
Comparing effectuation to discovery-driven planning,prescriptive entrepreneurship, business planning, leanstartup, and design thinking
Yashar Mansoori & Martin Lackéus
Accepted: 7 August 2018# The Author(s) 2019
Abstract There has been a growing interest among en-trepreneurs and students in explicit guidance for entre-preneurial action. Both scholars and practitioners haveresponded to this demand by suggesting a variety ofentrepreneurial methods. This has led, however, to aproliferation of relatively unrelated methods with varyingdegrees of rigor and relevance. In an attempt to organizeand bring clarity to the range and diversity of entrepre-neurial methods, this article compares effectuation withfive other entrepreneurial methods along nine conceptualdimensions. Through the application of two conceptualframeworks, core underpinnings of each method arehighlighted. In addition to revealing similarities and dif-ferences between the methods, the study identifies somekey implications for theory, practice, policy, and educa-tion. The strengths of effectuation on a theoretical levelcould be used to develop other entrepreneurial methods.Conversely, the strengths of other entrepreneurialmethods could be used to shore up the potential weak-nesses of effectuation, such as a lack of behavioral tacticsand limited applicability in later stages of venture devel-opment. Findings from this article can thus aid entrepre-neurship scholars and practitioners to improve their
prescriptions and can create new avenues for developingentrepreneurial methods.
Prescriptive methods have recently attracted consider-able interest in the field of entrepreneurship (Jones andPenaluna 2013). Methods are principles of thought andaction that guide the theoretical and practical aspects ofhuman action (cf. Neck and Greene 2011; Mansoori2017; Romme and Endenburg 2006). A main sourceof prescriptions for entrepreneurs is the widespreadscholarly effort to empirically describe and categorizeentrepreneurial processes (cf. Romme 2016) and then totransform the results into prescriptive methods (Denyeret al. 2008) for how entrepreneurs should reason andbehave in order to create value. A prominent example ofan entrepreneurial method is effectuation, presented as aset of heuristics any entrepreneur could use to develop anew venture in the face of uncertainty (Sarasvathy2001). Another main source of prescriptions for entre-preneurs stems from expert entrepreneurs themselves,who have distilled their personal and idiosyncratic ex-periences into relatively coherent prescriptive advice. Awidespread example is the lean startup methodology,
Small Bus Econhttps://doi.org/10.1007/s11187-019-00153-w
Y. Mansoori :M. Lackéus (*)TechnologyManagement and Economics, Chalmers University ofTechnology, Vera Sandbergs Allé 8b, 412 96 Gothenburg, Swedene-mail: [email protected]
prescribing that entrepreneurs formulate and test venturehypotheses through interacting with customers(Ries 2011).
Prescriptive methods of entrepreneurship have beencriticized, however, for their lack of rigor and relevance.Practitioner-grounded entrepreneurial methods havemet with criticism for lacking theoretical rigor (Wood2000), which has led to undesirable consequences, suchas entrepreneurs giving up prematurely (Heitmann2014). Scholarly grounded entrepreneurial methodshave been said to lack both practical relevance (Frankand Landström 2016) and theoretical rigor (Arend et al.2015). One shortcoming of methods is a lack of trust-worthiness due to the context-specific nature of entre-preneurship and thus the limited applicability of largelyuntested prescriptions. Another frequently citedshortcoming is a lack of practical usefulness dueto limited concrete actionable advice (Wolf andRosenberg 2012). An illustrative example is a re-cent debate concerning effectuation, which hasbeen cast as an underdeveloped theory lackingpractical managerial tools and with the potentialto lead to dangerous practices among entrepreneurs(Arend et al. 2015). The concern has been that itcould tempt entrepreneurs to ignore the risks of compe-tition and to neglect the need for even the most rudi-mentary planning practices.
In an attempt to further the development of the fieldof entrepreneurial methods, this article compares effec-tuation in a highly detailed manner with five otherentrepreneurial methods. Similarities, differences,strengths, weaknesses, overlaps, and gaps are exploredalong nine key conceptual dimensions. This processhelps organize the field of entrepreneurial methods in amore comprehensible way for both scholars and practi-tioners. Increased clarity and visibility across the rangeof entrepreneurial methods may serve as a source ofinspiration for work to improve existing entrepreneurialmethods as well as to develop new ones. Thus, thisarticle lays a foundation for proponents of entrepreneur-ial methods to use in future work. Proponents ofpractitioner-grounded entrepreneurial methods could in-crease the theoretical rigor of their prescriptions bydrawing on scholarly grounded entrepreneurialmethods. Similarly, proponents of scholarly groundedentrepreneurial methods could use this comparison toincrease their practical relevance by drawing onpractitioner-grounded entrepreneurial methods. Worksthat build on the comparison conducted here can serve
as a bridge between different prescriptive endeavors inentrepreneurship that are developed in relative isolation.
In order to avoid bias toward any one particularentrepreneurial method, a conceptual framework is de-veloped through an in-depth analysis of effectuation andfive other purposefully selected entrepreneurialmethods. These are discovery-driven planning(McGrath and MacMillan 1995), prescriptive entrepre-neurship (Fiet 2008), business planning (Steinhoff1971), the lean startup methodology (Ries 2011), anddesign thinking (Brown 2008). Choices of entrepreneur-ial methods were based on the following: citation anal-ysis, appearance on entrepreneurship courses’ syllabi(see footnote in Section 2.3), perceived alignment withthe definition of entrepreneurial method, and informalinquiries with a number of experienced entrepreneur-ship researchers around frequency of use in their educa-tional practices. Three entrepreneurial methods withscholarly origins were included alongside three methodsintroduced by practitioners. The conceptual frameworkconsists of nine dimensions and is used as ameans to elucidate similarities and differences.The discussion will then delve more deeply into thesubject of effectuation, contrasting it to the five otherentrepreneurial methods.
The article proceeds as follows. First, previous liter-ature in relation to prescriptive work in entrepreneurshipis presented. Then the framework of nine conceptualdimensions is developed in three steps and used for anin-depth comparison between effectuation and five otherestablished entrepreneurial methods. A number of issuesarising from this comparison are discussed, followed byan articulation of implications for theory, practice, pol-icy, and education.
2 Literature review
2.1 Descriptive and prescriptive theories of action
Action theories can be divided into two different types:descriptive and prescriptive (Tsang 1997). Descriptivetheories are often highly empirical and describe howindividuals think and act in different situations. Theyfrequently outline logical consequences, such as Bundercondition C, following action A leads to outcome O^(Parsons et al. 1965). By providing such propositions,they allow for predicting the outcome of specific actionswhen particular conditions are in place. Descriptive
Y. Mansoori, M. Lackéus
theories are judged by their empirical validity, that is, theextent to which they are consistent with the observedbehavior (Bell et al. 1988; Tietz 1992).
Prescriptive theories help people decide what to doand how to think in a particular context (Cross andSproull 2004). A key feature of prescriptive theories isthat they are intended to influence and change the be-havior of actual people (Bell et al. 1988; March andSmith 1995). Therefore, they often include propositionssuch as Bin order to arrive at outcome O under conditionC, do action A,^ intended to improve the quality ofhuman judgment and decision-making. Prescriptive the-ories are often appreciated for their pragmatic value, inthat they help individuals to excel in practice (Bell et al.1988; Tietz 1992). While descriptive theories come inthe passive form of Bif … then^ propositions, prescrip-tive theories come in the active form of Bin order to …do this^ (Argyris and Schön 1974).
2.2 Methods as prescriptive theories of action
In everyday as well as scientific language, a number ofterms and their synonyms have been used to discussprescriptive theories of action. Some examples are heu-ristics (Baker and Nelson 2005; Sarasvathy 2001),guidelines (Sull 2004), principles (Ries 2011), approachand techniques (McGrath and MacMillan 1995), frame-work (Blank and Dorf 2012), practice (Dean and Bowen1994), process and procedure (Ackoff 1981), model(Fiet 2007), and method (Brown 2008; Ries 2011;Sarasvathy and Venkataraman 2011). For the sake ofclarity, the term Bmethod^ will be used from this pointgoing forward to address prescriptive theories of action.The term Bmethod^ was also chosen because of itsubiquity in academic circles and the fact that it connotesthe guiding of actions, giving it both theoretical andpractical relevance, and allowing it to function as aunifying term. Although the term Bmethod^ is commonboth in everyday life and scientific discourse, the manydifferent definitions of the term can create confusion andhamper effective communication, warranting the estab-lishment of a clear definition (D’Abate et al. 2003).
Landa (1999, p. 346) conceptualizes method as Bastructured system of instructions and/or actions forachieving some goal.^ March and Smith (1995) referto methods as a set of steps necessary to carry out a task.Vincenti (1990) describes a method as a design appara-tus that entails various ways of thinking, judging, andeventually doing. In line with this, Dimov (2016, p. 25)
suggests that methods can be proposed Bin the form ofdesign propositions or principles on the basis of reviewand synthesis of prior research findings.^ Neck et al.(2014, p. 11) define method as Ba way of thinking andacting built on a set of assumptions using a portfolio ofpractices to encourage creating.^ By synthesizing defi-nitions for the purpose of this article, a method is de-fined here as a coherent set of related principles andguidelines of thought and action that help to structurethe theoretical and practical aspects of arriving at a setgoal (cf. Mansoori 2017). Based on this, an entrepre-neurial method is further defined as a coherent set ofrelated principles and guidelines of thought and actionthat help to structure the theoretical and practical aspectsof entrepreneurship (cf. Neck and Greene 2011;Sarasvathy and Venkataraman 2011).
2.3 Entrepreneurial methods
Following the proposed definition of entrepreneurialmethod, several preexisting methods can be classifiedas such. While some of them are not labeled as methodsin the existing literature, the definition used here wouldqualify them as entrepreneurial methods. This may bethe first effort to include methods such as these under thebroad heading of entrepreneurial methods, as defined inthis article. Although there may be several ways topresent the methods, the focus in this section is toprovide a brief historical trajectory of their emergence,diffusion, and arrival at the current stage.
Business planning emerged as a prominent collectionof principles and guidelines in the early 1960s andattained widespread acceptance in the 1970s (Ackoff1981; Porter 1980). It was mainly used to structure theoperations of existing firms and guide strategic deci-sions, but throughout the years, it also served as a usefultool to signal legitimacy. Therefore, entrepreneurs beganusing it as a communication tool to attract investment(Karlsson and Honig 2009). The prevailing bias ofventure capitalists and other funding agencies at the timeput business planning at the forefront of the agenda foraspiring entrepreneurs (Upton et al. 2001). NumerousBmanual books^ were published to demonstrate whatbusiness planning processes looked like and howaspiring entrepreneurs should go about conductingthem. To complement the business planning approachand to adapt it to the conditions of high uncertaintyassumed by entrepreneurs, scholars such as McGrathand MacMillan (1995, 2000) proposed a new set of
Comparing effectuation to discovery-driven planning, prescriptive entrepreneurship, business planning, lean...
guidelines for using planning strategies in entrepreneur-ship. These were grounded in a philosophy of incremen-tal development rather than a grand, long-term (oftenfive-year) plan that was formulated before any entrepre-neurial activity was even initiated. In their book entitledThe Entrepreneurial Mindset: Strategies forContinuously Creating Opportunity in an Age ofUncertainty, they championed experimenting with en-trepreneurs’ subjective beliefs and assumptions arounddoing business that had been taken for granted in busi-ness planning practices.
This opened up space for theories that emphasizedBdesigning^ new business activities rather thanBplanning^ for them. In 2001, Saras Sarasvathy proposedfive principles that served to guide the actions of expertentrepreneurs in creating successful businesses (2001).She postulated that these five principles could be con-ceived of as best practices and, therefore, could be learnedby aspiring entrepreneurs (Sarasvathy and Venkataraman2011). Additionally, Baker and Nelson (2005) appropri-ated the concept of bricolage from sociology and appliedit to entrepreneurship, packaging it as a set of guidingprinciples that entrepreneurs could use when faced withresource scarcity. In the meantime, the notion of experi-mentation (Thomke 1998, 2003), implicitly touched uponas part of effectuation and bricolage, began to gain trac-tion. Books and research articles that advocated similarexperimental approaches to business development ac-quired a modicum of popularity (Fiet 2002; Pfeffer andSutton 2006; Sull 2004). They concluded that a highdegree of uncertainty can only be effectively and activelyreduced through an experimental process that convertsassumptions to facts. Furthermore, they argued for mak-ing decisions grounded in information gathered fromcarefully crafted experiments. Building on this idea, pre-scriptive entrepreneurship (Fiet 2008) offered a set ofsystematic theoretical guidelines for discovering opportu-nities amid the growing scholarly interest in the constructof opportunity. The guidelines projected a competinglogic to the alertness perspective and offered new avenuesfor entrepreneurs to discover latent and/or create newopportunities in their surroundings.
The methods of scholarly origin outlined above didnot seem to diffuse much outside academic circles(Arend et al. 2015; Frank and Landström 2016). It was,instead, often the practitioner-grounded counterpartswhose ideas were to reach a wider audience(Abrahamson 1991). Design thinking as a set of mana-gerial guidelines started to gain momentum around 2006
(Rauth 2015). Designers Tim Brown, Roger Martin, andDavid Kelly of Stanford d.school and IDEO (a globaldesign company) began to advocate for the application ofdesign thinking in business and entrepreneurial contexts(Martin 2009), even claiming that they could revolution-ize management education (Dunne and Martin 2006).Large firms such as Procter & Gamble adopted designthinking and incorporated many of its key ideas into theirprocesses (Leavy 2010). Some startup communitiesfollowed suit and used design thinking to structure theirbusiness activities (Sonalkar et al. 2016). In 2011, EricRies extrapolated from his own startup experiences andformulated a method he labeled Bthe lean startupmethodology^ (Ries 2011). The ideas were not new(e.g., Murray and Tripsas 2004) but were repackaged toappeal to the software industry. This was the first suc-cessful attempt to appropriate ideas reminiscent of exper-imental approaches to the context of entrepreneurship bya practitioner. Before Ries, Steve Blank had proposedsimilar ideas (Blank 2007), but he did not enjoy the samelevel of popularity and recognition as Ries. The leanstartup methodology began to spread rapidly throughhotbeds of entrepreneurship, such as Silicon Valley, andquickly reached a global audience among entrepreneursand entrepreneurship practitioners. Other practitionersjoined the emerging movement and added nuances andtexture to the proposed guidelines (Blank and Dorf 2012;Furr and Ahlstrom 2011; Maurya 2012). Blank (2013)claims that, at the current moment, the lean startup meth-odology is the most popular entrepreneurial methodaround, with a striking range of entrepreneurs, incuba-tors, accelerators, and entrepreneurship programs whoseagendas are based on its fundamental principles. Whilescholarly grounded entrepreneurial methods have indeedattracted some attention, practitioner-grounded entrepre-neurial methods appear to have reached the broadestaudience among entrepreneurs and entrepreneurshippractitioners.1
1 Awitness to this claim is the presence of the lean startup methodol-ogy (Ries 2011), customer development (Blank and Dorf 2012), anddesign thinking (Brown 2009) books on Amazon’s top 20 businessbooks list, and the corresponding absence of books on more scholarlygrounded entrepreneurial methods. Another witness to this claim is anonline review the authors conducted of syllabi of the top ten entrepre-neurship programs worldwide according to the Eduniversal master’sprogram ranking website. Business planning was mentioned at sevenof the ten programs, the lean startup methodology and its siblingsbusiness model generation and customer development were mentionedat six of them, and design thinking was mentioned as reading essentialsat five of them. Of the scholarly grounded entrepreneurial methods,only effectuation was mentioned, and only at one of the programs.
Y. Mansoori, M. Lackéus
2.4 A three-tier framework for prescriptionsof entrepreneurial methods
An organizing framework constituted of three levelswas recently proposed by Mansoori (2015). The frame-work consists of the three levels of logic, model, andtactics (see Fig. 1). Logic touches on issues that need tobe dealt with at a higher level of thought and cognition;model acts as an intermediate level bridging thought andaction, facilitating the transfer of entrepreneurialknowledge from prescribers to those seeking advice;and tactics concern the tools and practical strategies ata lower level of action and interaction. Mansoori (2015,2017) claims that this framework can be used for severalpurposes, such as guiding the design and developmentof effective entrepreneurial methods, improving thecomprehensibility of advice given to entrepreneurs,and facilitating the comparisons of different entrepre-neurial methods in more structured ways. The frame-work can act as a bridge between scholars and practi-tioners, validating that entrepreneurial methods have thepotential to connect ideas and actions in pragmaticways. Given that scholars have been lamenting the gapbetween theory and practice (Frank and Landström2016; Rynes et al. 2001; Weick 2001; Banks et al.2016; Van de Ven and Johnson 2006), this new rolefor entrepreneurial methods could gain prominence andattention (Mansoori 2017).
While the work ofMansoori (2015) is the first frame-work of its kind in the field of entrepreneurial methods,there have been similar frameworks in other fields.Among others, research areas such as firm strategy(Casadesus-Masanell and Ricart 2010), business re-search (Bryman and Bell 2007), management ideas(Rauth 2015), language teaching-learning (Anthony1963; Richards and Rodgers 2014), and total qualitymanagement (Dean and Bowen 1994) have all benefitedfrom conceptual frameworks that organize the abstractand concrete aspects of their theories. These examplesdemonstrate the versatility of these kinds of frameworksand suggest that a similar frameworkmight be applied toentrepreneurial methods. As such, Mansoori’s (2015)three-tiered framework, shown in Fig. 1, will be usedin this article to compare six entrepreneurial methods,and a more detailed account of it will now follow.
The higher level of logic represents an overarchingway of thinking that guides entrepreneurial action andacts as a reference point in regard to the theoreticalfoundations of methods (cf. McMullen and Shepherd
2006). The higher level deals with fundamental issues,imparting a clear logic to the entrepreneurial methodsthat helps entrepreneurs relate cognitively to the entre-preneurial process (cf. Baron 2004). It also frames theentrepreneurial method, acting as an orienting device,with the capacity to guide activities throughout thevarious stages of the entrepreneurial process.Therefore, the overarching logic sets the stage for entre-preneurial thinking and provides some general rules andprinciples.
The middle level ofmodel gives entrepreneurs a wayto conveniently visualize the entrepreneurial processand establish key terms that can be used in discussionsbetween prescribers and entrepreneurs. This aspect ofthe model can facilitate endeavors through simple ex-planations that entrepreneurs can apply to their ownunique venture activities, thus accelerating the intersub-jective and normative diffusion of the entrepreneurialmethod (cf. Rogers 1983).
The lower level of tactics prescribes activities, exer-cises, and practices in line with the overarching logicand the summarizing model. They are often detailed andspecify the context of use and the outcomes of action.Therefore, they are implementation-oriented, geared to-ward accomplishing immediate objectives and impor-tant tools for influencing practice (Romme 2003).Tactics tie the abstract nature of the logic to the tangiblerealm of entrepreneurial practice, which give rise towhat can be considered outcome by outsiders.
Fig. 1 Organizing three-tier framework comprised of three hier-archical levels of logic, model, and tactics
Comparing effectuation to discovery-driven planning, prescriptive entrepreneurship, business planning, lean...
Furthermore, they can be effectively documented byobservational studies since they are closest to the sphereof concrete action.
3 Developing a conceptual framework in three steps
While the framework in Fig. 1 allows for a generalthree-tiered comparison across entrepreneurial methods,an in-depth comparison on a more fundamental levelwould necessitate a more fine-grained analysis. Aframework has been developed here for this very pur-pose and involves a comparative analysis in three steps.In the first step, Mansoori’s (2015) three-tiered frame-work allowed for the mapping of six entrepreneurialmethods onto the three levels: logic, model, and tactics.In the second step, these levels were compared, resultingin the summary shown in Table 1. In the third and finalstep, a more fine-grained framework consisting of nineconceptual dimensions applicable to the six entrepre-neurial methods was developed. It was subsequentlyemployed in another comparative analysis (seeSection 4). These nine conceptual dimensions wereinductively generated by reviewing existing literatureon six entrepreneurial methods; information extractedfrom the literature was viewed as quasi-empirical data.
3.1 Step 1: analyzing six entrepreneurial methodsacross three levels
Effectuation emphasizes controlling the future ratherthan predicting it (Sarasvathy 2003). On a higher levelof logic, effectuation Bis rooted in the realization thathuman beings cause the future and, therefore, the futurecan be controlled and/or created through consensualhuman action^ (Sarasvathy 2009, p. 27). Effectuationclaims to address a logic of control (Sarasvathy 2001),promoting the idea that entrepreneurs’ tasks are notlimited to unearthing latent opportunities patientlywaiting to be discovered. They also involve the actualcreation of opportunities through a social process(Sarasvathy and Dew 2005a). Therefore, entrepreneursbegin with the universe of possible outcomes that can becreated with the available means at their disposal(Sarasvathy 2001) and focus on continuous interactionswith a committed network of stakeholders. On the mid-dle level of model, five heuristics form the backbone ofthe effectual decision-making logic. Sarasvathy (2001)proposes these heuristics as follows: (1) starting the
process by asking oneself who you are, what you know,and whom you know; (2) limiting risk by calculatinghow much one can afford to lose; (3) embracing thesurprise factor and trying to use it as a leverage; (4)reducing uncertainty by obtaining commitment fromearly partners; and (5) focusing on activities withinone’s control rather than trying to predict the unknownfuture (Sarasvathy 2001). These five heuristics form acycle to guide progress through the steps of the effectu-ation logic. On the lower level of tactics, effectuationoffers a number of tools, such as means inventory,affordable loss assessment template, and effectual askto uncover available resources. These can aid in theassessment of risks involved in venture creation activi-ties. They can also guide the formation of the network ofstakeholders and inform how to control the outcomes ofa particular endeavor (Dew et al. 2018; Read et al.2016).
Discovery-driven planning is an approach that com-bines business planningwith learning through a series ofsteps that reveal key discoveries (McGrath andMacMillan 2000). On the higher level of logic,discovery-driven planning posits that uncertainty canbe reduced by Bsystematically converting assumptionsto knowledge and by redirecting its activities in the faceof emerging understanding^ (McGrath and MacMillan2000, p. 243). Proponents of discovery-driven planningmaintain that, while conventional planning approachesare helpful in certain situations, they may be useless oreven lead to disastrous outcomes in conditions of highuncertainty. Dysfunctional outcomes are largely due toreliance on untested assumptions. To manage the uncer-tainty, on the middle level of model, discovery-drivenplanning provides six areas of guidelines: (1) framingthe desired business idea; (2) benchmarking the param-eters that promise a successful outcome; (3) strategictranslation of operations by specifying relevant organi-zational deliverables; (4) documenting, testing, andrevisiting previously held or newly formed assumptions;(5) managing key milestones to reflect on actions takenand planning subsequent milestones; and (6) findingcreative ways to run operations with a minimum amountof resources until major assumptions are tested(McGrath and MacMillan 2000). On the lower level oftactics, tools and techniques such as reverse incomestatement, targeted experiments, and assumptionschecklists are offered.
Prescriptive entrepreneurship comprises a set ofresearch-based guidelines outlining what entrepreneurs
Y. Mansoori, M. Lackéus
Tab
le1
Astructured
representatio
nof
entrepreneurialm
ethods
onthelevelsof
logic,model,and
tactics
Logic
Model
Tactics
Effectuation
Asfuture
outcom
esdriven
byhuman
beings
are
largelyunpredictable,insteadof
predictio
n,controlshouldbe
atthecore
ofallthe
activ
ities.
Five
heuristicsof
effectuatio
n,Effectualcycle
Means
inventory,affordableloss
assessmenttem
plate,effectualask
Discovery-drivenplanning
Uncertainty
canbe
reducedby
system
atically
convertin
gassumptions
toknow
ledgeand
redirectingactiv
ities
intheface
ofem
erging
understanding.
Sixareasof
discovery-driven
planning
realized
throughtensteps
Reverse
incomestatem
ent,targeted
experiments,assum
ptions
checklists
Prescriptiveentrepreneurship
Insteadof
searchingtheentireworld
assearch
space,
entrepreneursshould
focustheirsearch
only
onsourcesof
possiblematches
with
whattheyalready
know
andtheirconsiderationsets.
Aprocessmodelconsistin
gof
anumberof
steps
N/A
Businessplanning
Future
outcom
esarelargelyunknow
nbutp
redictable
throughcarefulexaminationof
thetrends
and
availablehistoricaldata.
Sixstepsof
business
planning
Marketresearch,focusgroups,P
EST
model,S
WOTanalysis,7Smodel,
financialp
rognosis,nom
inalranking
The
lean
startupmethodology
Uncertainty
isreduciblethroughem
ployingasystem
atic
andscientificapproach
toform
ulatingworking
guesses
aboutthe
idea
andtestingthevalid
ityof
them
.
Build-m
easure-learn
loop,the
lean
startupflow
chart
Targeted
experiments,customer
interviews,
physicalprototypes,concierge,A
/Btests,fake
door
tests
Designthinking
Adoptionof
asystem
aticapproach
toproblem
form
ulation
andvalid
ationincreasesthelik
elihoodof
innovativ
esolutio
nsin
linewith
theneedsandwantsof
users.
The
five
stepsof
design
thinking
Physicalprototypes,userinterviews,
innovatio
nflow
chart,questio
nladder,
design
thinking
mixtape
Comparing effectuation to discovery-driven planning, prescriptive entrepreneurship, business planning, lean...
should do in order to improve their odds of success inwealth creation (Fiet 2008). On the higher level of logic,prescriptive entrepreneurship’s rationale is thatBentrepreneurial discovery depends on a fit between anentrepreneur’s prior, specific knowledge, and a particu-lar venture idea, which may be discoveredsystematically^ (Fiet 2008, p. 190). Grounded inBayesian learning, prescriptive entrepreneurship positsthat entrepreneurs are only able to discover ventureideas that correspond to their Bepistemic structure^(Fiet 2008, p. 26). Therefore, entrepreneurs should be-gin by systematically focusing on constrained priorexperience, in other words on their acquired generaland specific knowledge. In this context, Bsystematic^refers to how entrepreneurs Bpredetermine, based ontheir specific knowledge, how to search^ (Fiet et al.2013, p. 894) and Bconstrained^ refers to the idea thatentrepreneurs might derive more benefit from limitingsearches to familiar information channels as opposed tothe unbound scanning of the alertness perspective (cf.Kirzner 1997). On the middle level of model, Fiet(2008) highlighted five steps for a prescriptive model:(1) introspection about prior, specific, and generalknowledge; (2) selecting information channels in accor-dance with own prior knowledge; (3) confining thesearch to the most preferred information channels; (4)searching for signals and quickly responding to them;and (5) interpreting feedback based on socio-cognitivefactors. The goal of this process is to discover relevantsignals in the form of informational cues about theenvironment (Fiet 2007). On the lower level of tactics,prescriptive entrepreneurship remains abstract. It offerstheoretical notions such as information channels andconsideration sets, but it does not provide ways for usingthem in practice, rendering implementation challenging.
Business planning is defined as Ba process of ascer-taining a series of potential courses to be taken by thefirm, determining the firm’s position as a result of eachpotential course, comparing and weighing this positionfor all actions, and, on the basis of the evaluation,selecting the course of action to be followed^(Steinhoff 1971, p. 3). On the higher level of logic, thebusiness plan should offer solutions to Ba set of depen-dent and independent functional problems^ (Ackoff1981, p. 52). The business plan is the formal statementoutlining the process of business planning. It is con-structed around several functions in the internal organi-zation and several other external factors that influencethe entrepreneurial process. Business plans deal with
issues such as customers, market objectives, risks, fi-nancial plans, management team, and milestone sched-ules (Draman 1995; Delmar and Shane 2004). They alsoinclude strategies such as cost minimization, and perfor-mance and sales maximization (Utterback andAbernathy 1975), differentiation, cost leadership, andfocus (Porter 1980; Delmar and Shane 2003). On themiddle level of model, there are a number of stepscommonly associated with a business planning process:defining the business, developing its mission, settinggoals and objectives, crafting a strategy to achieve theobjectives, identifying the required resources, establish-ing a resource acquisition and allocation plan, executingthe strategy, evaluating performance, and initiating cor-rective adjustments (Draman 1995; Steinhoff 1971). Onthe lower level of tactics, approaches such as marketresearch (Hong et al. 2013), focus groups, SWOT anal-ysis, PEST model, 7S model, financial prognosis, andnominal ranking assist entrepreneurs in the process.
The lean startup methodology is Ba set of practicesfor helping entrepreneurs increase their odds of buildingsuccessful startups^ (Ries 2011, p. 20). On the higherlevel of logic, the lean startup methodology is foundedon Bthe realization that although human judgment maybe faulty, we can improve our judgment by subjectingour theories to repeated testing^ (Ries 2011, p. 150).Such repeated testing or purposeful experimentation isspecifically designed to provide validated learning abouta new product or service (Maurya 2012; Ries 2011).Evidence is gathered through close and constant inter-actions with current and potential customers and used tovalidate or invalidate key assumptions of the venture.On the middle level of model, the lean startup method-ology provides the Bbuild-measure-learn^ diagram: (1)mapping a business idea onto testable business modelassumptions (Osterwalder and Pigneur 2010) and build-ing a Bminimum viable product^ (MVP) that allows forcollecting feedback, (2) testing the product with cus-tomers and objectively analyzing the results of the com-pleted tests to validate or invalidate key assumptions,and (3) learning from the results and designing the nextrounds of experiments. Additionally, the proponents ofthe lean startup methodology rely on customer develop-ment (Blank and Dorf 2012) as a guiding tool, whichentails four stages of customer discovery, customer val-idation, customer creation, and company creation.These processes are designed to reduce uncertaintythrough the accumulation of detailed and accurate infor-mation. On the lower level of tactics, the lean startup
Y. Mansoori, M. Lackéus
methodology relies on a set of tools that are appropriatedfrom other domains, such as rapid prototyping (Brown2008) and agile software development principles (Dybåand Dingsøyr 2008). Tactics such as customer inter-views, targeted experiments, physical prototypes, con-cierge, fake door tests, and A/B tests all allow for quickfeedback collection and advancement of the process.
Design thinking is Ba discipline that uses the de-signer’s sensibility andmethods tomatch people’s needswith what is technologically feasible and what a viablebusiness strategy can convert into customer value andmarket opportunity^ (Brown 2008, p. 86). On the higherlevel of logic, design thinking is Bthe application ofintegrative thinking to the task of resolving the conflictbetween reliability and validity, between exploitationand exploration, and between analytical and intuitivethinking^ (Martin 2009, p. 171). Design thinking isgrounded in an iterative, nonlinear, and human-centered practice based on user research. The processbegins with defining the problem that users experience,understanding it in depth, creating a possible solutionand testing it, and ends with reflecting on the results(Liedtka and Ogilvie 2011; Carlgren et al. 2016). It isthrough this process of creating, testing, and learningthat entrepreneurs can better their initial venture ideas(Brown 2008). On the middle level of model, designthinking consists of five steps: (1) empathizing with theproblem by understanding it from the perspective ofusers, (2) defining the problem in detail bymaking senseof the dispersed information, (3) brainstorming differentways the problem might be solved through generating awide range of possible solutions and combining imagi-native insights about these solutions, (4) prototyping asolution to highlight its strengths and weaknesses toidentify new paths, and (5) testing the solution withusers through soliciting feedback about prototypes togain a better understanding. On the lower level of tac-tics, design thinking offers tools such as user interviews,physical prototypes, question ladders, innovation flow-charts, and design thinking mixtapes as aids to theprocess.
3.2 Step 2: comparing six entrepreneurial methodsacross the levels of logic, model, and tactics
For the level of logic, Table 1 illustrates several criticalassumptions about the nature of the venture creationprocess, specified through theoretical and philosophicalaxioms. Examples include the notion of uncertainty
(McKelvie et al. 2011), the view of the future in relationto the level of skepticism of the predictability of out-comes (Tetlock and Gardner 2016), and the nature of theprocess as discovery or creation (Alvarez and Barney2007). All the entrepreneurial methods that werereviewed explicitly or implicitly address the logic oftheir prescriptions. For example, business planning em-ploys scenario building as a way to Bpredict^ the future,while effectuation relies on heuristics for controllingpresent conditions while creating future ones.Knowledge and evidence are other notions central tothe level of logic in almost all of the surveyed entrepre-neurial methods. It is through the process of knowledgegathering by interacting with the external world thatentrepreneurs engage in a process of learning (Cohenand Levinthal 1990) and eventually reduce the uncer-tainty they face.
For the level of model, Table 1 shows that a numberof models prescribe procedural steps that represent theiterative nature of the entrepreneurial process. Suchmodels can be conceived of as summarizing heuristicsor algorithms. In some models—such as the lean startupmethodology, effectuation, and design thinking—thereare a clear order and feedback loops as part of theirprescriptions. These methods all present explicit modelswith iterations for how to make progress toward therealization of entrepreneurial objectives. Business plan-ning provides a clear sequence for necessary activitiesbut is designed to be used at the start of the process or ina predefined cycle (i.e., the annual planning cycle).Nevertheless, it serves as an important model, enumer-ating specific steps and areas of focus. Several modelsrefer to the involvement of external stakeholders. Forinstance, the lean startup methodology suggests thatinformed decisions can be achieved through frequentinteractions with external stakeholders, such as cus-tomers, partners, suppliers, and investors (Ries 2011;Klein 2013). Similarly, design thinking outlines stepsfor collecting user feedback in order to improve thequality of ideas and to refine them in line with thefeedback received.
For the lower level of tactics, Table 1 illustrates thatmany of the entrepreneurial methods provide tactics thatare aligned with their overarching logics. For instance,the lean startup methodology includes tactics such asconcierge, A/B tests, and making early MVPs.Similarly, design thinking offers prototyping, customerinterviews, and mixtapes to help entrepreneurs navigatethe five phases of design thinking. Table 1 shows that
Comparing effectuation to discovery-driven planning, prescriptive entrepreneurship, business planning, lean...
the scholarly grounded entrepreneurial methods providemarkedly less advice on this level than the practitioner-grounded counterparts, illustrating a difference in incli-nations for giving detailed and explicit prescriptions.
3.3 Step 3: developing a framework of nine conceptualdimensions of entrepreneurial methods
The framework shown in Fig. 1, with its disaggregationinto three levels, allows for a structured review of entre-preneurial methods, which enhances the clarity andvisibility across methods. As a result, the authors wereable to more effectively identify patterns. For instance,having the level of logic in mind primed the authors tospot ideas about aspects of the venture creation processthat corresponded to that particular level, namely pro-viding and discussing ideas involving the cognitiveaspects of the venture creation process (e.g., uncertaintymanagement). The development of the framework ofnine conceptual dimensions occurred in three stages. Inthe first stage, independent reviews took place over aperiod of 6 years, generating two different doctoraldissertations in which several conceptual dimensionsfor entrepreneurial methods were formulated(Mansoori 2015, p. 23–5; Lackéus 2016, p. 61). In thesecond stage, the independently formulated conceptualdimensions were integrated in five full-day workshops,during which the authors exchanged ideas to unite theframeworks. Some of the conceptual dimensions weremerged to represent more inclusive dimensions. Forinstance, Bnature of change^ and Blocus of agency^were merged to form Bredirection power.^Other dimen-sions were discarded, as they did not span a sufficientnumber of entrepreneurial methods. An example of adiscarded dimension was Breliance on historical data,^an important aspect of planning.
The entire process reduced the total number of con-ceptual dimensions to nine. As these nine dimensionswere generated inductively from the six established en-trepreneurial methods, none of the methods served as abaseline. This aspect of the process allowed for a moreobjective, unbiased, and generic comparison. In the finalstage, the preliminary framework and dimensions werescrutinized by editors and peer reviewers, triggering mi-nor revisions and eventually leading to these nine finaldimensions: uncertainty management, resource manage-ment, knowledge expansion, redirection power, continu-ous learning, iterative process, stakeholder interaction,team collaboration, and value creation (see Table 2).
On the level of logic, many of the reviewed methodsadvise that entrepreneurs cope with uncertainty (i.e.,uncertainty management) by systematically drawingon what is already known and then determining whatinformation needs to be gathered (i.e., knowledge ex-pansion), effectively making use of available and nec-essary resources (i.e., resource management). Mostmethods emphasize the importance of letting the gener-ated insights direct the forward momentum of the pro-cess in drastic ways if necessary (i.e., redirection pow-er). In the lean startup methodology, a drastic turn trig-gered by insights is called a Bpivot.^ On the level ofmodel, several methods outline a cyclical model (i.e.,iterative process) of learning from interactions (i.e.,continuous learning) with external stakeholders (i.e.,stakeholder interaction). Effectuation (Wiltbank et al.2006, p. 992; Read et al. 2016, p. 195) and the leanstartup methodology (Ries 2011, p. 81) both containvisualization of cyclical models. Design thinking sug-gests a more back-and-forth approach, also resulting inan iterative process (Rauth 2015, p. 20). On the level oftactics, some methods emphasize taking action throughteam-based efforts (i.e., team collaboration) to createvalue for external stakeholders (i.e., value creation).The lean startup method involves creating an MVP.Design thinking, on the other hand, hinges on the crea-tion of a prototype, and in effectuation, a key objective isto secure the commitment of stakeholders. Next, theframework with its nine conceptual dimensions will beused to conduct a second round of comparisons of thesix entrepreneurial methods.
4 Findings
To yield insight into the foundational similarities anddifferences of the six entrepreneurial methods, this sec-tion examines the conceptual underpinnings that formthe bases of their prescriptions. The section aims tobring to light where the methods overlap as well aswhere they diverge and differ. Table 2 helps carve outsimilarities and differences that these methods exhibit.The findings section is organized according to the nineconceptual dimensions developed in Section 3.
4.1 Uncertainty management
The first conceptual dimension speaks to the way entre-preneurial methods conceptualize the inherent
Y. Mansoori, M. Lackéus
Tab
le2
Theoreticalfoundatio
nsof
thesixentrepreneurialm
ethods
alongthenine
conceptualdimensions
Conceptual
dimension
Effectuation
Discovery-drivenplanning
Prescriptiv
eentrepreneurship
Businessplanning
The
lean
startup
methodology
Designthinking
Uncertainty
managem
ent:
Copewith
and
reduce
uncertainty
Uncertainty
(Knightiantrue
uncertainty)
isunderstood
asunknow
ability
offuture
outcom
esdueto
the
creativ
echaracterof
the
emergent
processof
creatin
gnewventures
a
BUncertainty
inthe
structure-conduct--
performance
paradigm
has
todo
prim
arily
with
ascertaining
which
features
ofthecompetitivelandscape
oneshould
payattention
to^b
BAsearch
cannever
completelyelim
inateall
uncertainty,which
leaves
anentrepreneur
tomanage
thetrade-offbetween
continuing
toinvestin
inform
ationtoreduce
what
isunknow
nandthecostof
doingso^c
N/A
Whenentrepreneursbelieve
they
aredealingwith
ahighly
uncertainbut
relativelypredictable
future,a
processof
system
aticinform
ation
gatheringandeffortsin
analysisof
that
inform
ation,with
incertain
bounds,isareasonable
course
ofactio
nd
N/A
Resource
managem
ent:
Manageyour
existin
gresourcesand
acquirethe
necessary
ones
BStakeholderscommit
resourcesinexchange
fora
chance
toreshapethegoals
oftheproject^
toinfluence
future
results
z
BMajor
commitm
entsof
resourcesshould
bepostponeduntil
theevidence
from
theprevious
milestone
eventsignalsthattherisk
oftaking
thenext
step
isjustified^
aa
BThe
impedimentfor
entrepreneursisthatthe
inform
ationneeded
tomakeinform
edallocatio
nsof
resourcesdoes
not
exist^
ab
The
existenceof
the
available
resourcesatthe
timeof
planning
processisa
nonissue.T
hey
canbe
acquired
throughexternal
fundingg
Itisim
portanttoreceive
feedback
onassumptions
before
committing
resourcesato
theproductd
N/A
Knowledge
expansion:
Letknow
ledge
bethestartin
gpointand/or
aimtoexpand
available
know
ledge
Knowledgeisform
ulated
aswhatthe
focalentrepreneur
know
s.Thisknow
ledgeis
latercomplem
entedby
otherstakeholders’
know
ledge.The
available
know
ledgeisan
expansion
oftheknow
ledgeof
allthe
individualswho
join
the
processe
Due
tothehigh
degree
ofuncertainty,entrepreneurs
areforced
tooperatein
the
face
ofhigher
assumption-to-knowledge
ratio
.Therefore,theyarein
need
ofstrategies
for
system
atically
collecting
relevant
know
ledge.
Historicaland
current
know
ledgeisinfluentialin
whatknowledgeisperceived
tobe
lackingb
There
isaneed
toleverage
specificknow
ledgeand
combine
itwith
the
existin
ggeneral
know
ledgein
attemptsto
expand
theknow
ledge
base,w
hich
increasesthe
likelihoodof
arriving
ata
fitb
etween;entrepreneurs
andtheirventureideasf
Itispossibleto
forecastfuture
outcom
esby
crunchingthe
existin
g,historical
know
ledgeand
producing
comprehensive
plansg
Existingknow
ledge,while
valuable,has
little
actionablemerits
butcan
beim
proved
through
carefuld
eliberationthat
restsin
carefully
collected
know
ledged
Acrucialp
arto
fdesign
thinking
isto
gain
user
know
ledgeby
collecting
inform
ationaboutu
sers
andtheirneedsh
Redirectio
npower:
Highautonomy
and
ownershipof
process,
reactin
gto
Hum
ansarenotoriouslybad
inpredictin
gand
forecasting.Focusingon
synthesisandactionallows
forbeingmoreadaptiv
eto
newconditions.Therefore,
ascontingenciesariseand
newstakeholderscomeon
N/A*
N/A*
N/A
Aviableandscalable
business
modelcanbe
achieved
ifinsights
gathered
through
experimentsareused
torapidlytestandrevise
importantelementsof
the
ventureidea.T
herefore,
Implem
entinghypothesis
testinganditeratio
nloops
asearlyas
possiblein
the
processprovideahigher
degree
ofredirection
power.C
ontin
uedlearning
andtheiterations
reduce
risksandim
provesuccess
Comparing effectuation to discovery-driven planning, prescriptive entrepreneurship, business planning, lean...
Tab
le2
(contin
ued)
Conceptual
dimension
Effectuation
Discovery-drivenplanning
Prescriptiv
eentrepreneurship
Businessplanning
The
lean
startup
methodology
Designthinking
failu
resand
surprises
board,theseto
fim
agined,
possibledirections
expands.Thisbegs
for
certaindegreesof
flexibilitya
theseinsightsareboundto
give
way
toiteratio
nsand
pivotsd
ratesin
theinnovatio
nprocessi
Contin
uous
learning:
Learn
from
feedback
onow
nactivities
andprocesses
BThe
effectuatorseeksto
design
intelligent
failu
res
thatcanbe
locally
containedandcontributeto
his/herlearning,and
continually
pushes
forw
ard
aseries
ofsm
allsuccesses
thatcanbe
accumulated
over
time^
j
Learningisachieved
througha
processof
Bsystematically
convertingassumptions
toknow
ledgeandredirecting
activ
ities
intheface
ofem
erging
understanding^
k
Based
onspecificknow
ledge
from
priorexperience
combinedwith
learning
from
ongoingfeedback
signalsfrom
previously
selected
channels,
inform
ationchannelscan
beeffectivelyrevisedf
N/A
The
validity
ofeach
assumptionisgrounded
infeedback
received
through
variouschannels.L
earning
from
feedback
received
iscoretotheiterativ
eprocess
ofupdatin
gcritical
assumptions
thatdefine
the
ventureidea
l
BContin
uedlearning
andthe
iteratio
nof
hypotheses
will
reduce
risk
and
improvesuccessratesin
theinnovationprocess^
m
Iterativeprocess:
Circularand
repetitive
sequence
ofactiv
ities
and
procedures
Expertentrepreneursoften
startw
ithwho
they
are,
whattheyknow
,and
whom
they
know
and
engage
inim
aginingallthe
availablepathsforw
ard.
Theylaborto
attract
commitm
entfrom
external
stakeholdersandthe
inclusionof
them
requires
therevisednetworkof
stakeholdersto
reflecto
nthenewly
constructed
Bwho
they
are,whatthey
know
,and
whom
they
know
^e
With
theem
ergenceof
new
inform
ationandthe
consequent
reduced
assumption-to-knowledge
ratio
,thereisaneed
tore-
form
ulatetheremaining
assumptions,devisenew
waysfortestingthem
,and
gather
relevant
inform
ation.
The
processdeem
sneces-
sary
until
the
assumption-to-knowledge
ratio
issufficiently
reducedn
The
feedback
loopsbetween
searchingaconsideration
setand
selecting
inform
ationchannelsis
moderated
bysocio-cognitive
factors
such
asmotivation,
expectations,creativity,
decision-m
akingstyle,ab-
sorptivecapacity,sense
makingo
N/A
Three
punctuated
iterative
phases
ofbuild,m
easure,
andlearnwould
allow
entrepreneursto
embracea
fluidprocesswherecritical
assumptions
arebeing
updatedwhennew
know
ledgecomes
into
lightp
BThe
reason
fortheiterativ
e,nonlinearnature
ofthe
journeyisnotthatd
esign
thinkersaredisorganized
orundisciplined
butthat
design
thinking
isfundam
entally
anexploratoryprocess^
q
Stakeholder
interaction:
Relianceon
interactions
with
other
people,
inseparability
ofexternalsto
theprocess
Alltheexternalindividuals
(involvedin
theeffectual
process)who
commit
resourcescanbe
considered
entrepreneurs.
Decisions,therefore,are
madein
acollective
mannerby
theintertwined
web
ofself-selected
stakeholdersa
N/A
N/A
N/A
Usersandcustom
ersare
considered
passive
stakeholderswhose
feedback
andopinions
have
implications
forthe
finalp
roductofferedd
BIndividuals,ratherthan
allowingthem
selves
tobe
stereotypedas
‘consumers,’‘customers,’
or‘users,’canthinkof
them
selves
asactiv
eparticipantsin
theprocess
ofcreatio
n^r
N/A
N/A
Y. Mansoori, M. Lackéus
Tab
le2
(contin
ued)
Conceptual
dimension
Effectuation
Discovery-drivenplanning
Prescriptiv
eentrepreneurship
Businessplanning
The
lean
startup
methodology
Designthinking
Team co
llaboratio
n:
Com
plem
ent-
ary
individuals
working
inteam
form
at
The
team
canbe
understood
asconsistin
gof
thefocal
entrepreneur
andthe
networkof
stakeholders.
Whilethefocal
entrepreneur
canbe
said
tobe
theintegralmem
berof
anyeffectualp
rocess,his
orherroleisconditioned
bytheinteractions
with
inthenetworkof
committed
stakeholderss
BBycombining
theindividual
considerationsetsof
diverseteam
mem
bers,a
team
couldaccess
alarger
jointconsiderationsetthan
couldasingleentrepreneur
working
alone…
inpursuito
faccess
topreviously
unknow
ninform
ation^
t
Alth
ough
Bthe
team
can
supportthe
founders,
firsthandexperience
bydefinitioncannot
bedelegated^
andthereforeis
needed
tobe
conductedby
founderspersonallyu
Embracingdesign
thinking
iscontingent
onshiftin
gfocusfrom
individual
know
ledgeworkto
team
-based
collaboratio
nv
Value
creatio
n:Emphasison
creatin
gvalue
foryou
and/or
others
external
Bothacquiringand
expendingavarietyof
resourcesin
thepursuito
fvaluecreatio
nareessential
features
oftheeffectuation
process.The
valueisto
beprovided
toallthe
active
stakeholdersas
wellas
usersandcustom
ersw
The
methodology
createsvalue
foracompany
byallowing
totake
actio
nsthatenlarge
andexploitu
psidegains
whileminim
izingdownside
exposuren
BEntrepreneursinterpret
signalsas
they
assess
their
usefulness
infuture
markets,tim
eliness,and
potentialfor
value
creation^
x
N/A
Product-marketfitrequires
thatBthe
venturedelivers
adequatevalueto
all
relevantparties:em
ployees
thatwill
join,customers
thatwill
buytheproduct,
partnerswho
will
provide
technology,and
distributio
n,andinvestors
who
will
beableto
earn
adequatereturns^
y
Value
iscreatedthrough
processesof
empathy,
integrativethinking,and
experimentatio
nforthe
enduser
andas
adirect
outcom
eof
thatprocess
fortheteam
ofentrepreneursi
aSarasvathy
(2001);b
McG
rath
andMacMillan
(2000:14);
cFiet(2007:607);
dRies(2011);e
SarasvathyandDew
(2005a);
fFiet(2008);
gAckoff(1981);h
Carlgrenetal.(2016);
iBrown
(2008);jSarasvathy
etal.(2008:340);kMcG
rath
andMacMillan
(2000:243);lBlank
andDorf(2012);mLiedtka
(2015:929);nMcG
rath
andMacMillan
(1995);oFietet
al.(2013);
pEisenmannetal.(2012);qBrown(2009:35);
rBrown(2009:80);sW
iltbank
etal.(2009);tFiet(2007:600);uBlank
andDorf(2012:151);vBrown(2009);wWiltbank
andSarasvathy
(2010);x
Fietetal.(2013:904);
yEisenmannetal.(2012:9);
zWiltbank
etal.(2006);
aaMcG
rathandMacMillan
(1995:55);a
bFiet(
2007:603);*L
iteratureprovides
prescriptio
nhere,but
nota
theoreticalfoundatio
n
Comparing effectuation to discovery-driven planning, prescriptive entrepreneurship, business planning, lean...
uncertainty present in current or future situations thatentrepreneurs face as part of their venture creation ef-forts (cf. Gomory 1995; McKelvie et al. 2011). Theview of future outcomes has important implications forhow uncertainty should be managed (Sarasvathy andDew 2005b). Apart from design thinking and businessplanning, the other methods explicitly or implicitly ap-proach the notion of uncertainty, presenting it as one ofthe main reasons for the relevance of their prescriptionsand proposing ways to manage or reduce it. The mean-ing of the term uncertainty, however, diverges alongthree main paths (cf. Packard et al. 2016). The firstmeaning is relevant to effectuation, in which uncertaintyis ontological; that is, the future is unknowable in prin-ciple (Read et al. 2016; Knight 1921). Thus, the future isconstructed by actors who are jointly creating it inunpredictable ways (Dew et al. 2008). The secondmeaning of uncertainty is seen in discovery-driven plan-ning and prescriptive entrepreneurship, and frames un-certainty as epistemological; that is, the future is know-able through information gathering strategies (Fietand Patel 2008). Here, uncertainty can be mitigat-ed by entrepreneurs expanding their knowledgebase. The third meaning for uncertainty revealsitself in the lean startup methodology, where amore implicit and colloquial meaning is found,incorporating concepts such as ambiguity and risk.It is most similar to epistemological uncertainty, thereduction of which hinges on the need to gather infor-mation (Murray and Tripsas 2004).
4.2 Resource management
The second conceptual dimension is concerned withhow to use existing resources and acquire new onesthrough various strategies. Scarce resources play animportant and integral role in any entrepreneurial pro-cess (Ozdemir et al. 2016; Baker and Nelson 2005), andentrepreneurial methods often provide recommenda-tions for acquiring and managing resources.Depending on the overarching logic of the entrepreneur-ial methods, different standpoints are taken. Effectuationemphasizes the dynamic nature of the resources at handby focusing attention on two issues: entrepreneursshould rely only on resources they are willing to lose,and self-selected stakeholders should be given the op-portunity to (re)shape the future of the venture in ex-change for committing resources (Dew et al. 2009).While discovery-driven planning grants more
prominence to resources than business planning, theyboth offer guidance on how existing resources should beallocated (McGrath and MacMillan 2000; Shane andDelmar 2003). Yet, neither method suggests strategiesfor how to acquire these new resources. Within designthinking, there do not appear to be recommendationsaround resource management. Prescriptive entrepre-neurship discusses resources primarily as informationabout the possible discovered opportunities andprovides ways to acquire new ones (Fiet 2007).Finally, the lean startup methodology cautions thatfrugality must be exercised in initial tests of theventure idea, before the commitment of any majorresources. Here, ideas around the scarcity of resourcescrystallize into the forewarning to fail early and fast(Khanna et al. 2016).
4.3 Knowledge expansion
The third conceptual dimension relates to activitiesaiming to expand the knowledge base beyond the levelof personal and general knowledge an entrepreneurpossesses at any given time in an entrepreneurial pro-cess. Knowledge plays an important role in entrepre-neurship (Tang et al. 2012), and its importance ishighlighted in most of the entrepreneurial methods.Except for business planning, in which the role ofknowledge is more illustrative and representational,the other methods emphasize leveraging currentpersonal and general knowledge in order to expandthe repos i to ry of one ’s own knowledge .Effectuation and prescriptive entrepreneurshipstrongly emphasize personal knowledge as the startingpoint (Fiet 2008; Sarasvathy 2001), whereas othermethods stress the importance of expanding the generalknowledge base, regardless of its origin. A key observ-able difference between the methods has to do withideas about how knowledge should be expanded (cf.Lundvall 1992). In effectuation, knowledge is expandedprimarily when stakeholders in possession of newknowledge join the network, whereas in prescrip-tive entrepreneurship, the lean startup methodolo-gy, and design thinking, knowledge is expandedthrough carefully designed information gatheringactivities. These differences mirror the previouslyobserved differences in conceptualizations of uncer-tainty management, suggesting a strong link be-tween the acquisition of knowledge and the abilityto manage uncertainty.
Y. Mansoori, M. Lackéus
4.4 Redirection power
The fourth conceptual dimension concerns the degree towhich the methods recognize entrepreneurs’ agencyover the entrepreneurial process, especially in relationto new information, failures, and surprises (Garud andKarnøe 2003). Although all entrepreneurial methodsexcept for business planning have a recursive under-standing of the venture creation process, they permitvarying degrees of process ownership (cf. Foss et al.2007). Business planning has a linear understanding ofits prescriptions, and although in reality there may beredirections in the process, the method does not, explic-itly or implicitly, provide advice in this regard. Whileeffectuation, design thinking, and the lean startup meth-odology explicitly embrace surprises and contingencies(Sarasvathy 2001; Johansson-Sköldberg et al. 2013),discovery-driven planning and prescriptive entrepre-neurship guide entrepreneurs to avoid future surprises.It is important to note that, in principle, entrepreneurialmethods are receptive to the idea of a change in direc-tion. But a difference between the methods emergeswith respect to the point at which these redirectionshappen. In effectuation, design thinking, and the leanstartup methodology, redirections can happen any timenew information is unearthed. In discovery-drivenplanning and prescriptive entrepreneurship, on theother hand, the decision to redirect is made at theend of a completed cycle. It is worth noting that,although discovery-driven planning and prescrip-tive entrepreneurship have incorporated redirectionalideas into their prescriptions (Fiet 2007; McGrath andMacMillan 1995), they fall short in providing ex-plicit justifications for why these changes to direc-tion in the face of emerging understanding arerelevant and necessary.
4.5 Continuous learning
The fifth conceptual dimension refers to the role offeedback and how it provides learning opportunitiesfor entrepreneurs during venture creation activities.Continuous learning from feedback plays an importantrole in shaping the trajectory of the entrepreneurialprocess (Minniti and Bygrave 2001). Feedback can bethe outcome of a deliberate process of information gath-ering, as in the lean startup methodology, design think-ing, and discovery-driven planning. It can also be theresult of serendipity and happenstance, as in effectuation
and prescriptive entrepreneurship (Harmeling andSarasvathy 2013). In all entrepreneurial methods exceptfor business planning, a high value is placed on contin-uous learning and the philosophical grounding of theventure creation process in newly learned insights.Feedback from the external environment is stressed asa source of continuous learning (cf. Kolb 1984).Effectuation deviates somewhat from the other method-ologies by placing less focus on continuous learning asan inherent strategy and more as a by-product of follow-ing other recommendations. The lean startup methodol-ogy and, to some extent, design thinking are moreexplicit, using validated learning as a cornerstone oftheir main ideas. Such a continuous learning necessitatesa need for revisiting and revising transient assumptionsheld by entrepreneurs in the face of newly acquiredinformation (Ries 2011).
4.6 Iterative process
The sixth conceptual dimension relates to the temporaland evolving nature of entrepreneurial models.Entrepreneurship is a dynamic process that requiresflexibility and constant adaptation (Bruyat and Julien2001). All entrepreneurial methods, with the exceptionof business planning, describe models that allow entre-preneurs to react to new information and environmentalconditions in dynamic and iterative ways. Regardless ofthe fact that these models could be understood as heu-ristics or algorithm-based, there is an explicit circularand repetitive aspect to them that suggests a continuousrevising of assumptions and the reinvention of the pro-cess as new information is unearthed (cf. Argyris 1976).A major difference between the models proposed inthese methods is what triggers the restarting of theprocess. In effectuation, the restart occurs when newstakeholders join the process, bringing with them anew set of means and expanding the set of possiblefutures to create (Sarasvathy 2003). In the other iterativemodels, the restart is triggered when new information isacquired through external sources as well as when theentrepreneur intuits a need to revise key assumptions. Asubtle difference between methods is an emphasis oniteration. The lean startup methodology, design think-ing, and effectuation are fundamentally groundedin iterative processes, whereas discovery-drivenplanning and prescriptive entrepreneurship include rel-atively minor feedback loops that may or may not resultin iterative processes.
Comparing effectuation to discovery-driven planning, prescriptive entrepreneurship, business planning, lean...
4.7 Stakeholder interaction
The seventh conceptual dimension refers to thereliance on interactions with others. While it re-mains largely under-researched, intersubjectivityhas had a central position in thinking about entre-preneurship (Sarasvathy and Venkataraman 2011).Entrepreneurs interact intensively with those who aredirectly involved in the process in various capacities aswell as with more peripheral stakeholders who indirect-ly impact the direction of the venture creation process(Hart and Sharma 2004). Discovery-driven planning,prescriptive entrepreneurship, and business planningdo not provide advice about stakeholder interaction.Instead, they focus on activities to be completed by thefocal entrepreneur, that is, the entrepreneur who ownsthe initial idea and process and has the largest impact onthe direction of the new venture (cf. Kotha and George2012). In effectuation, the lean startup methodology anddesign thinking interactions with stakeholders compriseimportant sources of feedback and new information (cf.Lundvall 1992; Tunisini and Zanfei 1998). These inter-actions constitute a large proportion of key activities,especially in the early stages of the new venture devel-opment. In the lean startup methodology and designthinking, stakeholders are defined as users, consumers,and customers who provide valuable insights that can beincorporated into and contribute to the evolution of theventure idea. It is noteworthy that these entrepreneurialmethods limit the involvement of users and customers tosoliciting feedback; in other words, they recommendkeeping them at arm’s length. In contrast, effectuationregards stakeholders quite differently. Effectuationscholars define active stakeholders as any individualswho commit resources; these stakeholders are partici-pating in the collective process of shaping the destiny ofthe new venture.
4.8 Team collaboration
The eighth conceptual dimension speaks to the role thatindividuals with complementary and diverse skill setsplay as team members in an entrepreneurial process.Team-based efforts are increasingly emphasized in en-trepreneurship research as a means to elicit and capital-ize on a larger set of heterogeneous competencies (Klotzet al. 2014; Lechler 2001; Harper 2008). An importantdifference observed among the methods pertains toideas about teams. In effectuation, the team boundaries
are highly fluid and dynamic. Anyone who commitsresources can be considered a team member and canplay a role in the future of the venture. The group thatforms is referred to as the Bnetwork of stakeholders,^which is in many ways similar to what some of the otherentrepreneurial methods label as a Bteam.^ Effectuatingindividuals are difficult to replace, as they have keyroles in shaping the direction of the venture. These rolesemanate from the idiosyncratic qualities these individ-uals possess (Sarasvathy and Dew 2005b). Designthinking, the lean startup methodology, and prescriptiveentrepreneurship view teams differently. They regardthem as a group of individuals with complementary skillsets who become responsible for specific aspects of theventure creation process based on their unique skills(Fiet 2008; Brown 2008; Blank and Dorf 2012). In thesemethods, most team members can be replaced by indi-viduals who possess similar competencies. A key dif-ference is that teams are more important in design think-ing and less important in prescriptive entrepreneurshipand the lean startup methodology. In discovery-driven planning and business planning, no explicitadvice on teamwork or on necessity for collectiveefforts could be identified.
4.9 Value creation
The last conceptual dimension concerns the creation ofvalue for entrepreneurs and others who may benefitfrom the outcome of the venture creation process.Creation of value, regardless of its recipients, is oftenthe ultimate goal of the entrepreneurial process (Bruyatand Julien 2001; Korsgaard and Anderson 2011). Allentrepreneurial methods except for business planningput value creation at the center. They make the venturecreation process conditional on providing value to en-trepreneurs and their teams, to active stakeholders, and/or to users and customers. This does not imply thatbusiness planning activities and outcomes fail to createvalue for entrepreneurs. They indeed help create legiti-macy and act as a marketing tool to attract investors(Brinckmann et al. 2010; Karlsson and Honig 2009).Rather, the activities as part of it are not designedprimarily to provide explicit value to external stake-holders. While the prime beneficiaries of value in effec-tuation, discovery-driven planning, prescriptive entre-preneurship, and the lean startup methodology are en-trepreneurs and their collaborators, design thinking em-phasizes value creation for users, customers, and
Comparing effectuation to discovery-driven planning, prescriptive entrepreneurship, business planning, lean...
consumers (Martin 2009). Amid these subtle differ-ences, Table 2 captures the role of value creationas an important factor for organizing new venturecreation activities.
5 Discussion
Table 3 summarizes the findings from the previoussection, attempting to clarify similarities, differences,strengths, weaknesses, overlaps, and gaps on a concep-tual level across all of the surveyed entrepreneurialmethods. This is the first effort of its kind to compareentrepreneurial methods along nine broad conceptualdimensions. Each cell in Table 3 contains typical pre-scriptive statements, which have been either clearlyarticulated in the methodologies or inferred by the au-thors of this article. Table 3 also reveals conceptual gapsin some of the methods, particularly in business plan-ning, underscoring the need for improvements.
While some methods appear similar upon first glance,variations in the details are often relatively large.Whereas effectuation calls for entrepreneurs to manageuncertainty by taking action to create the future, in thelean startup methodology, entrepreneurs discover the fu-ture through testing carefully designed hypotheses.Effectuation further advises entrepreneurs to expandself-knowledge through introspection (Dew andSarasvathy 2010), in contrast to design thinking, in whichentrepreneurs derive knowledge through observationalstudies of other people. While effectuation defines aredirection situation as an opportunity to Bleveragecontingencies,^ the lean startup methodology frames re-direction as an unfortunate but necessary Bpivot.^ In thelean startup methodology and in effectuation, continuouslearning comes primarily from interactions with cus-tomers and stakeholders, respectively, whereas in designthinking, continuous learning comes primarily from test-ing prototypes on users. Effectuation describes the itera-tive process as revolving around stakeholder commit-ments, whereas iterations in the lean startup methodologyand design thinking have to do with building frugalprototypes. Effectuation is largely focused on value cre-ation for oneself and the team, whereas the lean startupmethodology and design thinking are focused on valuecreation for others (i.e., for customers and users).
Table 3 also illustrates some key differences betweenentrepreneurial methods along the nine conceptual di-mensions. Stakeholder interaction is a key theme in
effectuation and in the lean startup methodology. It ispresent in design thinking alongside the imperative ofobserving stakeholders. It is, however, largely absent indiscovery-driven planning, prescriptive entrepreneur-ship, and business planning. Team collaboration is akey theme only in design thinking. It is partly orcompletely absent in the other entrepreneurial methods.
5.1 Analytical visual comparison across methodsand dimensions
In order to more powerfully illustrate the conceptualsimilarities and differences in Tables 2 and 3, the authorscreated a figure to show the weights assigned to each ofthe nine conceptual dimensions according to the extent towhich they are emphasized by a given entrepreneurialmethod. A set of qualifying criteria was developed toassign a grade2 for each dimension on a scale of 0 to 3. Ifa dimension was deemed fundamental to the theory orprescriptions of a given method, then it was considered abackbone dimension and was given a grade of B3^ forthat particular method. If an entrepreneurial method di-rectly referred to a dimension in discussions or prescrip-tions, that dimension was given a grade of B2^ for thatparticular method. If a method made indirect or implicitreference to a dimension by touching upon similar orrelated concepts, a grade of B1^ was given to that dimen-sion for that particular method. And lastly, if an entrepre-neurial method did not explicitly or implicitly addressany aspects of a dimension, and it could be safely as-sumed that this dimension did not inform any relevantaspect of that particular method, a grade of B0^was givento that dimension. This quantitative exercise resulted inFig. 2, which shows how the entrepreneurial methodscompare to one another and to effectuation.
To illustrate the grading system, the process of grad-ing uncertainty management is detailed here.Uncertainty serves as an ideological backbone in
2 The inter-rater agreement between the two authors who independent-ly conducted grading was relatively high, with 41 of the 54 gradesbeing the same. Consensus was achieved in the remaining dimensionsthrough extensive discussions among the authors and a detailed reviewof literature. The 13 grades requiring such discussions and reviewingwere distributed as follows: three each on team collaboration and valuecreation; two each on resource management, continuous learning, anditerative process; and one on knowledge expansion. All grades onuncertainty management, redirection power, and stakeholder interac-tion were in agreement between the two authors. The entrepreneurialmethods involved the most in such discussions were those that weregiven a low grade, since absence of a dimension proved to be moredifficult to substantiate than presence.
Y. Mansoori, M. Lackéus
effectuation, in the sense that its five action principlesare based on the assumption that entrepreneurial envi-ronments and associated activities are clouded withuncertainty (graded 3). Prescriptions for discovery-driven planning and prescriptive entrepreneurship areframed as suitable for uncertain entrepreneurial environ-ments, but the actions were not designed specifically asa means to reduce uncertainty (graded 2). In the leanstartup methodology, ambiguous and risky entrepre-neurial environments are equated with uncertainty(graded 1). And lastly, design thinking and businessplanning are not positioned as responses to uncertaintyand, therefore, they do not incorporate the notion ofuncertainty into their prescriptions (graded 0).
While the grading exercise is subjective, the resultingfigures illustrate patterns of potential relevance to thecomparison. A similarity across most of the entrepre-neurial methods is an emphasis on knowledge expan-sion, value creation, and iterative process, as well as alack of emphasis on team collaboration. Given themethods were developed largely in isolation from oneanother, these similarities are somewhat unexpected.Some differences are also visible. Three of the entrepre-neurial methods address the nine dimensions more com-prehensively than the others: effectuation, the leanstartup methodology, and design thinking. Moreover,redirection power and stakeholder interaction are impor-tant differentiators between them and the others.Business planning is largely mute on many of the ninedimensions.
Although some of the entrepreneurial methods incor-porate most of the nine dimensions, they can neverthe-less benefit from further elaboration in order to makethem more comprehensible. For instance, the fact thateffectuation is graded highly on stakeholder interactiondoes not necessarily mean that practical pointers aregiven for how individual entrepreneurs can form andleverage such interactions. In a similar fashion, the factthat the lean startup methodology is graded highly oncontinuous learning does not necessarily mean that theprescribed learning mechanisms are grounded in a the-oretical understanding of continuous learning. In sum,the fact that an entrepreneurial method emphasizes aparticular dimension does not make the emphasis ac-tionable or rigorous.
In an attempt to deepen the surface-level observa-tions for gaps, similarities, and differences shown inTable 3 and Fig. 2, two key themes will now be ex-plored. The first describes two approaches to bridge the
rigor–relevance gap in entrepreneurship. The secondhighlights three different venture phases, with implica-tions for whichmethods are appropriate to follow duringeach phase.
5.2 Bridging the rigor–relevance gap: two new ways
A key difference between the entrepreneurial methodscompared here is their origins: some are scholarlygrounded and others are practitioner-grounded. Thiswas a purposeful sampling strategy, and the comparisonconducted here sheds a new light on this key differenceon a deeper level. Table 1 revealed that effectuation,discovery-driven planning, and prescriptive entrepre-neurship are lacking on the level of tactics, especiallywhen compared to practitioner-grounded entrepreneur-ial methods that offer rather large toolkits for managingdifferent aspects of the venture creation process.Previous research indicates that, in order to trigger ac-tions, detailed instructions and prescriptions for behav-ior must be given (Fishbein and Ajzen 2010). If behav-ioral tactics are what make entrepreneurial methodsactionable and in turn relevant to practitioners(Romme 2003), Table 1 can explain why practitioner-grounded entrepreneurial methods are so widespread, asevidenced by Blank (2013) and Christiansen (2009).This also lends credence to previous claims that schol-arly grounded methods are difficult for practitioners tounderstand (Romme 2016). In the same vein, Fisher(2012, p. 1044) notes that it is Breally difficult for a wideaudience to understand and interpret what is meant byeffectuation.^ This comparison has illuminated, in anovel way, reasons why many scholarly grounded en-trepreneurial methods are perceived by many as lackingpractical relevance.
While Table 1 shows that all the entrepreneurialmethods exhibit an overarching logic of some kind,the more fine-grained analysis in Table 2 reveals anumber of shortcomings for practitioner-grounded en-trepreneurial methods in terms of theoretical basis.Neither business planning nor design thinking providesarticulated underpinnings of uncertainty management.Moreover, while the lean startup methodology discussesuncertainty to some extent, it does not engage in anontologically or epistemologically sound discussionaround what constitutes uncertainty, beyond referringto the need to eliminate it from entrepreneurial process-es. Given that uncertainty is a fundamental characteristicunderlying entrepreneurship (McMullen and Shepherd
Comparing effectuation to discovery-driven planning, prescriptive entrepreneurship, business planning, lean...
2006), its absence or weak presence in practitioner-grounded entrepreneurial methods may indicate a lackof rigor. These key differences are illustrated through apolar chart in Fig. 3, which shows an evaluation of thesix entrepreneurial methods in terms of core, explicit,implicit, or no focus in discussions on uncertaintymanagement.
This article provides a more fine-grained analysis ofkey characteristics of the rigor–relevance gap in relationto the six entrepreneurial methods. None of the surveyedmethods are currently capable of fully bridging therigor–relevance gap. In order to successfully do this,scholarly grounded methods need to be stronger on thelevel of tactics. Practitioner-grounded entrepreneurialmethods, on the other hand, could benefit from improve-ments in the areas of ontology and epistemology ingeneral and on their view of uncertainty managementin particular.
5.3 Importance of the venture phase for methodologicalfit
Depending on which phase an entrepreneurial venture isin, redirection power in Table 2 seems to covary. In theearly phase of a venture, redirection power, continuouslearning, and relentless expansion of the knowledgebase are to be expected. An example of an entrepreneur-ial method that corresponds to the early phase is effec-tuation. In this early phase, whoever joins the venture
will be a potential Bstakeholder,^ is allowed to reorientthe venture, and will determine the path forward (cf.Sarasvathy 2001). Formal roles do not matter muchsince everyone is a stakeholder cocreating the journey,and any decision is the result of a joint process involvingmultiple negotiations and interactions among the stake-holders on board (Sarasvathy et al. 2005). In fact, onecould argue that effectuation shies away from the notionof a core venture team and instead takes a more expan-sive view of a network of stakeholders, who eventuallycoalesce into a founding team (Wiltbank et al. 2006).This is similar to the notion of a nonteleological endeav-or, in which arrival at an emerging goal is the outcomeof the process itself (Dew et al. 2009).
In a later phase of the venture, there is a need formore structure (Clarysse and Moray 2004). Two primeexamples are design thinking and the lean startup meth-odology. Here, redirection power, continuous learning,and knowledge expansion are more structured and or-ganized through the process of hypothesis testing. Goalsand visions are articulated by a small team known asBfounders^ (Blank and Dorf 2012) or Bteam members^(Brown 2009). The interactions are more formal andtransactional than in effectuation, distinguishing thosedriving the process from their Bcustomers^ (Blank andDorf 2012; Ries 2011) or Busers^ (Brown 2009). Here,redirection power is still quite high, but it is exploited atspecific points in time. It is also referred to as Bpivot^(Ries 2011) or Biteration^ (Brown 2009; Liedtka 2015).
Fig. 2 Analytical comparison of six entrepreneurial methods across nine conceptual dimensions
Y. Mansoori, M. Lackéus
It reflects a higher degree of complexity and relies onclear roles and division of labor. The roles of the focalentrepreneur (Ries 2011) or the founding team (Brown2009) are more prominent in these methods and thelosses are less affordable due to more time and resourceshaving been invested into the process of a later phaseventure.
In mature ventures, redirection is not an affordable ordesirable option except in very specific situations. Anexample of an entrepreneurial method appropriate hereis business planning. This method exhibits little to noemphasis on redirection, continuous learning, or contin-uous knowledge expansion (see Table 2). Instead, ittranslates what is already known into plans beforestarting the journey and at predefined times throughoutthe journey. Business planning is focused on the execu-tion of a goal defined at the outset, and all the activitiesare designed to further progress toward that goal (Shaneand Delmar 2003; Karlsson and Honig 2009). An em-phasis on necessity to plan carefully and avoid redirec-tion whenever possible could be due to an implicitassumption that losses in mature ventures can be costly,
as exemplified by later stage venture financing. Venturecapitalists often request to review business plans beforeinvesting large amounts of money into a venture(Brinckmann et al. 2010).
The key differences that this venture phase observa-tion makes explicit are illustrated in a polar chart inFig. 4. This chart shows an evaluation of the six entre-preneurial methods in terms of a core, explicit, implicit,or no focus on redirection, based on Table 2 and Fig. 2.A key implication here is that the choice of entrepre-neurial method is highly contingent upon the phase ofthe venture. Existing venture phase models articulatedin extant literature could then perhaps be applied whendeciding which entrepreneurial method is appropriate touse (e.g., Clarysse and Moray 2004; Hanks et al. 1994;Levie and Lichtenstein 2010). This has also been tenta-tively proposed recently (Reymen et al. 2015), buildingon a four-phase model consisting of idea phase, pre-startup phase, startup phase, and post startup phase(Clarysse and Moray 2004). In this case, effectuationcould then be positioned as useful primarily in the ideaand pre-startup phases, design thinking and the lean
Fig. 3 Polar chart showing how focus on uncertainty management sets apart scholarly grounded entrepreneurial methods from practitioner-grounded entrepreneurial methods
Comparing effectuation to discovery-driven planning, prescriptive entrepreneurship, business planning, lean...
startup methodology could be useful primarily in thepre-startup and startup phases, and discovery-drivenplanning and business planning could be useful primar-ily in the startup and post startup phases. This, however,must be viewed as a tentative proposition. No empiricalresearch has yet been conducted on covariance betweenventure age, size, and growth rate, on the one hand, andmultiple entrepreneurial methods used successfully, onthe other hand. Venture phase models can also be mis-leading, resting on a false assumption that entrepreneur-ship is a linear and predetermined journey of growth(Levie and Lichtenstein 2010). Further, some entrepre-neurial methods are opposing the claim implicit in phasemodels that entrepreneurial processes are linear (e.g.,Blank and Dorf 2012: 32).
Despite the challenges in aligning entrepreneurialmethods to existing venture phase models, the methodsdo seem to be complementary over time. When thestakes are low in a new venture, the applicable methodmight be effectuation, followed by a move to applyingthe lean startup methodology when the stakes are slight-ly higher. Then the time arrives for a venture ramp-up,for example, when bringing in large amounts of venturecapital. At this stage, few investors would be willing tocommit resources unless they were shown a detailedplan or proposal of some kind. Furthermore, having noexplicitly stated goals necessitates constant change (i.e.,effectuation viewed as a nonteleological endeavor), hav-ing fluid goals facilitates change (i.e., the lean startupmethodology and design thinking), and having fixedgoals leads to inflexibility in the face of change (i.e.,business planning, discovery-driven planning, and pre-scriptive entrepreneurship).
To avoid premature assignment of entrepreneurialmethods to certain venture phases, a venture phaseagnostic metaphor of boating is proposed here to inspirefuture research. The size of the boat represents the phaseof an entrepreneurial venture. Applying effectuationcould then be viewed as traveling in a rowboat, wherewhoever boards the rowboat is allowed to row and thusreorient its direction somewhat. Any loss in speed oreven of the boat itself is affordable, since the pace isslow and the boat is small. Space is limited, so eachpassenger needs to bring something of value on thejourney. Applying the lean startup methodology couldbe viewed as traveling in a sailboat, where a redirectionis analogous to upwind sailors tacking into the wind incarefully planned maneuvers. The more formal roles ofa founder and a team are analogous to a captain and a
sailboat crew, respectively, being a necessity on a moreexpensive and complex boat traveling in more danger-ous waters. Applying business planning could beviewed as traveling in a large ferry toward acarefully planned destination, and where a loss ofthe boat is very costly.
6 Implications
6.1 Implications for theory
A key theoretical implication of this study is thatscholars can use the key strengths of some entrepreneur-ial methods to improve aspects of other entrepreneurialmethods that require theoretical and practical develop-ment. In particular, insights from this enquiry enablescholars to take advantage of the theoretical strengthsthat effectuation is grounded in and the strengths aroundactionable, tactical prescription that the lean startupmethodology and design thinking provide. Ourstudy also shows weaknesses among the sixmethods, especially in the areas of team collabo-ration and contextual sensitivity. For example, itmight not make much sense to give effectuation-based advice when potential losses are far fromaffordable, or when roles and responsibilities are alreadyestablished and when continuous redirection of strategicchoices is a less viable strategy.
To advance beyond the current state of entrepreneur-ial methods, researchers need to recognize entrepreneur-ial methods as a legitimate field of scholarly inquiry.One way could be to adopt an integrated approach,combining different methods into more comprehensivemeta-methods that are both Btheoretically-driven andempirically-tested^ (Fiet 2008, p. 11) in a broad varietyof contexts and situations. Such work could be guidedby the three-tiered framework and the nine conceptualdimensions put forth in this article and could draw fromand relate to extant literature, such as venture successfactors (Hong et al. 2013; Marmer et al. 2011) andinnovation and startup ecosystems (Gauthier et al.2017), among others. An integrated approach could alsofurther the development of a prescription-based andpragmatic view of the entrepreneurial process. It isargued in this article that a combined view may be themost accurate and effective one. Perhaps entrepreneur-ship is when individuals manage uncertainty byexpanding their knowledge and resource base through
Y. Mansoori, M. Lackéus
continuous learning from feedback, in an iterative andinteractive manner involving close collaborators, actingto create new kinds of value for oneself and for others.
6.2 Implications for practice
Some key implications for practice are also evident.Entrepreneurs should reflect critically on advice givento them to decide if and when an entrepreneurial methodis suitable for their purposes, taking into considerationdevelopment stage and context (Reymen et al. 2015).Ease of use does not imply future venture success. Thelack of theoretical rigor among the entrepreneurialmethods, especially in the areas of uncertainty manage-ment and team collaboration, suggests that entrepre-neurs might need to develop their own comprehensiveunderstanding of these two key issues. For example, themethods have a tendency to provide ready-made an-swers instead of inspiring entrepreneurs to undertaketheir own processes of discovery when facing an un-known situation. Entrepreneurs could also benefit frombeing aware of the shortcomings of business planning,
in terms of its misalignment with many key dimensionsof the entrepreneurial process. Early-stage financierscould take stock of this discrepancy and draw uponother entrepreneurial methods when assessingwhich ventures to fund. If scholars act upon thetheoretical implications mentioned above, entrepre-neurs will have access to more comprehensive andempirically studied meta-methods that place thecontext and development stage of the venture at thecenter of prescriptive efforts.
6.3 Implications for educators and policymakers
This study also has implications for educators andpolicymakers. Educators can now use the three-tieredframework and the nine conceptual dimensions to helpstudents make sense of the existing entrepreneurialmethods, illustrating their strengths, weaknesses, andcomplementarities. The temporal, contextual, direction-al, and uncertainty-related differences presented herecan also be explored in more depth in academic settingsas a way of teaching and communicating them more
Fig. 4 Polar chart showing how emphasis on redirection power sets apart entrepreneurial methods suitable for early-stage venture creationfrom methods suitable for later stage venture creation
Comparing effectuation to discovery-driven planning, prescriptive entrepreneurship, business planning, lean...
effectively. The rigor–relevance gap, exhibited by entre-preneurial methods as well as other submanagementtheories, calls for attention from educators who rely onthese methods in practically oriented courses and mod-ules. Educators could communicate with students in atransparent manner about limitations in theoretical rigor,applicability, actionability, empirical evidence base, andcontextual sensitivity. Methods that are exciting or con-venient to teach, such as the lean startup methodologyand business planning, are not effective in all settings.Moreover, policymakers could address these shortcom-ings in research, education, and entrepreneurial ecosys-tems by demanding more practical relevance from theirresearch grants. In this way, policymakers could inspireresearchers, educators, incubator and acceleratorcoaches, university officials, entrepreneurship consul-tants, ecosystem designers, and others to raise thebar for theoretical rigor and at the same time, forcontextual relevance and applicability. These ef-forts would strengthen the empirical evidence baseof the entrepreneurial methods that are being stud-ied, recommended, and implemented in a multitudeof settings.
7 Conclusions
The comparison undertaken here has positioned empir-ical, theoretical and prescriptive work on entrepreneurialmethods as an emerging scholarly field of not onlyinquiry but also of design (Romme 2016). Instead ofstudying effectuation as a dominant logic for Bthe entre-preneurial method^ (cf. Sarasvathy and Venkataraman2011), scholars and practitioners could use the pluralterm Bentrepreneurial methods^ as a vehicle for comingtogether in co-creation efforts to bridge a rigor–relevance gap. This could be a pragmatic way to makethe entrepreneurial process more explicit, graspable,teachable, and ultimately more successful. Such collab-orative work will likely require a partial departure fromdetached observation-based research methods and in-stead require researchers to work closely with practi-tioners in prescriptive endeavors where empirical data isrigorously collected around what works, when, forwhom, and in which context.
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