What's Effectuation Good For?

Companies are always curious as to what their peers are doing.  One of the questions I’m asked most frequently when I talk to managers about Effectuation is “How are other companies using it”? 

These are some examples of how others are applying the Effectual principles in their corporate environments.

A New Product Launch Process

A beverage company used Effectuation to roll out a new soft drink.  While the drink itself was not innovative, they wanted to take an innovative approach to its marketing and launch.  They made a conscious decision to break from their normal marketing launch model.  In its place, they applied Effectual decision-making. 

The primary difference was how they engaged their marketing, sales, and distribution partners in a more co-creative way.   Usually, they would decide at the corporate level which market to roll out to first.  This time, they worked with their partners to seek handraisers.  And in return, they asked them to co-invest in the process.  Their partners contributed sales resources.  They exercised the crazy quilt principle to build a stakeholder network that was mutually vested in the success of the product rather than just executing on orders and agreements. 

The launch was successful and led to a full scale roll out.  After operating this way, it changed how they think of the launch process.  Now, they have incorporated Effectual elements into their early stage innovation efforts, providing them with alternative methods to deal with market uncertainties. 

 Closing a Funding Gap

A national nonprofit organization faced a significant decline in funding.  Every year, they addressed their budget needs as part of a broader strategic planning process.  This year, they applied Effectual thinking to their strategic planning review and it changed their outcomes.

Rather than focus on what was cut from their budget, they looked inward at what resources they did have – their bird in hand.  This assessment uncovered both tangible assets – such as underutilized real estate and technology, as well as intangible assets – such as members and partnerships that were ripe to be built on.

So they took their planning process outwards.  They reached out to members and potential partners to see what it would take for them to increase their investment in the organization.  These dialogues led to several members, groups, and businesses identifying ways in which they would be willing to partner to develop mutually beneficial programs. 

The outcome was that they were not only closed their funding gap, but they surpassed their shortfall and achieved better than expected outcomes because their efforts were buttressed by the partnership of a stronger network. 

Creating a New Revenue Line

A technology services business used Effectuation to develop a product based revenue line. This company grew on the strength of its people and service delivery.  They had an impressive list of corporate clients but were struggling to recruit the talent needed to scale their operations. 

At the same time, they saw gaps in the products they were implementing and additional needs among their clientele.  They put this problem out to their employees and several indicated an interest in prototyping possible technology solutions.  They did this on top of their normal job responsibilities as it was of interest to them. 

The sales team took these product prototypes out to their clients to see if they generated interest.  Not only did they get positive feedback on some of their concepts, but they were able to successfully presell a version.  They partnered with the company on further development and delivered a tech product that they can no repurpose for other organizations.  This will allow them to scale and meet their growth goals.

So What is Effectuation Good For?

Effectuation is not just a process.  It’s also a problem solving method.  Whether you work in a nonprofit or a corporation, there are organizational challenges that could be addressed by applying the entrepreneurial mindset. 

If you see your company in any of these examples, consider how you and your team might apply Effectuation to solve the problems you’re facing. 

--Written by Sara Whiffen, Founder & Managing Partner, Insights Ignited LLC