Effectuation is a way of thinking about and practicing entrepreneurship. It is most closely associated with the work of Saras D. Sarasvathy and her seminal paper “Causation and Effectuation: Toward a Theoretical Shift from Economic Inevitability to Entrepreneurial Contingency” (2001).

Distinguishing causal thinking from effectual thinking, Sarasvathy argues that the former starts with a specific goal in mind and proceeds to seek the means necessary to achieve that goal, whereas the latter approach starts with a set of means and proceeds to discover what can be achieved through them.

The classic example of distinguishing causal and effectual thinking concerns a chef who must cook a meal. Under a causal approach, the client selects the menu and the chef then sources the ingredients and prepares the meal. The process starts with the end in mind and the chef’s task is to achieve a means of getting there. Working under an effectual approach, the client asks the chef to create a meal from the food in the cupboards and the utensils available in the kitchen. In this instance, the process starts with what is available and the chef must make the most of what is available.

The concept was developed by Sarasvathy (2008) to incorporate five principles: (1) bird-in-hand; (2) affordable loss; (3) crazy quilt; (4) lemonade; (5) pilot-in-the-plane (see Sarasthvathy et al. 2014: 73-75).