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Effectuation is a logic of entrepreneurial expertise. The theory was developed from a cognitive science based study of 27 founders of companies ranging in size from $200 million to $6.5 billion. For an easy 8-page introduction to the key elements of the theory and its applications, see: What makes entrepreneurs entrepreneurial?
Here, by "logic" we mean an internally consistent set of ideas that form a clear basis for action upon the world. An effectual logic is based on the premise that:
- the future is fundamentally unpredictable, yet controllable;
- the environment is Isotropy (also known as the frame problem) refers to the difficulty of determining what is relevant and what is not relevant for making a particular decision. As Jerry Fodor puts it, it is "Hamlet's problem: when to stop thinking." Fodor's claim is that when it comes to determining the consequences of an action, anything could be relevant. How humans solve the frame problem remains a vexing mystery in logic, robotics, epistemology and cognitive theories of human action. isotropic, but constructible through human action;
- goals are outcomes of stakeholder commitments rather than pre-existent preference orderings.