The Entrepreneurial Method [Archived]

There are thousands of new companies founded every year all around the world. Most of them fail within the first five years of operation. However, there are a few extremely successful ventures that become incredibly valuable in a short period of time.

Hence, we have asked ourselves: What does it take to be a successful entrepreneur. Why are some successful while most others fail. And how can we increase the chances of becoming successful entrepreneurs?

Fortunately enough, scientists have already done quite a lot of research on this. One concept that stands out is what we call The Entrepreneurial Method (by Professor Saras Sarasvathi). It describes a logic of thinking that is commonly used by some of the most successful entrepreneurs to build their ventures. We will look at it in more detail below.

Effectual Principles

The Entrepreneuiral Method mainly consists of five effectual principles. As mentioned before, they represent a logic of thinking that some of the most expert entrepreneurs use to build their ventures. By observing a large number of entrepreneurs and ventures over time and across different industries, the team around Sarasvathi has come up with the following principles that can help entrepreneurs advance their ventures.

  • Start with your means: If you are trying to build a new venture you should start with your available means. That is, you have to ask yourself: who are you, what do you know and whom do you know. Once you have answered these questions, you can start to imagine different possibilities and outcomes that originate from your means. It is important to not just focus on one specific goal, but to be open for new possibilities and opportunities. 
  • Focus on affordable loss: To limit your downside risk, define your affordable loss. Especially in early stages of your venture it is much more reasonable to limit the downside potential rather than to focus on possible returns and pursue a risky all-or-nothing strategy. However, always define your affordable loss in advance to protect yourself from potential cognitive biases during the project.
  • Form partnerships: Working together with interested stakeholders reduces uncertainty. Partnerships can help you create new markets together with people who have a complementary skill set to yours, which significantly reduces your own risk. Plus, it is generally more fun to work with others instead of trying to do it all by yourself. 
  • Leverage contingencies: If life gives you lemons, make lemonade. Seemingly bad surprises and unexpected turns are not always bad, try to see them as new opportunities. Maybe you just found another way that does not work. These experiences can be more valuable than you might think. In fact, many of the most successful ventures were the result of another failed project or a coincidence. 
  • Control the future: Focus on activities that lie within your control. If you spend too much time worrying about what might or could happen to your venture, you give up control. Concentrate your efforts on what you can influence to reach your goals one at a time. In other words, if you control the future you do not have to predict it.
Since these principles have proven to be quite successful in practice, additional research has been conducted and has revealed several other relevant principles for entrepreneurs (which we will discuss in another post). Now, this goes to show that there is a multitude of other aspects and principles that affect the success of any venture. Thus following the Entrepreneurial Method may not always lead to success, but it certainly provides valuable insights into the logic of thinking that can be used to be more successful as an entrepreneur in the long run.

In a Nutshell

There are thousands of new companies founded every year all around the world. While most of them fail, some become incredibly successful. Based on that, the Entrepreneurial Method (by Professor Saras Sarasvathi) describes a logic of thinking that is commonly used by some of the most successful entrepreneurs to build their ventures. It consists of five effectual principles: Start with your means, focus on affordable loss, form partnerships, leverage contingencies, and control the future. These basic principles provide valuable insights for entrepreneurs to be more successful in the long run.

For more information, visit:

Leave a Reply

Your email address will not be published. Required fields are marked *