Effectuation and generative AI in life’s predicaments: speculations on breaking new ground
Effectuation and The Straw Millionaire
Have you ever heard of the term “Effectuation?” It is a theory of decision-making that systematizes the thought processes and behaviors common to good entrepreneurs. The term is a combination of the adjective “effectual” (effective in producing results) and the suffix “-ation,” which means an impetus for change. Effectual aims to systematize the thinking of successful entrepreneurs and build on their logic.
The theory was proposed in 2001 by Saras Sarasvathy, a management scholar from India and currently a professor at the University of Virginia’s Darden School of Business, and subsequently translated in Japan in 2015. This theory has been attracting attention as a methodology for starting new businesses in the uncertain environment known as the age of VUCA.
Effectuation, also known as the “effective theory of market creation,” aims to provide entrepreneurs with a way to deal with market uncertainty and create new opportunities.
Effectuation and The Straw Millionaire
Although it is a difficult word to grasp in English, the concept of this theory is the same as the old Japanese story of The Straw Millionaire.
Effectuation is a theory based on the behavior and thinking of successful entrepreneurs, which considers how to create value with what is at hand, based on the idea that the future is unpredictable. On the other hand, Warashibe-no-choja is an old Japanese tale in which the main character starts with small things, repeatedly bartered them, and eventually builds a large fortune.
Comparing these two stories, we can see that effectuation and The Straw Millionaire share the same point: how to create value with what is given to you. Effectuation is the world of business, while The Straw Millionaire is the world of old Japanese tales, teaching how to use resources well and create value. However, Effectuation focuses on the modern business environment, while Warashibecho shows the lessons of wise exchange through stories. Both explore how to create value from scarce resources, suggesting that this is one step toward success.
The story of the Straw Millionaire, who ends up with great wealth by exchanging strawmen from the street with people from different backgrounds.
What is unique about effectuation is that it focuses on “control” rather than “forecasting,” which has been the focus of traditional business administration. This allows entrepreneurs to deal with uncertainty and see the potential for creating new value.
Effectuation can be an important framework for entrepreneurs and managers to help them make decisions in an uncertain market environment and provide valuable insights for business success.
Effectuation is an entrepreneurial way of thinking and refers to a methodology for creating the future by maximizing the resources at hand rather than relying on future predictions. Generative AI, on the other hand, is a powerful tool that mimics human thinking and provides new ideas and solutions. By combining these technologies and ways of thinking, we can realize life’s effec-tives and explore the possibilities for new innovations.
Effective Life Techniques for Midlife Crisis
In this era of 100-year life, life transitions in the late 40s and 50s are significant for many people. Death, illness, divorce, the breakup of a family, the loss of a job, and other major life transitions can have a profound impact on each of us. However, it is the power of effectuation thinking and generative AI that can help us overcome these difficulties and create a new life path.
In my own experience, when I was 40 years old, I was told that I would be laid off from the venture company I was working for. It was a very painful experience and I fell into a state of depression for a while. However, I began practicing zazen in an effort to rebuild my mind, and that was a turning point for me. Through zazen, his depression gradually improved, and he had the unexpected experience of coming up with numerous business ideas. This led me to start “zenschool,” an innovation school that utilizes zazen, and I found a way to become independent.
In addition, my appreciation for Zen and my strong desire to spread its wisdom around the world led me to organize an event called “Zen 2.0” focusing on Zen and mindfulness, which started initially with four friends and borrowed Kenchoji temple in Kitakamakura. This was an international conference on Zen and mindfulness that eventually grew to become the world’s largest conference in this field.
Since Zen2.0’s inception, I have been able to organize successful conferences for seven consecutive years, and the connections I have made with numerous Zen and mindfulness professionals and the wonderful volunteers who provide support have been invaluable treasures in my life.
If I had not experienced restructuring, I would never have had these wonderful encounters. Looking back on the past, I am now sincerely grateful to the former company that sentenced me to restructuring. I am not being sarcastic, but truly sincere. Because that restructuring provided me with the opportunity to make a big change.
What possibilities does generative AI offer for life transitions?
In the use of generative AI, it can be a powerful tool in life’s effecitves. Generative AI can mimic human thinking and provide new ideas and solutions. In addition, generative AI can complement human creativity and help us explore new possibilities. At life’s turning points, generative AI can be a very useful tool for finding ideas and solutions that pave new paths.
The combination of generative AI and effectuation thinking methods can help us overcome life’s difficulties and find new possibilities. And by utilizing these technologies and ways of thinking, we can explore new innovation possibilities in each phase of our lives.
Looking back at the early stages of my own entrepreneurial endeavor, the process of developing my business idea was extremely challenging. I would jot down the ideas that came to mind on a piece of paper while continuing to sit in zazen meditation. I would come up with hundreds of ideas, scribble them down on a moving train, and review them over and over again with myself.
At the time, there was no one to consult, and this process was very lonely, monotonous, and painful. Today, however, things have changed dramatically thanks to the existence of generative AI, where you can input your business idea into an AI tool such as ChatGPT and have it discussed by several virtual experts you set up within ChatGPT, right down to the final revenue estimate.
The presence of a generative AI greatly reduces the time and effort required for the process of formulating and reviewing ideas, and most importantly, it frees one from the feeling of isolation. This will make a huge difference for entrepreneurs and open up new possibilities in business building.
Global environmental changes and rapid advances in cutting-edge technology are making it more difficult to plan one’s life. However, by combining the power of effectuation thinking with the power of generative AI, we can overcome difficulties and create new life paths.
The possibilities for new innovations in the use of life effectuation and generative AI can be explored more deeply and passionately. And it will provide readers with new perspectives and the courage to overcome life’s challenges.
In this rapidly evolving world of generative AI, we are currently practicing a zenschool in Kamakura to extract the excitement that is your axis and what you truly and sincerely want to do, while utilizing generative AI and incorporating the thinking method of effectuation. If you are interested, please visit the following website.
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