Guy Laliberte, Effectuation in Action

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Rotterdam school of management|
Punishment Essay|
Guy Laliberté: Effectuation in Action|
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Jay Shah 375370|
22-Oct-12|

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Contents

Early Life 2
Effectuation in Action3
The Bird in Hand4
Affordable Loss6
Crazy Quilt8
Lemonades10
Pilot in the Plane11
Conclusion12
Bibliography12

Early Life

Known for revolutionizing the entertainment industry, Guy Laliberte was born in Quebec City, Quebec, Canada in 1953 to a large middle class family. His creativity and passion for performing arts and theatre began when he was a small child and his parents took him to watch the Barnum and Bailey circus. The theatrical acts inspired him to read the biography of P.T Barnum, a famous showman known for his hoaxes, scams and circus acts. With the dream and goal of becoming a performing artist, Guy performed in many events during his high school career. At the age of 18, Guy left his home in St. Bruno and took on the streets of Europe with a goal of becoming a famous performing artist. Accompanying him on his trip was 2 accordions, a mouth organ, 2 spoons and a Jews harp. According to an interview with Guy, he stated that he will never forget sleeping on a bench in Hyde Park in London with less than $1000 in his pocket. During this period in his life, he encountered many musicians and street performers on the side walk who taught him how to breathe fire and walk on stilts. Initially, Guy stated that this was just a period of experimentation and adventure; he planned on leaving this life to go back into education and live a normal life. However, he enjoyed the lifestyle and cultural learning he gained from this experience and envisioned a possibility of something enormous emerging from this and rotated the idea of unemployed kids performing on the street into Quebec’s second largest cultural export, the Cirque du Soleil. Effectuation in Action

Entrepreneurial thinking has been a subject of debate since the 1990’s. Various academic researchers and current entrepreneurs were experimenting with this topic with very little success. This was where effectual reasoning was created. Effectuation the logic of entrepreneurial expertise and is a type of human problem solving mechanism which revolves around the idea of the future being controllable with the means at hand. Before effectuation, entrepreneurs used the causal way of reasoning and thinking. Causal entrepreneurs believe in a predictable future and to alter their means to accommodate their perceived future. Causal reasoning puts the goals of the entrepreneur ahead of the means at hand. In simpler terms, if a goal seems unreachable, the whole business idea is scrapped. However, Effectual entrepreneurs work around their goals and formulate new goals according to their knowledge and expertise in the current moment. Effectuation

The five main principles of effectuation consist of the following. The bird in hand principle, Crazy quilt, affordable loss, lemonade and pilot in plane principles. In this essay, I will relate how these principles were used by the entrepreneur Guy Laliberte which enabled him to start Cirque du Soleil and become a billionaire.

Bird in Hand

The bird in hand principle is the starting point in effectual entrepreneurship. This principle is the most important as it defines the entrepreneur. This principle emphasizes the fact that an entrepreneur has to start with his means and then work towards a goal with his means at hand. Means refer to ‘who am I’ ‘what I know’ and ‘who I know’. This differs to causal entrepreneurship as they would have a goal in mind and formulate their means to reach that particular goal as depicted in the diagram below.

The bird in hand principle allows entrepreneurs to start now rather than waiting for opportunities or chasing investors. This is exactly what Guy Laliberte has done in the past. According to an interview...
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