Effectuation that respond to change
One of the most fascinating strategies I’ve been sharing with you this year is effectuation—and I must admit, I’ve completely fallen in love with it. More than just a theory, it resonates deeply with my own experiences in business over the past 50 years.
I want our executives to not only understand this strategy but also put it into practice. Why? Because effectuation isn’t just a concept—it’s a mindset that has shaped my journey. The more I reflect on the Crazy Quilt Principle, the more vividly I see the path I’ve traveled, the relationships I’ve built, and the way these connections have influenced my business.
This isn’t just about theory; it’s about real-world application—and I believe it holds the key to navigating uncertainty and creating lasting success.
I have been in business for a long time—struggling, working hard, and facing countless moments when I thought it was all over, that there was no tomorrow. There have been more hardships than I can count, far more than both hands could hold. In fact, I faced yet another such challenge in the second half of last year. And the truth is, these moments don’t just happen once; they come again and again.
Through it all, I have lived through the Crazy Quilt Principle time and time again. And if there’s one thing I can say with absolute confidence, it’s this: when faced with uncertainty, taking action is the most important thing you can do.
Over the years, so many people have stepped in to help me—lifting me up, guiding me through challenges, and offering their wisdom. Some of the most well-known among them include the late Chairman Goto, founder of the publicly listed Hachiban Ramen, and the late Chairman Sakurada, founder of Mos Burger. But there are many, many more whose names may not be famous but whose impact on my life and business has been immeasurable. It is because of these people, and the strong relationships we’ve built, that I stand here today.
If you have been in business as long as I have—50 years and counting—you will come to realize that effectuation and the Crazy Quilt Principle aren’t just theoretical concepts. They are real, practical, and incredibly powerful in both business and life.
If you have been in business as long as I have—50 years and counting—you will come to realize that effectuation and the Crazy Quilt Principle aren’t just theoretical concepts. They are real, practical, and incredibly powerful in both business and life.
The importance of “action” to convert ideas into business opportunities
Partnerships
valued by accomplished entrepreneurs
Successful entrepreneurs who apply effectuation in their decision-making don’t rely on traditional market research or competitive analysis as their primary approach. Instead, they focus on building strong partnerships with stakeholders who can offer real commitment and support.
From my experience, navigating these partnerships requires both maximum flexibility and consistency—a delicate balance that allows for innovation while staying true to core principles. Unlike traditional causation-based strategies, which rely on predicting and controlling the future, effectual entrepreneurs embrace uncertainty and seek opportunities to co-create new possibilities.
They have a remarkable ability to turn the impossible into the possible—leveraging every connection, every resource, and every opportunity to advance their goals. This mindset is at the heart of what we call the Crazy Quilt Principle, a core element of effectuation.
The first characteristic
of a partnership based on effectuation
When it comes to negotiation and partnerships, effectual entrepreneurs prioritize working with voluntary participants—those who join not for monetary gain or external incentives, but out of genuine commitment and shared vision.
Rather than relying on rewards or coercion, the key is to foster relationships where partners willingly contribute—whether through resources, expertise, or other forms of support. This approach allows for more organic, sustainable collaborations, built on trust and mutual value rather than transactional exchanges.
By embracing this mindset, effectual entrepreneurs expand their definition of a “partner.” They don’t just seek financial backers or technical experts; they welcome anyone willing to contribute in any meaningful way. The guiding question is not just “What do you bring?” but rather, “What can we co-create together?”
This principle—deeply rooted in the Crazy Quilt Principle—empowers businesses to unlock unexpected opportunities, drive innovation, and create lasting impact
Diverse Forms of Partner Commitment in Effectuation
One of the key characteristics of effectual entrepreneurship is recognizing that partners can offer a variety of commitments beyond their initial roles. In the unpredictable landscape of business, partners often evolve, playing multiple roles over time.
Case Study: The Early Days of Panasonic
A perfect example of this Crazy Quilt Principle can be seen in the early days of Konosuke Matsushita, the founder of what is now Panasonic.
At just 22 years old, Matsushita started his company, Matsushita Electric Appliance Manufacturing Co., Ltd., producing two inventions:
- The improved attachment plug (“Attachin”)
- The two-light cluster (“Bifurcated Socket”)
Initially, his business was a small, family-run cottage industry—until a major wholesaler, Yoshida Shoten, took notice. The wholesaler saw potential and offered a sole agency contract, proposing to distribute Matsushita’s products on a large scale.
However, Matsushita did not simply accept or reject the offer. Instead, he took an effectual approach by negotiating for a deposit of 3,000 yen to expand production capacity. This turned Yoshida Shoten from a distribution partner into an investor, allowing Matsushita to scale from a small workshop to a factory with 20 employees and a monthly production capacity of 5,000 units.
The Evolution of Partnerships in Business
This story illustrates a powerful lesson: business partners often evolve into deeper roles—from customers to investors, from suppliers to strategic allies, and even from clients to co-managers.In effectuation, this fluid approach to partnerships is crucial. Instead of rigidly defining the roles of those you work with, embrace the possibilities of co-creation and mutual growth.
The key takeaway? Every partner can bring more than what they initially offer—if you create the right environment for collaboration.
Partners Bring Not Only Resources but Also Vision
In the effectuation process, partnerships do more than just provide resources—they redefine what is possible by shaping the vision and direction of the business.
From “I” to “We”
Effectual entrepreneurship starts with the entrepreneur’s existing means—their skills, knowledge, and network. However, each new partnership expands these means, transforming:
- “Who I am” → “Who we are”
- “What I know” → “What we know”
- “Who I know” → “Who we know”
As a result, what is possible also expands, creating new opportunities that were previously unimaginable.
The Role of Partners in Shaping the Future
A crucial aspect of effectuation is that partners don’t just contribute resources—they also bring their own ambitions and vision. Entrepreneurs should recognize that:
- Partners often join voluntarily because they have personal goals they want to achieve.
- These goals influence the direction of the venture, expanding beyond what the entrepreneur initially envisioned.
- Co-creation is at the heart of effectuation—entrepreneurs and partners shape the future together, rather than following a rigid pre-planned strategy.
The Power of Shared Vision
A great entrepreneur doesn’t just seek partners who can provide funding, technology, or distribution. Instead, they welcome those who bring ideas, aspirations, and a shared sense of purpose. The right partnerships don’t just add strength to a business—they expand its horizons.
By embracing this co-creative approach, entrepreneurs can turn uncertainty into opportunity, leveraging the collective vision of their network to navigate an ever-changing business landscape.
Effectuation partnership similar to quilt making
Jigsaw Puzzle (Causation)
- The picture to be completed is decided from the beginning
- If one person does not have all the pieces, the work will be completed in partnership with the person who has them.
Patchwork Quilt (Effectuation)
- Design by arranging various pieces of cloth (patches) in a basket in a way that the artist thinks is beautiful and meaningful
- Large pieces are created in collaboration with other quilters, each witch a different fabric basket, taste and technique
- As a result, great designs are often created that no one had originally imagined
The principle of crazy quilting can be explained in an easy-to-understand manner using examples from around us. The story is about the famous Japanese folktale, “Warashibe Choja (the straw millionaire)”.
Effectuation process like “Warashibe Choja (the straw millionaire)”
We can also see stories that are familiar to us like Effectuation, in which new resources and visions are repeatedly provided through encounters with partners, and in the end, an unexpected outcome is reached.
The story of “Warashibe-Choja” (the straw millionaire) is a tale that appears in classics such as Konjaku Monogatari-shu. It begins when a poor young man, whose life is not getting any easier despite his hard work, makes a wish to the Kannon, the Goddess of Mercy, to whom he has deep faith.
Then Kannon (Goddess of Mercy) appeared in his dream and gave him a message: “Tomorrow, take the first thing you touched and go on a journey”. The young man jumped out with joy, tripped over a stone, and fell, and all he caught was a stick of straw. As he was walking forward with it, a large horsefly approached the straw and wouldn’t let go, so he had no choice but to catch it, tie it to the end of the straw, and walked further.
A rich boy in an ox carriage passed by, saw the straw stick moving with a horsefly and cried out to his mother, “I want that toy”.
The young man complied with his mother’s request, gave up the straw rope to the boy, and received a citrus fruit in exchange. Walking further, he came across a thirsty merchant and his attendant. The citrus fruit was just a citrus fruit, but it was a precious thing that the merchant wanted, so he offered it to the young man, who in return gave him a fine piece of cloth (fabric) in return.
After that, the story has a happy ending: the cloth was exchanged for a horse that had become weak due to illness, and the owner of a large house asked him to lend the horse, which had become healthy after taking care of it. However, the owner did not return to the house where he took care of the horse for many years, so in the end, the young man was able to live a wealthy life.
Case Study: One of the managers who achieved great success by utilizing effectuation was the late Steve Jobs
This is an interview conducted with Apple founder Steve Jobs in 1994. “Most people don’t pick up the phone and make a call,” he says. Among the videos owned by the Silicon Valley Historical Society is an interview conducted in 1994 with Apple founder Steve Jobs. In it, he says, “Most people don’t pick up the phone and make a call. And that’s what sometimes separates the people who make things happen from the people who only dream about it.”
In fact, this is based on an episode from his middle school days. At the age of 12, Jobs was a boy who was passionate about building machines and other things. He belonged to the electronics club at the junior high school he attended, and there is a photo of him with the members of the club.
At one point, he really wanted to build his own machine, a frequency counter, but some of the parts needed for it were not available to the average middle school student. So there were two “what do you know” that he could take advantage of.
One was that one of the manufacturers of frequency counters was Hewlett-Packard company, and they would certainly have the parts. The other was that Bill Hewlett, one of the founders of Hewlett-Packard company, was a rich and famous man, and he knew that he lived in the Palo Alto area, just like Jobs.
So Jobs pulled up the phone book in his name, which Jobs had at home, and found only one number that corresponded to him, so Jobs called it.The person happened to be home and picked up the receiver, so Jobs introduced himself and asked if he could share the parts for the frequency counter. Mr. Hewlett laughed and agreed, much to the delight of the Jobs boy. The above statement is an anecdote about “picking up the receiver and making a phone call”.
However, the reality did not end there.
Mr. Hewlett, who felt that Jobs really loved frequency counters in his interactions with the Jobs boy, now made another proposal. He was asked if he would like to work on the production line at Hewlett-Packard’s frequency counter plant as a part-time summer job. Of course, Jobs jumped at the chance and spent his summer vacation like a dream.
Furthermore, the relationship with Hewlett-Packard company, which thus began in junior high school as a part-time job on a factory production line, continued into high school as an internship at the company’s headquarters.
Steve Wozniak was working as an engineer at the company that Steve Jobs worked at during his high school days. As many of us know, the two hit it off and later co-founded Apple Computer. So, this is what he was talking about in his earlier interview.
Many people may be reluctant to make a phone call asking for parts for a variety of reasons, including feeling that it is trivial or even impolite.
However, it is conceivable that if the Jobs boy had not made the call at that time, the company Apple probably would not have existed. While the future is uncertain and unpredictable, and things often do not go as initially envisioned, it is also entirely possible that casual partner interactions can lead to unimagined developments precisely because the future is uncertain.
SELLING VS ASKING
In effectuation, the process of approaching potential partners to gain their commitment is known as “asking” or simply “ask.” This concept revolves around making inquiries and exploring possibilities rather than pushing a fixed agenda.
If we compare traditional causation-based thinking with effectuation-based thinking, the difference becomes clear:
- Causation Approach → Focus on “selling”
- Effectuation Approach → Focus on “asking”
The “Selling” Approach in Causation
A causation-based mindset relies on thorough analysis and forecasting to refine a business idea into the best possible version. Entrepreneurs following this approach aim to sell their vision by proving its superiority.
When seeking partnerships, this often results in a one-time negotiation, where the goal is to convince potential partners of the idea’s value. The outcome is either success or failure—a binary result.
The “Asking” Approach in Effectuation
In contrast, effectuation is based on what can be done using the entrepreneur’s available means and acceptable losses. Ideas are flexible and can evolve based on input from others.
Rather than focusing on persuasion, effectuation encourages an open dialogue with potential partners. The key question shifts from “Will you buy into my idea?” to “How can we create something together?
The Importance of Listening in Effective Partnerships
To build meaningful partnerships, entrepreneurs must listen more than they speak. Instead of solely explaining their vision, they should focus on understanding:
- What resources or contributions the potential partner is willing to offer
- What means and assets the partner has at their disposal
- What shared goals, values, or ideas can form the foundation for collaboration
Only by understanding these aspects can entrepreneurs and their partners co-create initiatives that are valuable to both sides.
Effectuation is not about pitching the perfect idea—it’s about discovering opportunities through collaboration.
The other party is not necessarily looking for financial return
Some people may hesitate when asking questions of others as potential partners, thinking that they have nothing to offer them in return. However, in the end, it is up to the other party to decide whether they will provide the commitment the order party expected and for what reasons.
The importance of asking has been clarified through discussions at academic conferences. The impetus for this was an article by Robert Barron published in the academic journal “Journal of Business Venturing” in 2009.
In another paper published in the same journal, Sarasvathy and his colleagues concluded that “the Ask” or “Asking” is the most important activity that helps successful entrepreneurs become adept at dealing with uncertainty when making decisions.
This is because, unlike selling, which focuses on the success or failure of acquiring resources, if you can gain a variety of commitments from others through asking, you can increase the effectiveness of your efforts together with your partners, even in situations that cannot be predicted in advance, and actually lead to superior entrepreneurial results.
In addition, while “who” and “what” to ask in order to launch a new business varies from situation to situation, “how” to ask can be continuously practiced and improved. In other words, it was argued that questions that build co-creative relationships (co-creative asks) will lead to improved performance.In fact, asking was also identified as fulfilling the six essential requirements of “purposeful practice”, which is the foundation for the deliberate practice necessary for proficiency.
- The activity is decomposed or transformed into tasks that are meaningfully related to the desired performance;
- Being able to practice the activity repeatedly;
- Practice is motivated by the larger purpose of improving performance;
- Availability of performance feedback;
- Practice activities must take into account the performer’s current skill level;
- The activity must be within the “zone of proximal development” (Vygotsky 1978) associated with the accumulation of mastery.
In addition to these, intentional learning includes:
- Adds the requirement that the exercises be supervised and designed by a teacher who has successfully trained others to achieve the desired performance.
In other words, the act of asking others questions in order to acquire a partner can be practiced repeatedly while receiving feedback on whether or not it went well, and by learning and getting support, you will be able to do things by yourself that you cannot do immediately, and in this sense, it falls under the category of purposeful practice.
Some people may practice asking on a daily basis without even realizing it. On the other hand, many people may feel that they are not good at asking someone to do something, or that they may not be able to do it well at first. However, since this is the most important and achievable element of effectuation utilization and entrepreneurial mastery, I encourage you to practice it repeatedly at a loss that is tolerable to you.
Final Thoughts
Thank you for reading until the end. In an ever-changing business environment, mastering the art of asking and collaboration is a powerful tool for success. By practicing purposefully and embracing the Crazy Quilt principles, you can navigate uncertainty with confidence.
We appreciate your continued support and look forward to being a valuable partner in your journey. May our resources and expertise help you achieve even greater success.
We will continue to share valuable insights—please count on us again this year!
Fujii ‘Rocky’ Kaoru
