CONTENTs
1. Introduction
2. The Worldview of an Accomplished Entrepreneur
3. The importance of pilots dealing with uncertainty
4. Change the world within a 2 meter radius around you
5. How to use causation and effectuation
6. How did the “Ice Hotel,” where people from all over the world stay, come to be?
7. Integrating the five principles to create a cycle of effectuation
Navigating Business Like an Airplane Pilot
In the world of business,
uncertainty is a constant companion.
Every day brings new challenges, unexpected changes, and unforeseen circumstances. To navigate this ever-changing landscape, I often turn to a principle that resonates deeply with me—the “Principle of an Airplane Pilot.”
For Master Kaoru Fujii who has designed airplanes and has a deep appreciation for aviation, this concept makes perfect sense. Modern jet airliners are equipped with autopilot systems that allow pilots to maintain flight with minimal manual input, except during take-off and landing.
However, despite these advanced systems, commercial flights always have two professional pilots onboard. Why? Because no flight is ever guaranteed to be smooth. Unpredictable weather, technical malfunctions, and emergencies require skilled pilots to make quick decisions and keep the aircraft flying safely.
This principle mirrors the realities of running a business. Entrepreneurs and business leaders, much like pilots, must constantly monitor their environment. Market conditions shift, customer demands evolve, and unexpected hurdles arise. The key to sustained success is to focus on controllable factors while adapting to unforeseen challenges.
Aviation history provides a powerful example of this mindset. The tragic crash of Japan Airlines Flight 123 over Mt. Osutaka serves as a stark reminder of the importance of focusing on what remains controllable in crisis situations. The pilots of that flight faced a catastrophic failure that severely limited their ability to navigate, yet they made every possible effort to keep the plane stable for as long as they could. While the outcome was tragic, their relentless focus on controlling what little remained under their command exemplifies the critical role of decision-making in high-stakes situations.
The same principle applies to business leadership. When facing adversity, successful leaders do not dwell on what is beyond their control. Instead, they channel their energy into actionable solutions, maximizing the resources available to them. Whether it’s an economic downturn, a supply chain disruption, or internal setbacks, the ability to maintain focus and adaptability is what keeps a business flying high.
Just like experienced pilots, strong business leaders do not rely solely on autopilot. They remain vigilant, assess the environment, and make real-time decisions to steer their organization toward safety and success. By embracing this principle, we can navigate even the most turbulent times with confidence and resilience
The Worldview of an Accomplished Entrepreneur
This is a way of thinking that “focuses on activities that can be controlled and results in desired outcomes through manipulation rather than prediction”.
The “Principles of an Airplane Pilot” reflect the worldview of an accomplished entrepreneur in the face of an uncertain future. It is driven by the following four ways of thinking. It can be understood as being involved in the entire cycle of effectuation.
FOUR KEY PRINCIPLES
BLOG POST
BIRD IN HAND PRINCIPLE
The importance of pilots dealing with uncertainty
The idea of causation, which emphasizes the formulation of optimal plans based on predictions, may be said to be similar to the idea of designing an autopilot system by analyzing and anticipating possible situations in advance.
The important thing here is planning and system design to reach the destination, and the pilot is just the executor.
In contrast, according to the idea of effectuation, the entrepreneur’s own independent control of continuing to make decisions on actionable and meaningful actions even in the midst of unexpected turbulence is an absolutely essential condition for the aircraft to continue flying.
The “Lemonade Principle”, which uses unexpected coincidences as leverage, and the “Crazy Quilt Principle”, which involves co-creating new directions through the acquisition of partners, may give the erroneous impression that they are something that is left up to others at random.
However, it is precisely because pilots do not overlook the new possibilities that emerge through chance events and encounters, and constantly maintain control of the stick to produce meaningful results from them, that they are able to incorporate these elements from the external environment and produce the desired results.
Change the world within a 2 meter radius around you
The Airplane Pilot’s Principles are implemented by combining four other Effectuation Principles
- “Bird in hand principle” ⇒ Questions that ask you to think about “what you can do” based on the means you have.
- “Principle of acceptable loss” ⇒What kind of loss can you prepare for at this moment?.
In this way, by creating new actions within the scope of control, the entrepreneur will have an impact on local others within two meters of the people with whom the entrepreneur interacts directly or indirectly.
In turn, new responses obtained from others will increase the entrepreneur’s potential for control over his or her own environment.
If an entrepreneur’s thinking style, which incorporates various elements of the external environment, including the consequences of such actions, is able to obtain spontaneous opinions from those with whom he or she interacts using the “Crazy Quilt Principle” the entrepreneur’s tools and “what can be done” will be expanded, and the possibility of greater control over the environment will be available.
And even when something unexpected happens, the Lemonade Principle allows you to use chance as an opportunity to create a new course of action, giving you more control over the situation than if you stuck to your original plan.
In this way, the effectuation cycle is a process that gradually increases the possibility of control over the environment through the implementation of the five thinking styles, and as a result increases the effectiveness of the overall effort.
How to use causation and effectuation
It can be said that one or the other of causation and effectuation is not effective in every situation, and that both should be used depending on the situation.
Regarding the relationship between causation and effectuation, the first paper published by [Sarasvathy] points out that “causation reasoning and effectuation reasoning do not always work in opposite directions; rather, they function in a complementary manner.”
However, it has been pointed out that the logic used for decision-making does not change naturally in response to changes in the environment, and that it is important to understand both effectuation and causation, and to have the ability to intentionally switch between them. We hope that future research will deepen our understanding of the combination of effectuation and causation.
However, it is also assumed that as entrepreneurs gain more experience, they will become more adept at and prefer to use effectuation.
When faced with challenges that involve uncertainty, it is important to take control of the controls without taking your eyes off the changes in the environment. By doing so, entrepreneurs, like skilled pilots, will be able to use experience to guide them to a more desirable outcome, no matter what the unexpected situation.
Now, let’s take a look at some successful cases that utilized the entire effectuation process.
How did the “Ice Hotel,” where people from all over the world stay, come to be?
ICE HOTEL IN Jukkasjärvi, Sweden
This is an example of “an ice hotel” built during the winter from December to April in the small village of Jukkasjärvi, Sweden, with a population of 700, located 200 km north of the Arctic Circle.
As the name suggests, the Ice Hotel is a hotel made almost entirely of ice and snow cut from the Torne River that flows nearby, and as it disappears in the spring, the Ice Hotel is rebuilt with a new design on the following November.
The Ice Hotel is a successful example of a tourism project that utilizes the unique natural environment of Jukkasjärvi as a resource, and can be said to be a pioneer of sustainable tourism, which has been attracting attention in recent years. However, at the time they were created, no one, including the entrepreneurs themselves, had foreseen these business opportunities.
Rafting experience business started as a hobby
The Ice Hotel was founded by a young man named Yngve Bergqvist. He used to relieve stress from work by going rafting on the Torne River in Jukkasjärvi every weekend. One day, a passing tourist asks him to take her on a boat, and he begins to think that offering a rafting experience could be a business. So, he consulted with an acquaintance who works at a tourist information center, and started offering a rafting experience to tourists who visited the tourist information center every weekend morning. Even if he didn’t get customers, Yngve Bergqvist would have had little to lose.
In fact, the results of his actions exceeded his expectations, and he gained almost every customer, from which he also received a steady income. Only after the rafting experience business was on track did he quit his job at a mining company and start a canoe center with his friends, expanding the business to include 40 employees and 30 boats in the summer.
Exploration of unexpected situations and winter tourism resources
When the short summer ends and winter arrives, the river is covered with solid ice, making rafting impossible. The frigid winters of northern Sweden were perceived as dark and frightening, in contrast to the short, light-filled summers, and even local tourism operators considered it impossible to attract winter visitors.
Still, his motto is “Dig where you stand-much still remains undone.” He continues to act.
It turned out that Japanese tourists visit the Arctic Circle in winter to observe the aurora borealis. So he asked the Scandinavian Tourism Bureau in Tokyo for information on travel agencies planning tours. The person he ended up with was Mr. Sakata. After meeting Mr. Sakata, Japanese tourists began to visit northern Sweden, and learned that Japan has an event called the Sapporo Snow Festival that attracts many tourists from all over the country in the winter.
In 1988, Yngve Bergqvist visited the Sapporo Snow Festival and saw huge ice and snow sculptures and the large number of tourists who flocked to see them. Thinking that snow and ice would be more plentiful in their area, he also hit it off with an ice sculptor from Asahikawa he met at a hotel, so he hatched the idea of holding a larger-scale ice sculpture art festival in Jukkasjärvi in winter.
The following winter, two Japanese artists were invited to Jukkasjärvi to learn how to work with materials such as ice and snow, and the project also attracted the interest of international artists who create ice sculptures, and was interviewed by several media outlets. Until then, Jukkasjärvi, which had no winter tourist attractions, was lined with spectacular sculptures made of ice and snow, and tourists from all over Europe flocked to it.
Ice art festival that didn’t go as planned
Yngve Bergqvist’s family and villagers were thrilled to see the beautiful ice sculpture completed and were excited for the event to take place the next morning. However, something unexpected happens that day.
When Yngve Berryqvist woke up at 6 a.m. the next morning, he heard a disturbing sound. When he ran outside, he found that it was raining, an amount rarely seen in the winter in the area, and the temperature had risen to 7 degrees. Fearing the worst, he headed to the venue, where the staff spread sheets over the artwork to protect it from the rain and asked Yngve Berryqvist for instructions.
It was the worst possible situation: the work he had prepared for the day was crumbling in a venue already crowded with tourists and media. It was then that he was once again brought back to his true nature.
He loves nature, which is why he has worked as an environmental engineer, offered rafting experiences, and organized art festivals that take advantage of the ice and snow on the Tornay River. He then reaffirmed his own belief that “nature is not what man wants it to be, and that is why it is so interesting. He gathered himself up and told the staff.
“Let’s let it break. When it breaks, let’s make something new at that time.”
At the festival venue, there was an abundance of snow and ice, as well as artists with the tools and techniques to carve ice, and many people in attendance. Once Yngve Berryqvist and his colleagues had the tools to make ice sculptures, they approached people.They proposed a workshop where visitors could learn the technique of carving ice and create something new together. Participating groups learned the art of making ice sculptures, while others began building “igloo” (dome-shaped shelters made by people in the Arctic Circle) by stacking ice blocks. When night fell, the group completed the igloo and invited others to spend the night inside. When the group entered the igloo, the ice dome shut off the outside air, and surprisingly it wasn’t cold or dark inside. Rather, the light that filtered through the translucent ice shimmered, creating a dream-like and beautiful space.
From the ice art gallery to the ice hotel
As a result, the ice sculpture art festival ended in failure, but the group learned new techniques for making ice buildings and had a great experience in the igloo, so they continued their activities in Jukkasjärvi the following year. In 1990, an art exhibition by French artist Jannot Derid was held in a 250 square meter cylindrical igloo.
The igloo was named “Artic Hall”, and hundreds of visitors visited the ice art gallery. Also, around the same time, guests from overseas were unable to stay because the hotel was full due to the National Ski Championships being held in Kiruna.
Yngve Berryqvist offered to stay overnight at the Artic Hall, and the guests who accepted spent the night in sleeping bags and reindeer skins, which turned out to be a much more comfortable and enchanting experience than they had imagined. From there, the idea for an ice hotel took shape.
In 1992-1993, the first full-fledged Ice hotel was built, and Yngve Berryqvist and friends founded a company called Ice hotel AB. Construction of the Ice Hotel, which will begin at the end of October, will begin with local artists and architects creating the entire structure of the building. In addition to natural snow and ice, machine-made snow called “snice” (snice: meaning “snow + ice”) was used for building materials, and a structure based on arched steel formwork was developed and patented to prevent the roof from collapsing in the spring.
Once the building is nearly complete, artists from Sweden and abroad will create the interior, including windows, doors, columns, furniture, lamps, and various sculptures in their own unique styles. Each room itself is a work of ice art, which is a major attraction of the Ice Hotel that attracts many visitors.
In 1992, an ice chapel was built, and approximately 150 weddings and 20 baptisms are held annually, and in 2006, the 1000th wedding was held there. The scale of the ice hotel business eventually grew to exceed the summer rafting experience business.
Partnership with Absolut Vodka
he reason why the Ice Bar, which was created in the Ice Hotel, was later expanded to other parts of the world was due to the establishment of an important partnership with Absolut Vodka, Sweden’s leading vodka brand.
Yngve Berryqvist has long wanted to link the Ice hotel, which attracts international tourists, with “Absolut Vodka”, a symbol of Sweden.
Initially, the donor companies showed no interest, but already in 1994 an ice bar was installed in the Ice Hotel where Absolut vodka could be drunk, and its main decoration was an ice sculpture in the shape of a giant Absolut vodka bottle.
Yngve Berryqvist and his colleagues sent out a press release using a photo of an ice bar taken by a professional photographer to 1,000 companies in the United States and Germany, and when the media in which it appeared caught the eye of the provider company, they finally discovered the possibility of a partnership.
The company first sent some staff to Jukkasjärvi to sponsor the ice bar and began to joint promotional activities.
In 1997, an advertisement for a collaborative campaign between Italian fashion brand Versace and Absolut Vodka attracted international attention.
In the ad, top models such as Naomi Campbell, Kate Moss, and Marcus Schenkenberg wore Versace designs inspired by the Absolut bottle, and the photo was taken in the Ice Hotel at -27 degrees Celsius, which caused a stir.
Since then, the Ice Hotel has been used as a location for various filming, including Volvo’s American TV commercials and James Bond movies, and now 600 to 700 media companies visit the Ice Hotel every year.
Global expansion based on the vision brought by partners
However, the partnership with Absolut Vodka was a much bigger vision than Berryqvist and his colleagues had originally envisioned. The world’s fourth-largest spirits brand, in collaboration with Ice hotel, had a vision to expand ice bars around the world using ice from the River Torne.
First, an ice bar was created as a pilot project in Stockholm in June 2002, and later became a permanent ice bar.
The interior of the ice bar is kept at -5℃, and 50 tons of highly pure ice from the Torne River is carved into the bar counter, tables, sofas, glasses, and more. In 2007, it became Stockholm’s most profitable bar, with 100,000 people a year wearing silver ponchos and drinking vodka drinks from glasses made of ice from the River Torne. Like the Ice Hotel, the Ice Bar’s design is redesigned every six months, with international artists invited.
Starting in Stockholm, Ice Bars opened in London, Tokyo and Milan in 2004, and in Copenhagen and Shanghai in 2007, all operating under the same concept: “A bar made from 80 square meters of ice from the Torne River.”
The architecture of the Ice Hotel that will never melt away
As the Ice Hotel became famous, more and more tourists visiting Jukkasjärvi in the summer began to look forward to visiting the Ice Hotel. Yngve Berryqvist therefore sought to expand the partnership and came up with the idea of using solar power to generate electricity during the approximately 100 days of midnight sun in the summer, so that the ice hotel would not melt even in the summer.
Architect Hans Eek became the project’s lead architect, and construction began on a huge 2,100 square meter building consisting of 20 suites made of ice and snow, an ice bar, and an experience room where you can learn about the history of the Ice hotel.
After five months, “Icehotel 365”, a completely new ice hotel powered entirely by solar power, was completed and welcomed its first guests in November 2016. The establishment of the facility, which is open 365 days a year, as a hotel at night and a snow and ice art gallery during the day, has strengthened the relationship between the people and the River Torne. Summer visitors to the Ice hotel now have the option of rafting through the waters of the River Torne, providing a more consistent and unforgettable experience.
Non-predictive control creates a market that did not exist
From the ice hotel case we have seen so far, it is not necessary for entrepreneurs to have a clear purpose or business opportunity in mind at the beginning.
What is important is that when we receive opinions from the external environment that exceed our predictions, we should not be at the mercy of them or, conversely, be fixated on our prior predictions and plans and overlook them. Instead, we should focus on activities that we can control on the spot and at that moment, and act as a pilot to deal with them.
By creating new behaviors in this way, it becomes possible to capture and utilize contingencies in the external environment, including crises and encounters with new others, as opportunities to expand one’s controllability.
Integrating the five principles to create a cycle of effectuation
Entrepreneurs are able to rationally take steps that are meaningful to them even under uncertainties such as the inability to predict future outcomes, based on the “bird-in-hand principle,” in which entrepreneurs set out based on their own essence, knowledge, and social connections, and the “acceptable loss principle,” which reflects their own possible risk-taking.
However, this alone may result in small actions focused on feasibility and risk management.
Such actions can lead to the creation of greater value, including new markets and business opportunities, because entrepreneurs incorporate impressions from the external environment (unexpected results, encounters with people and information, institutional barriers, etc.) that are obtained only after taking action, and repeatedly update their actions to become more effective.
The thinking styles that enable this kind of response can be understood as the “Crazy Quilt Principle” and the “Lemonade Principle.”
Finally, the “Principles of an Airplane Pilot” can be said to relate to entrepreneurs’ independence in trying to control the entire process, including interaction with the external environment.
Decisions about how to deal with contingencies, who will partner and who will not, are made by the pilot entrepreneurs themselves, and such decisions will strongly reflect the essence of “who I am.
In the process of effectuation, the first of the means (resources) on hand as a starting point for action is the essence of “who I am” because essence can provide a consistent guide to determine “what to do” even in uncertain decision making where the optimal action cannot be defined because the outcome is unpredictable.
It is assumed that although the essence is initially the same as the entrepreneur’s own “who am I” identity, as a result of repeated cycles of effectuation and the acquisition of partners, an organizational identity of “who we are” is gradually formed.
Conversely, it is possible that there may be unforeseen circumstances or partner relationships that are not addressed because they do not suit the essence of the entrepreneur or his or her team.
In this way, the five thinking styles that make up effectuation are not each utilized independently, but are in a relationship where they influence each other.
By continuing to run the cycle of effectuation while being aware of the complementary relationship between these five thinking styles, we believe that it becomes possible to create new value that reflects the state of your own internal environment (the entrepreneur’s own cognitions, emotions, desires, etc.) and the external environment (market structure, institutions, various stakeholders, etc.) as an entrepreneur.
Final Thoughts
Unlike ordinary planning, the concept of effectuation is not about creating something within the expected range. At first, it is like a philosophy of action that naturally creates ideal forms that we had never imagined. This is nothing but aiming for the level of master in life.
I love this concept and want to continue learning more.
Fujii ‘Rocky’ Kaoru
