Of all the (practical) content on entrepreneurship, one of my favorite is an academic paper entitled What makes entrepreneurs entrepreneurial? It is a look at the set of principles and characteristics that makes (successful) entrepreneurs "entrepreneurial".

In short, entrepreneurs leverage "effectual reasoning", which is the opposite of the managerial-minded "causal or predictive reasoning". 

While causal thinkers believe that "If I can predict the future, I can control it", the entrepreneurial effectual thinkers believe that "If I can control the future, I do not need to predict it".

So why is this important? 

As we weather through the COVID-19 storm, the punditry has been applying causal reasoning to the situation in an effort to predict what the future will look like. "The economy will open up in X time", or "the future will look like Y". 

This is a fruitless exercise, not only because who the fuck knows what's going to happen, but also because this line of questioning and predicting is the opposite of thinking like an entrepreneur. 

Effectual thinking consists of five principles that are instructive for operating in this new environment. 

1. Bird in a Hand Principle - What are your means? Who you are, what you know, and who you know. 
2. Affordable Loss Principle - Optimize for affordable loss rather than expected returns by deciding what you are willing to lose rather than making decisions based on what you expect to make. 
3. Lemonade Principle - Turning lemons into lemonade. In most scenarios, surprises and unforeseen outcomes are considered bad. For entrepreneurial thinkers, anything and everything is potentially a surprise that can lead to a valuable opportunity. 
4. Crazy Quilt Principle - Form partnerships and jointly create the future. 
5. Pilot in the Plane Principles - Pilots are only in control of the plane. Not the weather or anything else. Worry only about controlling what you can control.

I recently interviewed Alitheia Capital's Tokunboh Ishmael for an upcoming podcast episode of The Flip. Tokunboh founded her firm in 2007, and her experience at this time is an instructive demonstration of effectual thinking. 

Upon launching Alitheia, Tokunboh set out with the intention to raise a fund by leveraging relationships built during her career. However, the Global Financial Crisis of 2008 derailed her initial plans, forcing her to pivot. 

Rather than fight the uphill battle of fundraising during a downturn, or choosing to wait until the economy picked back up again Tokunboh fortuitously met the folks at Goodwell Investments, who were also looking for a local partner. As she recalls, 

It was a good marriage where they were in the place and could speak the language of the people who wanted to have the impact, and I was in a place where I could speak the language of the people that needed the funding to make that impact. 

And their partnership approach has endured over the 13 years of the firm. Most recently, Alitheia partnered with a South African fund manager, IDF capital, and the two parties jointly raised the Alitheia IDF Identity Fund, a $75 million fund investing in gender-diverse SMEs around the continent.

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