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Freitag Brothers

Entrepreneurship is about using one’s own creativity and initiating a new business by

making that idea a foundation. Same thing was implemented by the brothers duo

named Markus and Daniel Freitag, who used their innovative mind and stepped into

the entrepreneurship in 1993. Brothers from their own experience and from their

surroundings noticed that the messengers who were using bicycles, were also having

difficulty in delivering the parcels. Their innovative minds got an idea of utilizing the

tarp of the trucks to create something unique which is also handy. They came up with

the idea of using the bicycle inner tubes, old tarpaulin and car’s seat belts for making

the messenger bags. The bicycle messengers found those bags very prudent and each

bag was different from other. The word of mouth spread and people started buying

these bags for multiple purpose. Freitag brothers are the ones that used the concept of

effectuation.

Effectuation

It is often seen that in modern era, entrepreneurs are more focused on the means that

are available to them rather than predicting about the future. This is known as

effectual reasoning or effectuation. Effectutaion is the opposite of causal reasoning in

which the milestones are well defined and strategies are already planned. Effectuation

basically involves the recombination of resources to create something unique. By this

entrepreneurs are not much concerned about the capital and are well aware of their

floating goals and limitations. There are five principles of effectuation which are

worthwhile to be mentioned. Keeping in mind these principles the entrepreneurs can

better create something new from the existing resources.

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Bird In Hand Principle: Keeping in mind this principle, an entrepreneur can assess

the capabilities of his business through the questions like who are they? What are their

values? What they think the society should have or what is their role in the society?

What we are creating, is it really worth it?. In addition, they also have to ponder upon

their core competencies, core activities, assets, potential customers, competitors,

budget, production capacity, business partners etc.

Affordable Loss Principle: As effectuation involves thinking of applying a unique

idea, so this should start by making small investment rather than large investments.

Before making investment the entrepreneur should think about the factors like can he

afford to invest in such initiative, will iteran good name or bad name for the

organization, and how much risk he can eradicate for moving forward in the corporate

world.

Crazy Quilt Principle: This principle is about making partnerships. Each partner is a

unique piece of cloth, all partners are stitched together to form a quilt which
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represents that business is a network of multiple partners. By using this principle,

entrepreneurs collaborate to form solutions for the perceived problems. In other words,

the entrepreneurs come together to limit the adverse effect of risk involved and

improve value proposition.

Lemonade Principle: In corporate world, learning and adapting the market trends

faster than your competitor is the key to success. Entrepreneur would come across

surprises that would either be positive or negative. Entrepreneur often perceive

positive surprise as luck. The negative surprises have a potential to kill the project.

Therefore, entrepreneurs should learn from this principle that if some lemon forces

you to do so, then slice that lemon and learn what its juice is teaching you. The

entrepreneur should change their directions from the lessons learnt rather than

abandoning a project.

Pilot in the Plane: Effectuator is the pilot in this principle. This principle provides a

simple lesson to the entrepreneurs to take the charge of your activities and the

resulting outcomes would be according to your desire. This principle provides

entrepreneurs to control future instead of predicting it.