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Freitag Brothers

Entrepreneurship is the process of setting up a business by accepting the financial

risk with the hope of getting profit. In this process people use their innovative ideas

by observing things around them and by analyzing how such initiatives can generate

profit streams. Same concept was executed by the couple brother who were raised in

Switzerland named Markus and Daniel Freitag, they used their innovative mental

capacity and stepped into the entrepreneurship in 1993. Both of them by means of

their experience and from their surroundings observed that the messengers who were

riding bicycles are facing the problem in delivering the parcels. Their innovative

minds thought for an idea to utilize the traps of the trucks in order 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 in

terms of design. Due to increase in words of mouth people started buying these bags

for multiple purposes. Freitag brothers are the ones used this concept of effectuation

and became entrepreneurs.

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. Effectuation 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 these

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

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
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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 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.

1. Things could be created from what already exists

Positivity is often regarded as an ingredient to success in entrepreneurship, but blind

optimism may land you in difficult situation as one might have ignored the red flags.
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So, the person should adopt the strategy of defensive pessimism that would make the

entrepreneur ready for every situation and entrepreneur becomes more productive.

Creating something that already exists requires innovation and creativity.

Obviously, a product would fail to gather the attention of masses if it has the same

features like the ones present in the market. It’s about coming up with the whole new

idea and using the resources within to create a new thing. One of the finest examples is

Freitag brothers who created new variety of messenger bags from already existing seat

belts, bicycle inner tubes and truck tarpaulins.