New this year, the Effectual De-Risking competition will require students to demonstrate that they have taken steps to "de-risk" their idea. De-risking is a process expert entrepreneurs undergo after they have conceived of their idea, and before they invest significant time and/or money (their own or that of outside investors). Many businesses fail at the startup phase because inexperienced entrepreneurs skip this step. The new "Effectual De-Risking competition" will focus students on this critical junction in the business formation process.
Students are strongly encouraged to attend three workshops covering the essentials of de-risking and effectuation. The first workshop will be held at Darden's annual E-Conference on 9 November 2012, titled: "Assumption Testing - How to De-Risk Your Business Idea." A second workshop will be led by Darden Professor Saras Saravathy on Wednesday, January 23 at Open Grounds. The Darden EVC Club will also host a third workshop on Darden Grounds with Professor Sarasvathy. For more information on the sessions, visit the Competition Page and view the Calendar on the upper right hand corner.
For additional information on effectuation and de-risking, please view the videos below, visit the resources tab, and attend the pre-competition workshops.
Effectuation by Corsendonk College Center for Effectuation
Effectuation: The Affordable Loss Principle
- Submission Deadline: TBA
- Finalists Announced: TBA
- Finals: TBA
Please visit the Resources page for more information Effectuation.
Your submission should include the following:
- · 3-5 page paper (see Judging Criteria for information on what to cover in your submission). Submissions may follow this suggested template.
- · Contact Information:
- Name of team Captain and team members
- Telephone Number
- E-mail Address
Note: Selected finalists will present their findings via Powerpoint (10 - 15 slides). Powerpoints should be visual and story oriented.
Competition submissions should address the questions below. Submissions will be judged on these criteria using this Scoring Sheet.
1. What do you know about this business? Who do you know? Bird-in-Hand Principle of Effectuation
Examples: Do you have experience in these markets, do you understand the production and sales/distribution of the product? Have you been able to get experts in the field who know the markets intimately to commit to supporting you as advisors (specifically what time, resources have they committed), thereby confirming your vision for the business and avoiding the problems only people intimately familiar with the sector can anticipate. Have you built a board of advisors?
2. What evidence do you have that a customer wants your product? Crazy Quilt Principle of Effectuation
Examples: Specifically what have customers committed to you indicating that they truly want your product? Commitment to use the prototype or beta? Money in the form of a pre purchase or purchase order? Following or "Likes, Connections, or Friends" on social media platforms?
3. Have you been able to get people who have a vested interest in your success to commit something to helping you succeed "Skin-in-the-game"? Crazy Quilt Principle of Effectuation
Examples: Customers help you create/simulate your prototype or product, vendors agree to hold inventory for you, agree to give you advantageous payment terms, commit resources to design/manufacture your product in exchange for equity, etc.
4. Have you already shown your ability to "pivot," incorporating information into the concept? Describe the original idea and how/why it has evolved. What did you learn that you didn't know? Lemonade Principle of Effectuation
5. "Managing risk like a seasoned entrepreneur means making decisions based on acceptable downside rather than guesses about upside potential." How well have you determined how much you really need to start your business? What are you really able and willing to lose? Have you made the cost of initial failure and iteration affordable? Affordable Loss Principle of Effectuation
6. Have you demonstrated your ability to take an unexpected and possibly negative event (i.e. an employee who fails to deliver or a technical shortcoming) and turn it into an asset? Explain how that happened. Lemonade Principle of Effectuation
Note, you may uncover new de-risking strategies as you go through the effectual de-risking process. If you do, articulate them in your submission.
First Prize: $3,000
Second Prize: $1,500
Third Prize: $ 500
Payments: Unless otherwise specified, the entire payment will be made directly to the team captain. To split payments between team members or pay to a business entity, please contact the competition organizer for more information.