Knowledge and control: Effectuation vs Causation

“Knowledge is power.” This is usually attributed to Francis Bacon, who said something similar enough. He was roughly a contemporary of Descartes and went all in in this “let’s figure things out ourselves” idea. So he went ahead and created the scientific method.

His stated purpose, in creating the method, was to “command nature” by gaining knowledge about “her”.

He was operating in a model in which knowledge leads to power.

Unbundling, it states that prediction leads to control.) This is what certainty is about as well, if you have certainty in knowledge, then you can bend reality to your will – Descartes’ aim.

The other way to get control, without prediction, without certainty; is to go for control directly: Effectual thinking.

Following I present Effectuation, contrast it to Causation (Causal, teleological, means-end rationality), and suggest their domains of application.

 

Effectuation

Effectuation (1)⁠ is a theory of how expert entrepreneurs act. It originated due to a think-aloud study by a student of Herbert Simon that aimed to understand what are the commonalities and differences in the decision making processes of a group of expert entrepreneurs.

The answer happened to be that they share much, in fact, a whole hitherto unknown, approach to problem solving.

This approach was baptized Effectuation, and, what is of more theoretical interest, it happened to be a direct inversion of Rational Choice theory.

(Rational Choice theory is a normative theory choice of judgement and decision-making. That is, a theory of how people ought to make choices and judgments. It imposes consistency conditions on choices, values, and beliefs. According to it, one is rational to the extent that one abides to these conditions. RCT holds that if agent’s preferences respect certain axioms, then people are behaving as if they were maximizing a utility function u over which their preferences are defined. That is, to say, given a set of options, they choose their preferred option. I had been really generative as a model for social and economic behavior.)

Effectuation and Causation

Sarasvathy distinguishes Effectuation from Causation. Effectuation is, broadly, the type of thinking that expert entrepreneurs use (but also, that humans use to design artifacts, products, firms, and marktets), and Causation is, broadly, the type of thinking that RCT formalizes.

  • Causation processes take a particular effect as given and focus on selecting between means to create that effect. It is teleological.
  • Effectuation processes take a set of means as given and focus on selecting between possible effects that can be created with that set of means. It is teleonomical.

Below I contrast Effectuation or Effectual reasoning, and Causation, or Causal reasoning, based on their problem, process, principles, and logic.

The problem

Causal rationality begins with pre-determined goal(s) and means and aims to identify the optimal route to the goal. Effectual reasoning begins with a set of means and allows goals to emerge over time from the imagination and commitments of the stakeholders.

The process

All entrepreneurs start with three types of means: (1) Who they are, (2) What they know, and (3) Whom they know. Using the aforementioned means, entrepreneurs start imagining and implementing what can be created. In this process goals are allowed to emerge as actions are taken and further means are gathered.

“Who I am refers” to the collection of traits, characteristics, dispositions, and abilities of entrepreneurs. “What I know” refers to the knowledge, experience, and possible expertise of the entrepreneur. The third mean, “Whom I know”, refers to the social and business networks of the entrepreneur.

The principles

The Affordable Loss Principle

Causational logic suggests that decision-makers ought to maximise their expected value. Entrepreneurs focus on minimizing loss.

The Crazy Quilt Principle (Strategic Partnership)

Effectuation outlines a reduction of competition and uncertainty through the use of strategic partnerships. (Instead of competitive rationality.)⁠

The Make-Lemonade Principle (Leverage Contingencies)

Effectuation is a logic for environments with Knightian uncertainty (That is, true unpredictability).) entrepreneurs explore these spaces by leveraging surprises instead of seeing them as impediments to a goal-oriented search process focused on the exploitation of pre-existing knowledge.

The logic

The logic of effectual reasoning is different from that of causal reasoning. In causal reasoning, To the extent that we can predict the future, we can control it. In effectual reasoning, To the extent that we can control the future, we do not need to predict it.

Issue Effectuation Causation
Where to start Means. Goals.
Risk, return, and resources Affordable loss. Expected return.
Attitude towards others Partnership. Competition.
Surprise Leverage surprises. Avoid surprises.
Underlying logic and what to do Co-create. Cannot predict: Control. Plan. Predict to control.

(2)

 

The wrong way of thinking?

The scientific method was developed with the aim of controlling nature, and it has succeed , in the domain of the natural sciences. The same has not been the case for the social sciences.

I’m very partial to arguments about how the social sciences are younger (Sociology has been around for 100 years, and physics for 500.) and this could be why they haven’t started gaining control yet (or maybe because the subject is harder, or reaching the methodology is more difficult, or something else).

But, maybe, we’ve been thinking about this from the wrong direction? Maybe we don’t need predictive knowledge in the social sciences, to control the realm we aim to control (social reality/artificial realm)? Maybe we can get control directly by employing and harvesting effectual thinking?

I’m warming up to this idea. The belief that we can control the future without needing to predict it obtains in a particular problem space: a Knightian-Marchian-Weickian problem – where the future is unpredictable, goals are ambiguous, and every action changes the environment and your goals. The first one obtains if you believe that the future – in the social realm – is made by the actions of humans, and not discovered. The third obtains if you think theories act as engines, not as cameras. (If you don’t please let me know about how you think Marxism did not impact the world.)

It seems that the natural sciences deal with a problem space that is neither Knightian nor Weickian: you can know things, and your actions don’t change it (for the most part).

 

  1. Sarasvathy, S. D. (2001). Causation and effectuation: Toward a theoretical shift from economic inevitability to entrepreneurial contingency. Academy of management Review, 26(2), 243-263;  Sarasvathy, S. D. (2008). Effectuation: Elements of entrepreneurial expertise. Edward Elgar Publishing. ISO 690
  2. Read, S., & Dolmans, S. (2014). 11 a review on effectuation. Handbook of Research On Entrepreneurship: What We Know and What We Need to Know, 238.
  3. Read, S., & Sarasvathy, S. D. (2005). Knowing what to do and doing what you know: Effectuation as a form of entrepreneurial expertise. The Journal of Private Equity, 9(1), 45-62.

Future:

  1. Sarasvathy, S. D., & Venkataraman, S. (2011). Entrepreneurship as method: open questions for an entrepreneurial future. Entrepreneurship Theory and Practice, 35(1), 113-135.
  2. Conceptual clarification: rationality, rct, causal reasoning, effectuation, efectual logic, effectual thinking
  3. Physics envy is maybe not a problem once you show results?
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Theories as cameras, theories as engines

At some point all of science was together in something called “natural philosophy”. Francis Bacon was the first to attempt to partition the sciences. Nowadays disciplines are partitioned more or less neatly. (Cognitive Sciences being new is pretty haphazard.) And there is one big demarcation I wish to touch upon: between soft and hard sciences, or social and natural sciences.

I have frequently observed the confusing fact that whether one is more connected to the social or the natural sciences is quite predictive of one’s epistemological beliefs: It seems that people that participate or research in hard science fields (physics, chemistry, biology) seem to be drawn into objectivity whilst those in soft science fields (economics, sociology) more drawn to non-objectivity.

In what follows I attempt to describe the epistemology of the fields and to do a first pass at along what axis the underlying epistemological assumptions differ.

 

Descriptive epistemology of the 2 scientific cultures

In designerly ways of knowing (1), Nigel Cross talks about 3 scientific cultures (sciences, humanities, design) and characterises them across the axes of phenomenon of study, appropriate methods, and values. I’m going to reproduce his characterizations, skipping design:

“The phenomenon of study in each culture is

  • in the sciences: the natural world
  • in the humanities: human experience

The appropriate methods in each culture are

  • in the sciences: controlled experiment, classification, analysis
  • in the humanities: analogy, metaphor, evaluation

The values of each culture are

  • in the sciences: objectivity, rationality, neutrality, and a concern for ‘truth’
  • in the humanities: subjectivity, imagination, commitment, and a concern for ‘justice’

Now, researchers are trained and develop methodologies which entail epistemologies and ontologies.  I think I finally understood what this difference about.

The basic metaphor of knowledge is vision. When you see you don’t change the object. This metaphor obtains for physics and chemistry and biology for the most part, and thus you can model this domains as being observer independent, as systems that are separate from the one that is modeling them.

In the soft sciences (that is, sciences that study human-made systems, or systems made up by humans) the correct metaphor is touch: to understand you must manipulate the object. You cannot be independent of the systems that you are observing – there is theoretical performativity. Meaning, the observer and what the observer is doing (theorising) affect the phenomenon.

Your observations (and their being published and spread out) change the system you set out to observe. Your theories in this domain are not a camera, but an engine.

This suggestion is not wholly original. Cybernetics was the study of systems, and second-order cybernetics the study of systems including the ones constructing systems and studying systems. In what follows I tease out the generativity of this particular viewpoint to understand the curious fact pointed at in the introduction.

MAP-MAKING WITH CAMERAS

MODERN WORLDVIEW

Naive objectivism. The received worldview, the natural stance (my map is the territory.).

3RD PERSON

Observer sits outside of the system he is observing. God’s eye view

OBJECTIVITY IS POSSIBLE

What is being described is independent and not affected by the description or the descriptor.

MAP AND TERRITORY: SIMPLE RELATIONSHIP
SEPARATED

Representationalism/Realism: One level up, my map is not the territory and the territory informs my map but there is no bidirectional causality.

METAPHOR: VISION

“The KNOWING IS SEEING conceptual metaphor allows us to understand the abstract domain of knowledge by means of the concrete domain of sight. This is a metaphor with a clear experiential basis2 grounded in the fact that in early childhood human beings normally receive cognitive input by seeing. Nevertheless, whereas in the first years of one’s life perception and cognition are conceived as together (or conflated in terms of JOHNSON 1997), due to the fact that there is a deep basic correlation between the intellectual input and vision, afterwards these two domains separate from each other («deconflation» in JOHNSON’s words 1997). This is the reason why we are able to use the metaphor KNOWING IS SEEING meaning just «awareness» and not being linked to vision at all, which may be seen in everyday language expressions like the following ones:

(a) I see what you’re getting at.

(b) His claims aren’t clear.

(c) The passage is opaque.” (2)

TRUTH: POSSIBLE

A great intro.

MAP-MAKING WITH ENGINES

POSTMODERN WORLDVIEW

Objectivity is impossible. Everything that is said is said from someone to someone, from a specific viewpoint, culture, assumptions and so on that cannot be transcended.

2ND PERSON

Participant observation, ethnography. If you want to study the object you must interact.

INTERSUBJECTIVITY IS POSSIBLE

Claim can be made and triangulated from authors in various different positions.

MAP AND TERRITORY: COMPLEX RELATIONSHIP
MAP(S) ARE THE TERRITORY BEING MAPPED

I write about this particular relationship at some length in modelling map aggregation.

2ND AND N-ORDER EFFECTS OF MAPPING

The mapping alters the territory.

http://mitpress.mit.edu/books/engine-not-camera

MAPPING CREATES TERRITORY

“what we conventionally think of a ‘subject’ and ‘object’ are co-arising. Because the mind is embodied and arises out of “an active handling and coping with the world”, then “whatever you call an object … is entirely dependent on this constant sensory motor handling”. As a result an object is not independently ‘out there’, but “arises because of your activity, so, in fact, you and the object are co-emerging, co-arising” (Varela, 1999: 71-72).” http://en.wikipedia.org/wiki/Enactivism

METAPHOR: TOUCH

Core metaphor is “knowing is touching”. To know the object you must interact with it, and your interactions change it.

TRUTH: DISREGARDED

Habermas: “By linking meaning with the acceptability of speech acts, Habermas moves the analysis beyond a narrow focus on the truth-conditional semantics of representation to the social intelligibility of interaction. The complexity of social interaction then allows him to find three basic validity claims potentially at stake in any speech act used for cooperative purposes (i.e., in strong communicative action). His argument relies on three “world relations” that are potentially involved in strongly communicative acts in which a speaker intends to say something to someone about something (TCA1: 275ff). For example, a constative (fact-stating) speech act (a) expresses an inner world (an intention to communicate a belief); (b) establishes a communicative relation with a hearer (and thus relates to a social world, specifically one in which both persons share a piece of information, and know they do); and (c) attempts to represent the external world. This triadic structure suggests that many speech acts, including non-constatives, involve a set of tacit validity claims: the claim that the speech act is sincere (non-deceptive), is socially appropriate or right, and is factually true (or more broadly: representationally adequate). Conversely, speech acts can be criticized for failing on one or more of these scores. Thus fully successful speech acts, insofar as they involve these three world relations, must satisfy the demands connected with these three basic validity claims (sincerity, rightness, and truth) in order to be acceptable.”

  1. – “Cross, Nigel. “Designerly Ways of Knowing.” Design Studies 3.4 (1982): 221-27.”
  2. – Ruiz, J. H. (2005). The authority is vision and the knowledge is a bounded region metaphors in fairy tales. Interlingüística, (16), 569-578.

Future: