Deck 5: The Process

Question 1

The book illustrates various types of processes. A typically linear process (A to B) contains:

A) a given start, a given goal, clear checkpoints along the way
B) a flow where the starting point and end goal are difficult to pinpoint and are figured out along the way
C) a flow where search and learn are the primary tools used to reach the goal
D) an open process where the goal is successively established
E) a process where one travels from A to B in a detailed, orderly manner

Answer 1

a given start, a given goal, clear checkpoints along the way

Question 2

The following is a potential definition of a process: "a series or flow of activities that lead to a result over time."

Answer 2

True

Question 3

Suppose a course of events was described in the following manner: it was an open and free process involving restrictions, which provided checkpoints which pointed all activities in a specific direction. Is this a description of a process?

A) Yes - a non-linear process
B) Yes - a typical search-and-learn process
C) No - rather a type of free improvisation
D) No - rather a let it be and we'll see what happens

Answer 3

Yes - a non-linear process
Yes - a typical search-and-learn process

Question 4

Enact and enactment are mentioned throughout the book to describe certain aspects in the entrepreneurial process (processes of change). These words imply people collaborate to stage reality and that this takes place through discussion and actions which create meaning.

Question 5

Numerous researchers have found that a sound entrepreneur has and uses entrepreneurial judgement when faced with uncertain situations. This means:

A) using discretion and avoiding business with low financial returns
B) using discretion when choosing people to work with
C) subjectively assessing and making major decisions in real time based on available - and often incomplete - information
D) choosing the right market at the right time

Question 6

When one traditionally discusses management control, one typically defines a sequence of activities. What is that sequence?

A) analyze - decide - plan - implement - control - correct
B) act - follow up - measure - act again
C) analyze - measure - control variants - reorganize - follow up
D) plan - act - organize - monitor - follow up
E) decide - follow up - find scapegoats - punish - reorganize

Question 7

Strategic analysis, market analysis, cost/revenue analyses, budgeting, financing analysis, organization, strategic planning and operational planning are all methods and tools which contribute to the rational decision-making process.

Question 8

A business plan typically has the following components. Which four of the following are incorrect?

A) Best practice analysis
B) Business idea
C) Benchmarking
D) Financial analysis
E) Implementation plan
F) Stakeholder analysis
G) Strategic analysis
H)People, the team
I)Risk analysis
J)Bottom line
K)Financial solidity calculation

Question 9

The following are included in the financial analysis section of a business plan: (three are incorrect)

A) Financing, capital planning
B) Sales scenarios
C) Liquidity planning
D) Market analysis
E) Break-even analysis
F) Income budget
G)SWOT analysis
H)Value curve

Question 10

A strategic analysis in a business plan typically includes the following: (four are correct)

A) Offering
B) Competition analysis
C) Market analysis
D) Milestone planning
E) Target group analysis
F) PESTEL analysis
G) Our unique value-creating components - value curve

Question 11

Supporters of the business plan as a crucial tool for entrepreneurs explain how it forces them to think through their offering early in the process and how it, for example, will be produced, packaged and distributed to reach and create value for the customer (and the business owner).

Question 12

Supporters of the business plan as a crucial tool for entrepreneurs explain how it forces them to strategically analyze the branch and market, penetrating and testing it as far as they can, without taking risks and jumping in blindly.

Question 13

Research has shown that while planning and drafting a business plan does not necessarily ensure greater profitability, it does increase the likelihood that the venture will reach the introduction phase and once there, the enterprise will have considerably better prospects of sustained growth and survival.

Question 14

Criticism of the business plan and its prevalence state that it:
(choose the correct alternatives, those which have been criticized)

A) lays out a plan A in great detail - when a plan B and C are also necessary
B) can easily become focused on "me and my idea," forgetting the customer
C) only covers issues relevant to banks and other creditors
D) is poorly structured and demands too much of readers
E)passivates and diverts one's focus away from action
F) takes time away from important activities
G) is far too vague and does not go into enough detail
H)amounts to useless pen-pushing and is neither read nor used

Question 15

A business plan is a symbol of the understanding of how one - according to the non-linear model - gets from A to B

Question 16

Sarasvathy proposes a packet that, according to her, reflects the entrepreneur's way of thinking and working. What are the three main components of this packet?

A) a checklist
B) an ideology
C) logic
D) a handbook for business planning
E) calculation schemes
F) methods
G) principles

Question 17

Sarasvathy calls her process - the entrepreneurial method - :

A) causation
B) cause-and-effect
C) effectuation
D) entrepreneurialism
E) liberation

Question 18

The term causation most closely corresponds to:

A) the non-linear model's method of analyzing and reacting
B) the linear model's method of analyzing and acting
C) the discovery model's method of analyzing and acting
D) the creation model's method of analyzing and acting

Question 19

The term effectuation most closely corresponds to:

A) the non-linear model's method of analyzing and reacting
B) the linear model's method of analyzing and acting
C) the discovery model's method of analyzing and acting
D) the creation model's method of analyzing and acting

Question 20

Sarasvathy's effectuation model is a process.

Question 21

Effectuation:

A) starts with setting a goal and then mobilizing the resources to achieve it
B) starts with taking the resources one has at hand and then navigating towards a gradually emerging goal

Question 22

Effectuation:

A) is driven by goals and planning
B) is driven by resources and actions

Question 23

The book explains that effectuation - as compared to causation - is more:

A) agent dependent
B) agent independent

Question 24

Causal reasoning begins with a goal and attempts to find the cheapest, quickest, most effective means of reaching it. In other words, using available and new resources (means) is an exercise of optimization.

Question 25

Effectual reasoning starts with available resources and lets the goal take shape via interaction with the environment (which may also supply resources).

Question 26

In an effectual way of working, improvisation, experimentation, imagination and judgement are more important than in the causal way of working.

Question 27

Effectual situations, according to Sarasvathy, are characterized by three kinds of uncertainty. Which are they?

A) Esoteric uncertainty
B) Goal ambiguity
C) Grandiose uncertainty
D) Isotrophy
E) Knightian uncertainty
F) Ontologic uncertainty

Question 28

Goal ambiguity is an expression used when discussing uncertainty. It means that:

A) we don't know exactly where we are headed
B) we don't know which circumstantial conditions are important
C) we cannot calculate probability or outcome

Question 29

Knightian uncertainty is an expression used when discussing uncertainty. It means that:

A) we are uncertain where we should or wish to be headed
B) we don't know which circumstantial conditions are important
C) consequences cannot be assigned probability and cannot be calculated

Question 30

Sarasvathy argues that the entrepreneurial method cannot involve choices and decisions - that is instead the causal line of thinking. Instead, we have a design problem, with open questions which do not have a given answer, according to S. In other words:

A) this is one of the problems with design, the fact that it has no given answers
B) we, first of all, need assistance in building something, not help in choosing or optimizing something
C) we do not actually have any real choices - the majority are given or provided
D) we do not actually have any real choices - the majority are so open-ended that we can only follow along

Question 31

Start with your basic resources, as prescribed by both Sarasvathy and the effectual model. Basic resources are:

A) both immaterial and material supplies
B) who you are, what you have and what you can do
C) your business plan, office, telephone, etc. (proof of concept)
D) who you know, what you have and what you can do

Question 32

Taking advantage of contingencies that occur along the way is emphasized in the effectual school of thought. Which of the five principles is this connected to?

A) Lemonade principle
B) Affordable loss principle
C) Bird-in-hand principle
D) Patchwork principle
E) Pilot-in-the-plane principle

Question 33

What can my partners and I afford to lose? is a question one proposes in one of the five principles within the effectual school of thought. Which of the five?

A) Pilot-in-the-plane
B) Affordable loss
C) Bird-in-hand
D) Patchwork
E) Lemonade

Question 34

What can I achieve with the means at my disposal? is connected to one of the five principles within the effectual school of thought. Which of the five?

A) Patchwork
B) Pilot-in-the-plane
C) Bird-in-hand
D) Affordable loss
E) Lemonade

Question 35

There is proof that entrepreneurs that reach the introduction stage and survive for a period after that differ from those that abandon a project in an early stage or wind up in a long period of waiting. A clear differentiator between the two is:

A) that survivors have better business plans
B) that survivors have incredibly high energy levels and IQs
C) that survivors immediately take a more active, offensive approach, displaying a business identity
D) that survivors are made of the right stuff

Question 36

The causal and the effectual - to play with both hands is a heading in the book. In other words:

A) that effectual and causal are like fire and water
B) that considering entrepreneurship to be a play with two hands is a fruitful approach
C) a person should employ all of his/her ability, not only parts of it
D) the two forms of logic complement one another - they are both necessary, just at different stages

Question 37

The book expresses opportunity as both an input and an output in the entrepreneurial process. The effectual process is an example of viewing opportunity as an output.
B. False

Question 38

Assign the following as examples of causal or effectual reasoning.

-The future can be predicted on the basis of the past. Predictions are possible and useful.

A) Causal
B) Effectual

Question 39

Assign the following as examples of causal or effectual reasoning.

-Action is driven by goals and sub-goals, which determine what course of action is rational and with whom it should be pursued.

A) Causal
B) Effectual

Question 40

Assign the following as examples of causal or effectual reasoning.

-One invests only what one (and interested parties) are willing to lose. Focus on limiting the downsides.

A) Effectual
B) Causal

Question 41

Assign the following as examples of causal or effectual reasoning.

-One uses strategic partners and brings them on board to increase one's resources. Opportunities develop and take form via partners.

A) Effectual
B) Causal

Question 42

Assign the following as examples of causal or effectual reasoning.

-Avoid risks that could end in failure! Avoid surprises. Don't experiment - plan!

A) Causal
B) Effectual

Question 43

In the discussion regarding causal and effectual rationality, the first is said to be typically useful when uncertainty is low and predictability is high, and the other when uncertainty is high and predictability is low.

Question 44

The Lean School defines a startup as "a temporary organization designed for finding and elaborating a sustainable business model in situations of extreme uncertainty."

Question 45

A startup is a temporary organization designed for finding and elaborating a sustainable business model in situations of extreme uncertainty. What ideas constitute the Lean Startup school of thinking? Which conclusion does NOT fit in this context?

A) When a viable business model is achieved, the start-up process is over.
B) The startup process is unique/specific and differs from later stages in the business process.
C) Once the business model has proven itself to work, one enters the next stage - development stage.
D) The development stage is clearly of a different nature - not characterized by extreme uncertainty.
E) The development stage is not defined by "search, find and form a business model" and related processes.
F) A business can be a startup forever.

Question 46

The Lean Startup school says that "the product is not the product!"

Question 47

The Lean Startup school says that "the business model is the product!"

Question 48

The Lean Startup school believes that the business model is the product, and states that the client values and responds to the business model, not only the specific product or service.

Question 49

MVP is an acronym for:

A) Minimal Venture Prospect
B) Minimum Viable Product
C) Most Valuable Product
D) Most Value Prosperity

Question 50

"Proof of concept " is a core idea in the Lean Startup school of thought. This means that the opportunity or business model demonstrates its potential in some capacity.

Question 51

The Lean Startup school's principle that through a series of learning loops, the uncertainties in the start-up process are reduced. With each round vis-à-vis the customer, the entrepreneur(s) advances to a higher degree of insight and certainty.

Question 52

The Lean Startup school's learning loops involve a number of steps. Which?

A) business model - implement - follow-up - learn - adjust
B) analyze and learn - create an alternative - rank - evaluate - choose
C) create hypotheses - design experiments - test - receive insight/learn
D) test - measure - compare - learn - calibrate - re-test

Question 53

The book speaks about how "it depends", when it comes to selecting one of the kinds of processes. We have described two archetypal approaches:
1)the testing, improvising and successively emerging model (≈ effectual)
2)the linear, analytical, systematic model (≈ causal)
On which of the following occasions would the effectual approach (1) be the first choice:

A) you know the goal and can predict the consequences of your decisions and actions
B) market already exists and is ready to be captured
C) mature market, mature product that will be renewed
D) new unknown market, new product category
E) uncertainty high, predictability low
F) uncertainty low, predictability high
G) the situation is disruptive by nature - something will be radically transformed
H)the task is to refine and optimize something
I)large-scale, long-term industrial investments
J)a large-scale, technically complex project

Question 54

The book mentions a number of desirable team qualities, known as dynamic capabilities. These are "the group's ability to continuously interpret what is happening in their surroundings and, just as continuously, to reconfigure their resources and actions according to the insights gained."

Question 55

The closest one can come is to try to achieve the best "fit" between the elements that form this book's structure. In other words, the environment, the people, the opportunity and the process.

Question 56

A few fundamental factors in our discussion of the process is if it is………? Select those which fit within the context of the process.

A) Linear or non-linear
B) Planned or improvised
C) Causal or effectual
D) Found or created
E) Imitative or innovative
F) Needs-driven or opportunity-driven
G) Fixed or dynamic