1 EFFECTUAL MARKETING PLANNING FOR NEW VENTURES ABSTRACT Current marketing theories largely follow the rational planning school and base marketing planning activities upon a strategic pursuit of an optimal market outcome. While extant theory aligns with the motivations of large corporations in established markets, it offers little benefit to marketers in new ventures. We address this gap directly and propose a new concept of effectual marketing planning which is based on a logic of control and specifically addresses the challenges facing new ventures. We note five key differences between traditional marketing planning and effectual marketing planning and offer propositions as to how effectual marketing planning can increase performance. Keywords: marketing planning, effectuation, new ventures, uncertainty
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EFFECTUAL MARKETING PLANNING FOR NEW VENTURES
ABSTRACT Current marketing theories largely follow the rational planning school and base marketing planning activities upon a strategic pursuit of an optimal market outcome. While extant theory aligns with the motivations of large corporations in established markets, it offers little benefit to marketers in new ventures. We address this gap directly and propose a new concept of effectual marketing planning which is based on a logic of control and specifically addresses the challenges facing new ventures. We note five key differences between traditional marketing planning and effectual marketing planning and offer propositions as to how effectual marketing planning can increase performance. Keywords: marketing planning, effectuation, new ventures, uncertainty
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Introduction
Marketing planning has long been a central component of marketing
management. For the past four decades, marketing planning has served as a vehicle for
demystifying, teaching, organizing and practicing marketing management. It is a logical
process that encompasses and integrates the many different sub disciplines of marketing
and provides a sequential approach to addressing a firm’s marketing practice (McDonald,
1996). Formality and sophistication may differ (Rue & Ibrahim, 1998), but the process
of marketing planning itself has remained remarkably consistent and unquestioned
(Smith, 2005). Much like business planning (Ames, 1989; Burns, 1990; Kahrs, 1995),
the marketing planning paradigm has become “more deeply rooted in ritual than
efficiency” (Honig and Karlsson, 2004, p. 260). This limits marketing planning’s
general efficacy and applicability, including its relevance to the new venture context
(Kukalis, 1991; Castrogiavanni, 1996). This paper focuses on marketing planning in new
ventures, where the sophistication and complexity of traditional planning are replaced by
action, learning through failure, and a premeditated approach to market experimentation
designed to create unique feedback paths (Honig, 2004; Sarasvathy, 2001).
Recently, scholars have argued for a new entrepreneurial paradigm of marketing
(Hill and Wright, 2000; Martin, 2009; Morris et al, 2002; Read, Dew, Sarasvathy, Song
and Wiltbank, 2009). We follow these scholars and suggest that unless marketing
planning scholars consider planning under the extreme uncertainty new ventures face, we
may never fully understand or inform these important constituents. We employ
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Sarasvathy’s (2001) logic of control, known as effectuation, as a strategic perspective that
allows marketing planning theory to provide value to entrepreneurs managing new
ventures. The effectuation perspective rejects traditional planning tenets that
opportunities are “discovered” through market research (Narver and Slater, 1990) and/or
the failure of incumbent firms (Christensen, 2003). Rather, effectuation suggests new
business opportunities are “created” by entrepreneurs that eschew analyzing existing
markets, investment risk, and expected returns and instead choose between possible
effects they can create with their given means (Sarasvathy, 2001)1. This leads to the
primary thesis considered in this paper: Could the marketing planning needs of new
ventures be better addressed using effectuation as a theoretical foundation?
1Sarasvathy (2001, p. 245) describes the difference between causation and effectuation as follows: Causation processes take a particular effect as given (an unmet market need in our case), and focus on selected means to create that effect (finding outside investment to exploit the discovered unmet need). Effectuation processes take a set of means as given (What I know, whom I know, and what I can create under these constraints) and focus on a set of possible effects that can be created with that set of means. Parentheses and Italics added by the authors.
Planning theory recognizes the limitations of bounded rationality; the planner’s
cognitive ability to address a finite amount of information over a given time (Simon,
1982). However, the general consensus is that firms within a given environment would
make the same choice, given the same information. This suggests that firms with
inferior information, like new ventures, ought to try harder to predict better (Wiltbank et
al., 2006) and leaves little room for alternative planning strategies.
The focus on prediction found in rational planning assumes markets are somewhat
static and unchanging, which limits its applicability in dynamic environments
(Christensen, 2003). Over the years, this has resulted in a number of attempts to assuage
planning paradigms through such theories as mindfulness (Weick and Sutcliffe, 2001),
emergent strategy (Mintzberg 1978), discovery driven planning (McGrath and
MacMillan, 1995), and in some respects, even improvisation (Moorman and Miner
1998).
Mindfulness notes that despite a manager’s clear intention to predict the future as
accurately as possible, new information and surprises can cloud a manager’s ability to
correctly interpret the environment (Weick and Sutcliffe, 2001; 2006). Mindful
organizations develop contingencies to handle new information. Faced with these
contingencies, mindful organizations (Weick and Sutcliffe, 2006, p. 516):
spend (a) more time examining failure as a window on the health of the system, (b) more time resisting the urge to simplify assumptions, (c) more time observing operations and their effects, (d) more time developing resilience to manage unexpected events, and (e) more time locating local expertise and creating a climate of deference to those experts.
The concept of mindfulness shares effectuation’s skepticism about accurately predicting
uncertain markets, however, mindfulness seems to suggest that increased investments in
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time and diligence can overcome planning’s shortcomings. Effectuation is predicated on
the fact that there is not one certain future but perhaps many futures; and therefore, no
amount of planning can accurately predict all that could happen.
Mintzberg and colleagues (Mintzberg 1978; Mintzberg and Waters, 1982;
Mintzberg, Raisinghani, and Theoret, 1976) developed a concept of emergent strategy as
an additional adaptation to the rational planning paradigm. At its core, emergent strategy,
like mindful organizing, is a reaction to new information or surprises from the
environment. Of the many varieties of emergent strategy (Mintzberg and Waters, 1985),
one specific form of emergent strategy, imposed strategy, is the most closely related to
EMP. Imposed strategy occurs “when an environment directly imposes a pattern of
action on an organization” (Mintzberg and Waters, 1985, p. 258). These authors suggest
imposed strategy is deterministic; organizations are resigned to competing a certain way
or to using particular technologies, and so they plan strategies to achieve them.
Mintzberg and Waters (1985, p. 268) give the example of state run Air Canada:
… when the minister who created and controlled the airline in its early years forced it to buy and fly a particular type of aircraft … given its inability to resist, the organization had to resign itself to the pursuit of this strategy…”
Mintzberg and Waters (1985) concede that no strategy is completely deterministic and
that entrepreneurs operate somewhere between determinism and free choice.
McGrath & MacMillan’s (1995) discovery-driven planning (DDP) is an
additional adaptation to the rational planning paradigm that attempts to assuage the
tension between predicting the future and responding to surprises. DDP recognizes the
danger of planning based on assumptions instead of first-hand knowledge through the
development of specific tools for business planning used to convert assumptions into
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knowledge throughout venture implementation. DDP’s contribution allowed
entrepreneurs to respond to wrong assumptions about existing markets, and revise plans
accordingly. DDP’s reliance on market analysis to form initial assumptions links
strongly with traditional marketing planning.
Despite the rich conceptual proposals described in mindfulness, emergent strategy
and DDP, they were all predicated on a traditional platform of predictive logic for
fomenting planning templates. They each fail to describe processes where organizations
actively engage the environment and dictate change on their own terms. This limits their
applicability in the new venture context (Sarasvathy and Dew, 2005; Holloway and
Sebastiao, 2010).
At the other end of the planning spectrum, Moorman and Miner (1998)
investigated improvisational marketing management in the new product development
process. They found a positive effect for firms that create tactical adjustments outside
the confines of planning and manage “in the moment (p. 1).” However, Slotegraf and
Dickson (2004) demonstrated a marketing planning paradox when it comes to
improvisation. Firms with a planning capability improve performance through
improvisation, however, they are less likely to engage in improvisational acts. It seems
that a marketing planning competency reduces the likelihood that firms will act outside
the implementation schedule even though, when they do, they achieve greater success.
While improvisation adds some understanding to managing marketing in uncertain
environments, to date it has largely failed to escape the confines of musical and theatric
metaphors and has not contributed to the meaningful advancements of managerial
processes.
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To better inform the needs of new ventures, marketing planning must embrace
entrepreneurial thought and action (Read et al., 2011) as antecedents to marketing plans.
EMP still fits with MacDonald’s (1989) definition of marketing planning, since EMP
“presents a logical sequence of activities that lead to the setting of marketing objectives
and the formulation of plans to achieve them.” Further, EMP is not simply a method of
improvisation. Rather, it is a strategic process that eschews determinism and actively
engages external markets. Through market experimentation, EMP instigates disruptive
tactical events for the purpose of creating new information. This action-oriented
marketing process creates new market information versus simply recognizing and then
reacting to newly obtained information. In this way, EMP premeditates improvisational
opportunities. By embracing effectuation (Sarasvathy, 2001) and formulating plans that
involve entrepreneurial action (Read et al., 2011), EMP provides a theoretical foundation
to adapt marketing planning for new ventures.
CONCEPTUAL MODEL OF EFFECTUAL MARKETING PLANNING
We position EMP as a means to address both risk and uncertainty, joining an
emerging conversation that cuts across the theoretical domains of marketing, strategic
management, and entrepreneurship (Folta, 2007; Read et al., 2009; Shepherd, et al.
2007). EMP, in contrast to TMP, is based on a fundamental belief that uncertainty can
be a source of new opportunities (Folta, 2007). Whereas traditional planning cycles treat
uncertainty as something to be avoided in the discovery process, EMP embraces
uncertainty as a potential source of new strategic opportunities. We align our thinking
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with Taleb (2007), who describes how uncertainty can actually produce new
opportunities (as seen in Folta, 2007, p. 99):
He argues … that the way discovery really works is when you search for something you know (for example, in the case of Columbus – a new way to India), and find something you did not know was there (i.e., America).
EMP extends the planning literature by beginning to explain how entrepreneurs can plan
for both market risks as well as uncertainties. In this way, EMP replaces goal-driven
strategy with means-driven strategy. By also considering the path dependent effects of
prior resource commitments (sunk costs) and how these commitments affect the means
available to pursue an uncertain future, EMP allows firms to address risk and uncertainty
simultaneously.
Next, we explicate the EMP construct to elucidate how a means-driven strategy
alters marketing planning for new ventures.
Clarifying the EMP Construct
EMP includes some of the basic structures found in TMP but differs in five
important ways. A summary of the differences between EMP and TMP is offered in
Table 1.
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Insert Table 1 about here
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As seen in Table 1, the first three differences have to the with plan complexity. First,
EMP’s initial forecasts and respective planning cycles are relatively short. Most likely
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because of planning’s corporate origin; plans have historically assumed an annual cycle.
For new ventures, the likelihood of accurately predicting the market and then committing
to a year’s worth of strategic direction is further compounded by their lack of experience
and respective knowledge stores. They cannot realistically plan for a coming year’s
worth of market discovery. This does not completely limit new ventures from
considering its long-term strategic direction. Instead it should limit the duration of their
operational, marketing planning.
Because new ventures range in their level of experience and operate under
varying levels of market stability, the appropriate length for the planning cycle will differ
among new ventures. Large, established organizations might be suited for year long
planning cycles, however new ventures, like the artisan food startup discussed earlier can
benefit from month long plans or even shorter. The length of EMP based plans should be
constructed based on then external market or internal events that are likely to produce
pivotal information. Examples of such events include industry purchasing cycles, media
buying opportunities or internal board meetings. In addition, the new venture must
consider its limited capacity for focus and commitment to the planned marketing
activities. If expected events or capacity timelines do not match, the shorter of the two
forecasts should be adopted.
The second difference between EMP and TMP is also related to plan complexity
and has to do with the number of interrelated plan components. TMP based plans usually
aim for full-scale complexity that incorporate the entire marketing mix (Borden, 1991),
EMP based plans contain fewer interrelated components. By definition, the least
complex plan would be a single marketing tactic that is unrelated to any other aspect of
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the organization’s marketing process. However, given the interrelated nature of the
marketing mix, completely singular efforts are unlikely. Perhaps the best a new venture
can do is to strive for a state of antonymous complexity, or simplicity. New ventures
should focus on simple, straightforward marketing activities that are easy to expand or
eliminate based on market feedback (Greiner, 1972).
The third difference in plan complexity between EMP and TMP de-emphasizes
brand building and increases the importance of closing transactions. TMP suggests brand
building and relationships are crucial to a firm’s long-term success. We agree with this,
but new ventures are more focused on short-term survival than long-term branding
activities (Sarasvathy and Dew, 2005; Holloway and Sebastiao, 2010). Brands
emphasize relationships and such full-scale marketing programs often take time to
manifest themselves. Further, the results of branding can be difficult to interpret. By
focusing on sales, EMP promotes a more tactical approach that will provide quicker and
more easily interpreted market feedback We agree with Covin et al (2006) that new
ventures should prioritize the pursuit of transaction over relationships (Covin et al., 2006)
at the very early stages of venture development. EMP encourages the repetition of
transactions in order to expose and understand the full potential of otherwise
indeterminable opportunities.
The fourth difference between EMP and TMP involves resource acquisition.
EMP is based upon effectuation, which emphasizes opportunity creation and encourages
entrepreneurs to leverage existing resources. These include current networks and
tangible assets, which Sarasvathy (2001) frames as the ‘means’ at an entrepreneurs
immediate disposal. Effectual approaches are analogous to a chef planning their next
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meal (Sarasvathy, 2001). A traditional chef creates a menu and then goes to the market
to acquire the necessary ingredients. The effectual chef goes to the pantry, surveys its
contents and then designs a menu that optimizes the ingredients on hand.
The final difference between EMP and TMP is related to market oriented
learning. EMP based plans are action oriented with specific and intentional designs
towards future learning opportunities. EMP accentuates experiential learning (Gavetti &
Levinthal, 2000) through short, simple plans that allow the firm to quickly and
confidently incorporate market feedback. . Perhaps most critical to planning efficacy,
EMP allows managers to seek both positive and negative feedback. Whereas negative
feedback often results in catastrophic failure for TMP based plans, managers enacting
EMP based plans expect to turn smaller negative outcomes into future successes.
Proposition development
Our first proposition links a shortened planning cycle duration with
entrepreneurial outcomes. EMP’s short-term, simple tactical activities allow a new
venture to remain innovative, while simultaneously lowering risk and increasing
proactiveness. From the entrepreneurship literature, the proactive accumulation and
assimilation of new knowledge facilitates learning and strategic change to better match
firm strategy with market conditions (Anderson et al., 2009; Covin & Slevin, 1989).
Miller (1983) described proactiveness as the proclivity of a firm to preempt its
competitors by introducing new products, entering new markets or aggressively changing
competitive tactics. Gonzalez-Benito and colleagues frame proactiveness as a pioneering
behavior that allows firms to adapt better when considering future contingencies
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(Gonzalez-Benito et al., 2009). These pioneers, if successful, will have access to
premium market segments, price control, distribution advantages and industry standards
(Zahra and Covin, 1995).
EMP will improve the new venture’s proactiveness in two ways. First, operating
in shorter cycles will provide the knowledge resources in a timely way that increases
flexibility and allows for opportunistically contingent behavior. Second, incorporating
the cyclical process demands of a planning framework forces the new venture to digest its
newly acquired market knowledge more frequently and allows the firm to become more
proactive. An additional outcome of proactiveness is the development of contingencies
that help an entrepreneur handle extreme uncertainty (Sarasvathy, 2001) and plan what to
do next (Wiltbank, et al. 2006)
The entrepreneurship literature suggests the leveraging of contingencies is best
exploited through an effectuation approach to strategic decisions (Sarasvathy et al.,
2003). Effectuation scholars frame this strategic leveraging of contingencies as a
proactive process of opportunity creation that is created by entrepreneurial interventions
in the marketplace. A distinguishing feature of this view of contingent market
experimentation is that entrepreneurs have a causal role in establishing opportunities
(Dew et al., 2009). This ongoing learning and recursive cycle allow new ventures to
increase strategic complexity of their market plans according to actual market
information instead of predicted market conditions. However, given the limited
capabilities of new ventures described earlier (experience, knowledge stores, personnel,
etc.), efforts designed to create market knowledge should remain relatively simple. The
degree of simplicity is related to the duration of the plan (short versus long) and the
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emphasis of the activities (transaction versus relationships). This provides the logic for
our first proposition:
P1a: When compared with TMP, EMP will better position new ventures to proactively respond to actual market information.
Our next proposition relates to plan complexity, and how the interrelated
components of a plan increase following proactive market interventions. Sull (2007)
modeled the dynamics of strategic change as a series of strategic loops. Based on
Eisenhardt and Sull’s (2000) strategic complexity continuum, Sull (2007) suggests that as
more information becomes available, the complexity of a firm’s strategic loop will
increase to capitalize on this information. Linking the concept of strategy loops with
effectuation and purposeful market interventions suggests that an effectuation approach
to marketing planning will increase the size of a new venture’s strategic loop (Sull, 2007)
over time. In our language, an increase in the number of interrelated marketing plan
components corresponds to an increase in a firm’s strategic loop. Figure 1 shows the
diameter of a strategic loop in a TMP sense versus the EMP sense. From the EMP
perspective, the increasing diameter of progressive loops model how a new venture’s
strategy loop increases through a process of market intervention, learning through
experimentation, and a reevaluation of marketing activities over time. Through this
process, the contingent business model and developing market opportunity unfold.
Collectively, these arguments support our next proposition:
P1b: EMP will iteratively increase the complexity of a new venture’s strategic marketing plan, which increases the size of a firm’s strategy loop over time.
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Figure 1 also shows how much larger the strategic loop is for a TMP-based plan. The
EMP graphic consists of multiple loops over the same total period of time as the single
loop presented in the TMP graphic. This depicts Proposition 1b’s assertion that the initial
length and complexity of the planning loops can expand over time as the organization
gains experience and closes successive transactions.
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Insert Figure 1 about here
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Our next proposition addresses how resource acquisition differs in EMP versus
TMP: TMP is goal-driven and EMP is means-driven. The effectuation literature
characterizes means-driven strategic decisions as a creative process where the
entrepreneur considers new opportunities and resource commitments in terms of what
they are willing to lose (i.e. their affordable loss) in order to make that commitment (Dew
et al., 2009). Particularly within the context of new ventures, expectations about the
future are frequently flawed because market conditions, competitors, and product
offerings are ambiguous and indeterminate as an overall system (Christensen, 2003; Dew
et al., 2009). Under these conditions of extreme uncertainty, risk is better managed by
making a series of small affordable losses instead of trying to predict a single optimal
outcome and commit larger resources to a sole objective (Sarasvathy, 2001).
In terms of marketing planning, EMP promotes an affordable loss approach to
strategy development. New ventures live perilously close to the edge of existence. This
vulnerability places survival as the paramount consideration. They must manage risk
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through a series of smaller resource commitments (Dew et al., 2009). This supports our
next proposition:
P2: EMP will direct new ventures towards a series of smaller resource commitments (affordable losses) that decrease the likelihood of catastrophic losses; as compared to the singular, larger resource commitments of TMP.
Figure 1 shows the difference in corresponding resource commitment for TMP and EMP
(not to scale). The larger and more complex plan associated with TMP requires a larger
resource commitment than any of the cycles for EMP and therefore puts the new venture
at greater risk of catastrophic failure.
Our final proposition suggests how market-oriented learning differs between
EMP and TMP. While both approaches suggest learning from the market can create
and EMP promotes active learning. Learning organizations that actively manage learning
for the purpose of improving their strategic position will improve performance (Anderson
et al., 2009; Sinkula, 1994). EMP considers the contextual and contingent learning needs
and abilities of new ventures as they relate to market-oriented learning. Through the
creation of simpler and more concise plans, EMP increases the new venture’s frequency
of learning opportunities generated via plan experimentation and reconciliation. We
model this in Figure 1 as “P3”, which shows how feedback from a market allows new
ventures to more systematically engage in market-oriented learning. This provides the
logic for our final proposition.
P3: EMP will increase market-oriented learning in new ventures.
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Empirical testing of propositions
Because of its lack of entrepreneurial consideration, TMP is usually unsuccessful
in meeting the needs of entrepreneurs. In the void that exists outside of TMP,
entrepreneurs still plan, market and use effectual logic. EMP formally connects those
three activities in a conceptual model. The organic development of EMP among
organizations makes traditional, empirical testing difficult. EMP is not something that
has been previously formalized and communicated. Therefore, while forms of EMP are
currently in practice, evidence of EMP would not be found in existing databases or easily
captured in survey-based research.
Inductive methodologies allow future researchers to follow with deductive, causal
research based on more traditional marketing theories. Ethnographers have successfully
untangled complex marketing phenomena, (McAlexander and Schouten, 1995) including
entrepreneurial marketing (Martin, 2009) and might be useful researchers for
understanding the marketing planning practices of successful entrepreneurs. Other
exploratory, qualitative research methods could also be employed to expose existing
forms of EMP and document the observed phenomena in the form of an introductory
taxonomy.
Research examining entrepreneurial creation (versus discovery) often relies upon
field research. For example, interviews were conducted with expert entrepreneurs on
how they make decisions in the face of extreme uncertainty (Dew et al., 2009; Read et al.,
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2009). Thus, testing the propositions of EMP may require field research and methods
that engage subjects directly. One such methodology that may be particularly salient to
testing the EMP propositions is marketing action research (Perry and Gummeson, 2004).
This method of case research allows the researcher to actively participate with clients that
are the “problem owners,” and, “have experience-based knowledge from their actual
context (Perry and Gummerson, 2004, p. 311).” Through action research, practitioners
and researchers openly collaborate on joint cycles of planning/acting/observing/reflecting
(see Figure 2 in appendix).
A study of EMP using action research would require scholars to recruit new
ventures to develop marketing plans based on EMP principles. Collectively, the planning
team (including the scholar) would make strategic choices with full and open
consideration of the TMP alternatives. Implementation of the marketing plans would be
documented and controls would be set in place to capture the efficacy of marketing plan
design. For example, the research team would consider whether the shortened duration
of the planning cycle impeded or improved the new venture’s ability to perform? Did the
simplicity of the plan allow for full exploitation of the opportunities at hand? Did the
pursuit of transactions over relationships result in vital cash generation or did it prevent
the firm from more meaningful investments? The research team would continue to
create new EMP based plans and revise the concept of EMP until the results of the
planning effort matched expectations.
Implications and Future Research
Implications for theory development
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This paper follows Read et al. (2009) and advocates a stronger connection
between effectuation and marketing theories. Buoyed by research advocating an
entrepreneurial interpretation of marketing (Hill and Wright, 2000; Martin, 2009; Morris
et al, 2002; Read, Dew, Sarasvathy, Song and Wiltbank, 2009), we add effectuation and
reinterpret marketing planning theory. Moving effectuation’s level of analysis from
individual decision-making (Sarasvathy, 2001) to firm-level action is also a contribution
of this paper. This contribution is similar to Daft and Weick’s (1984) discussion of how
organizations enact their environment. When individual managers interpret new
information, enactment suggests their organizations take action to change the
environment in their favor. While enactment is positioned as a strategy for incumbent
firms, we position EMP as a strategy for new ventures. In sum, extending effectuation
to the firm level opens a new segment for theoretical consideration.
This study also contributes to our understanding of affordable loss. The ‘risk
little, fail cheap’ (Read et al., 2011) mentality of affordable loss stands in stark contrast to
traditional business planning (Honig and Karlsson, 2004) and predictive logics
(Wiltbank, et al. 2006). The affordable loss concept more accurately represents what
most entrepreneurs actually do (Sarasvathy, 2001) and has been used to describe whether
an individual enters into entrepreneurship (Dew at al., 2009), the differences in decision
making between expert and novice entrepreneurs (Read et al., 2009), and even how
entrepreneurs coopt stakeholders into co-creating business models in uncertain markets
(Sarasvathy and Dew, 2005; Holloway and Sebastiao, 2010). We build on these scholars’
work by extending affordable loss into marketing planning. EMP provides marketing
planners with a strategic perspective to proceed with marketing planning under extreme
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uncertainty and, like the artisan food company, to discover opportunities that TMP could
not have predicted.
The conceptual consideration of TMP and EMP led to a crucial insight, that
perhaps EMP could be a tool for premeditating improvisation. Until now, improvisation
has remained a romantic and celebrated concept but has not evolved into practical advice
for improving firm performance. Future research should consider the role and EMP and
improvisation together and gather evidence that might further elucidate the impact that
EMP has on the success and frequency of improvisational acts. Perhaps EMP might help
solve the marketing planning paradox (Slotegraff and Dickson, 2004).
Additionally, this paper suggests field research, particularly action research, is a
underused methodology to bridge the gap between marketing and entrepreneurship.
Perry and Gummeson (2004) argued that marketing action research could provide an
additional perspective that will greatly increase scholarly reach. If the use of action
research increases, “practicing marketing managers will begin to read reports of
business school research, and marketing students and researchers will master
management action competencies as well as academic ones (p. 319).” Further, as we
have shown in our presentation of EMP, passive research methodologies miss the essence
of what entrepreneurs actually do. Entrepreneurs prefer to take action and learn on the
fly through feedback paths (Honig, 2004). Our research methods need to mirror this if
we expect observable phenomena to inform theory.
Managerial implications
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Recent economic conditions have resulted in a renewed focus on supporting
entrepreneurial development. Certainly, marketing management is a vital component to
the growth of new ventures. However, previous marketing planning research has failed
to focus on their specific needs. This has resulted in marketing planning tools that are ill-
equipped to handle the high levels of uncertainty faced by entrepreneurs managing new
ventures. By empowering managers with a marketing planning tool that reflects the way
they think, the attention and value of marketing is more likely to be accepted earlier in a
venture’s existence. This could lead to overall improvements in new venture survival,
value creation and profitability.
Our paper on EMP also closes the gap between theory and practice. By offering
entrepreneurs tactical advice to deal with extreme uncertainty, EMP bridges the divide
between academics and practitioners. As Little (1970, p. B466) wrote: “The big problem
with management science models is that managers practically never use them …” Lilien
(2011) agreed, stating that while some marketing models have had a dramatic impact on
practice, “orders of magnitude more” have received minimal use by practitioners. Our
transparent, five key differences between EMP and TMP give entrepreneurs simple rules
to get more operational value out of their marketing plans. Rather than collect dust once
a funding round is closed, EMP-based plans can actually help managers create market
opportunities within the means at their immediate disposal.
Future research may include extending EMP into corporate entrepreneurship. In
other words, would EMP benefit large corporations starting new ventures of their own?
EMP would likely enhance corporate entrepreneurship because it is vitally important for
any new venture to capture and respond to market feedback early in its development.
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Resource considerations might not require a corporately sponsored new venture to
employ EMP but the shorter, less complex aspects of EMP would still promote its most
important outcome – market oriented learning.
Conclusion
Two factors may have contributed to a lack of understanding of the role
marketing planning plays in new venture strategy and growth. First, the bulk of
marketing theory has focused on opportunity discovery instead of opportunity creation
(Alvarez and Barney, 2007). Opportunity discovery is a causal process, where marketers
analyze existing market conditions, predict an optimal market opportunity, and design
plans to capture that opportunity. This limits marketing planning efficacy to large
corporations and incumbent firms operating in stable markets (e.g. Christensen, 2003).
Because of this, traditional marketing planning offers little value to marketers in new
ventures.
Second, traditional marketing planning has a passive, historical perspective for
market-oriented learning. TMP positions learning as a way to reconcile the past year’s
successes and failures, or as a means to understand competitive conditions through
market research. Under TMP’s use for learning, marketing planning is reduced to a
component of a pre-launch start-up plan; once a venture launches, the value derived from
traditional planning is trivial. New ventures should not be passive in their learning, they
should actively use learning to inform strategic decisions (Anderson et al., 2009), respond
to new means and surprises (Sarasvathy and Dew, 2005; Holloway and Sebastiao, 2010),
and iteratively implement what they learned into new strategies (Sull, 2007). These
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action-based plans, which we term effectual marketing plans, use the marketing function
to actively learn from a market and inform operations. The needs of new ventures for
this type of plan have not been previously considered and we hope our paper adds to the
conversation based upon the interaction of effectuation and marketing (Read et al, 2009).
EMP better matches the marketing management needs of new ventures with the
unique challenges caused by greater market uncertainty. EMP improves new venture
performance by leveraging contingencies, means-driven risk management, and increased
market oriented learning. EMP makes an important contribution by logically mapping
effectuation theory to a strategic outline of marketing planning for new ventures. In so
doing, it begins to bridge the gaps between marketing, management and entrepreneurship.
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