Posts Tagged effectuation
Is it possible to know the future? Most people would say not. Yet many careers theories and theories about entrepreneurial behaviour inadvertently assume that it is possible.
In 1921 Frank Knight, who once taught the Nobel laureate Milton Friedman, wrote a seminal book called Risk, Uncertainty and Profit. Knight explained that there was a difference between risk (where the probability of success is known) and uncertainty (where the probability of success is unknown). More recently the economist Saras Sarasvathy, in her book Effectuation, pointed out that Knight had actually written about a third category – only no-one had noticed. This overlooked third category described a future that is not only unknown, but is unknowable, even in principle.
This observation, that there is an important difference between a future that is difficult to predict and a future that is impossible to predict, could lead to profound changes in our understanding of career choice.