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Lemonade Principle

Mistakes and surprises are inevitable and can be used to look for new opportunities.

“Contingencies are a part of business, that is why entrepreneurs need to look at them as a source of profit – turning a negative into a positive as they are not necessarily bad but should be seen as new opportunities. When someone throws you lemons, you don’t panic, make and sell┬álemonade. Effectuation helps in fighting uncertain and unpredictable environments, using surprises as a way to achieve your goal”.

Leveraging contingencies is the idea behind the Lemonade principle. Effectuation helps in fighting uncertain and unpredictable environments, using the Lemonade principle you see these contingencies not as negatives but as opportunities and new sources of profit (when life gives you lemons you make lemonade).

Lemonade principle is about using “what if” scenarios to deal with challenges and worse case scenarios. This could either lead you in a somewhat different direction or a very different direction also known as a “pivot”.

The Lemonade principle also helps iron out any problems in your business model, you will often hear investors say they don’t fund startups because they don’t want their money to be used while a business is still figuring things out. That is why this principle is used, that by the time it is a medium size business it has already figured a lot out – and the entrepreneur has learnt from the lesson.