Causation
Start from a clear predetermined goal and work backwards to plan the resources and steps needed to achieve it
10 min · Traditional strategic management and planning theory, contrasted with effectuation by Saras Sarasvathy
What is this framework?
Causation is the traditional planning logic: define a specific goal, analyse the market, work out exactly what resources and steps are needed, then execute the plan to reach that predetermined target. It works best when the future is reasonably predictable.
Causation is the decision-making logic most people learn first, often through business plan writing. It begins with a clear, specific goal — a target market, a revenue figure, a defined product — and reasons backwards to determine what resources, partnerships, and actions are required to reach it.
This approach relies on prediction. It assumes that with enough market research and analysis, the future can be forecast well enough to justify committing significant resources up front to a fixed plan. It suits situations with stable, well-understood markets, established competitors, and predictable customer behaviour.
Causation is not wrong or old-fashioned; it is simply better suited to certain conditions than others. A café chain expanding into its tenth predictable location can plan causally with confidence. A first-time founder entering a market that does not yet exist cannot predict it in the same way, which is where effectuation often becomes more appropriate. Most real ventures use both logics at different times, not one exclusively.
What problem does it help solve?
- Set a clear target and reverse-engineer the resources and steps needed to reach it
- Communicate a structured plan to investors, banks, or partners who expect one
- Coordinate teams around a shared, specific goal
- Manage predictable, well-understood markets efficiently
The framework
Causation moves in one direction: from a fixed goal backwards to the resources needed, then forwards through execution.
Every part explained
Define the goal
Set a specific, measurable target the venture is working towards.
Ask: What exact outcome are we trying to achieve, and by when?
Example: Serve 100 paying customers a day within six months of opening.
Analyse the market
Research the target market thoroughly to justify and refine the goal.
Ask: What does the data say about demand, competitors, and pricing in this market?
Example: Market research shows nearby offices lack an affordable lunch option within a five-minute walk.
Identify required resources
Work backwards from the goal to list exactly what is needed to achieve it.
Ask: What capital, staff, equipment, and partnerships are required to hit this goal?
Example: The café calculates it needs RM80,000 capital, three staff, and a lease in a specific location.
Build the plan
Create a structured, sequenced plan with milestones and timelines.
Ask: What is the step-by-step sequence to get from today to the target?
Example: Secure funding by month one, sign the lease by month two, open by month four, reach 100 customers by month six.
Execute and control
Implement the plan and monitor progress against the predetermined milestones.
Ask: Are we on track against the plan, and if not, how do we correct course back to it?
Example: When month three sales are below forecast, the café adjusts marketing spend to get back on schedule.
Worked example — A café aiming to serve 100 customers daily
Two graduates plan a café using causal logic, starting from a clear target.
Goal
Serve 100 paying customers per day within six months of opening
Market analysis
Survey confirms nearby office workers want an affordable lunch option under RM15
Required resources
RM80,000 capital, a lease near the office district, three staff, kitchen equipment
Plan
Secure funding (month 1), sign lease (month 2), fit-out and hire (month 3), open (month 4), scale marketing to reach target (months 5-6)
Execute
Funding secured through a bank loan and family investment as scheduled
Predictive control
Weekly sales tracked against the 100-customer target, with corrective marketing spend when behind schedule
Effectuation comparison: starting point
Causation starts from the goal (100 customers); effectuation would start from means (existing kitchen skills, a family recipe, a small network)
Effectuation comparison: planning style
Causation uses predictive planning against a fixed target; effectuation uses adaptive, flexible control as things unfold
Effectuation comparison: risk logic
Causation focuses on the expected return of hitting 100 customers; effectuation would focus on affordable loss, risking only what the founders can afford to lose
Causation and effectuation are not mutually exclusive: the café founders used causal planning for the predictable parts of opening a shop, while relying on affordable-loss thinking for menu experimentation before the launch date.
How to use it
- 1State a specific, measurable goal with a clear timeframe.
- 2Conduct market research to validate that the goal is realistic and evidence-based.
- 3List the exact resources, capital, and partnerships required to reach the goal.
- 4Sequence the steps into a timeline with milestones.
- 5Execute the plan and track progress against each milestone.
- 6Adjust tactics, not the underlying goal, when off track.
- 7Reassess whether causation is still appropriate if the market proves far less predictable than assumed.
Try it yourself
Work through the causal planning sequence for your own idea.
Goal and resources
Plan and execution
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When to use it
- When entering a market with predictable demand and established competitors
- When investors or lenders require a structured plan with clear milestones
- When scaling a proven model into a new but similar location or segment
When not to rely on it
This framework does not prove:
- • Relies on the market being predictable enough for research to be accurate
- • Can lead to wasted resources if committed early to a plan that the market later proves wrong
- • Less suited to genuinely novel ideas where no comparable market data exists
Common mistakes
- Treating the plan as fixed even after clear evidence the market has changed
- Investing heavily upfront before testing the core assumptions behind the goal
- Assuming causation is the only legitimate way to plan a venture, and dismissing more adaptive approaches
Connections
Related concepts
Related frameworks
Quick check
Causation and effectuation are best understood as:
Remember this
Causation works backwards from a fixed goal using predictive planning; it complements, rather than replaces, effectual thinking under uncertainty.