What do entrepreneurs do exactly? And what makes them entrepreneurs?
These questions and other similar ones preoccupied Dr. Saras D. Sarasvathy whose own life was deeply touched by the power and influence of entrepreneurship.
Challenging the long-standing hypotheses that luck, status, or risk-taking are the reasons why entrepreneurs succeed, Dr. Sarasvathy dedicated her doctoral research to interviewing serial entrepreneurs and detailing a scientific process that any entrepreneur can follow to succeed. Her paper What Makes Entrepreneurs Entrepreneurial lays the groundwork for her Effectuation Theory.
Effectual reasoning as a problem-solving method isn’t exclusive to the academic world but is quite grounded in many entrepreneurs’ realities - even when they don’t realize it.
Take Ahmed Abdelsalam, founder of Kuwait’s Farm Brown, for example, who once jokingly told us, “I see everything as a problem that’s calling out to be solved; every situation calling out to be enhanced.”
A closer look at Ahmed’s entrepreneurial journey clearly illustrates the on-ground manifestation of the effectuation theory’s five primary principles: Pilot in the Plane, Bird in Hand, Affordable Loss, Lemonade, and Crazy-Quilt.
1. Pilot in the Plane
As a species that was born to make choices, the desire for control is innate to human nature, even necessary for survival. This notion lies at the heart of the ‘Pilot in the Plane’ principle.
For many entrepreneurs, the urge to control their environments is what propels them towards entrepreneurship. As their own bosses, they are free to choose what to invest their resources in and how much of these resources to invest.
Ahmed Abdelsalam, a GUST (Gulf University for Science and Technology) graduate of communications and multimedia design felt a similar need to fly solo after briefly job-hopping between graphic design, FMCG marketing, and business. No matter how different the jobs were, the routine was almost the same: Repetitive tasks without any compelling challenges to look forward to.
Like myriad other entrepreneurs, Ahmed eventually decided to break this cycle and to regain control over his professional environment, creating the challenge that was lacking in all of his previous jobs.
The challenge was to create a local market of chicken fillet - something that he had often enjoyed on his travels but sorely missed as soon as he returned to Kuwait.
Thus far in his journey, that’s all Ahmed knew.
2. Bird in Hand
Once the initial will to start a business is in place, Dr. Sarasvathy suggests that a key differentiator between managers and entrepreneurs shows in the way they take their first step. Guided by causal thinking, managers set out with a clear end in mind for which they create and curate all the necessary means to reach. Meanwhile, effectual thinkers catalog all the means they presently have and map out the potential destinations they can reach with nothing but the available resources.
Resources in business (and in life) can be anything from networks and connections to time, a physical space, knowledge and expertise, and the most obvious, money. In Ahmed’s case, he had a decent mesh of all the above.
Despite growing up with no interest in cooking, Ahmed witnessed his mother’s delicious kubba garner so much demand that it grew from a specialty served to family in Ramadan to a regularly selling item around the Holy month and finally a steady business that he now runs under the brand name Kubba Thahab. While unintended, Ahmed’s mother and her scrumptious kubba lured him into the F&B world.
Successful as it was, Kubba Thahab was still his mother’s and it didn’t fill the gap that Ahmed could no longer unsee: Kuwait’s missing local chicken fillet market. And in 2014, he lay the cornerstone for Farm Brown.
“We started very slow. It was an idea that my friend and I wanted to experiment with,” recalls Ahmed. “He, being the one passionate about food and cooking, was responsible for developing the menu, and I took care of putting the pieces together and turning this idea into an actual business.”
With no guarantee that their chicken fillet would assume its place in the market, Ahmed and his business partner spent two years developing their recipe, cooking from their home kitchen, and selling only to friends and family.
Other resources that Ahmed used to kickstart Farm Brown include his experience in graphic and multimedia design which he used to come up with Farm Brown’s branding and package designs.
For two years, Farm Brown survived solely on family and friends’ orders until one fateful night during Ramadan 2016 when Ahmed and his partner decided to go public with their chicken fillets.
“We thought that traffic in Ramadan would be slow and that would give us room to gradually test the open waters and then grow bit by bit,” says Ahmed. “But to our surprise, the orders came flooding in. This gave us an extra reason to push even further. The audience was part of this success.”
But what if the market wasn’t as enthusiastic about Farm Brown’s chicken?
What if Farm Brown was destined to fail?
3. Affordable Loss
Oftentimes, entrepreneurs create entirely new markets, rendering any market research pointless. For how can anyone study a market that doesn’t yet exist?
Acknowledging the uncertainty of the future, Dr. Sarasvathy’s findings show that instead of designing a strategy that maximizes their profit, entrepreneurs focus on their available resources and define how much they would be willing to lose. By investing resources that they can afford to lose, entrepreneurs start small but right away, gathering along the way more stakeholders who are willing to add to the pool of resources that they can afford to lose.
As far as Ahmed was concerned, money was not his biggest issue.
“Sometimes you need something that defines you. You need something that gives you the satisfaction of success,” he explains. “It wasn’t the money after all. Financially speaking, we were comfortable. We wanted to prove to ourselves that we’re successful.”
Even though this relaxed head start allowed Farm Brown to mature over the span of two years before going public, it still grew out of a home kitchen and was catered to by none other than Ahmed and his partner. But given how demanding fried chicken is as a product, it was mandatory to equip their kitchen professionally from day one - an investment whose fruits they still reap today, four years later.
Nonetheless, the business was still lacking a lot of its infrastructure which required Ahmed to assume whichever role Farm Brown required of him. In the early days after going public, Ahmed spent six months behind the phone taking orders before he could expand the team and hire people solely for this task. Other times, he would attend to Farm Brown’s IT needs.
This slow but steady growth allowed Farm Brown to grow from a home-based experiment in 2014 to a home-based business in 2016. Two years later in 2018, Farm Brown moved to its first location in Shuwaikh, and in 2020, it celebrated its second branch in Aswaq Al Qurain.
Are you familiar with the proverb, “When life gives you lemons, make lemonade”? According to this principle of effectual thinking, entrepreneurs are all too familiar with making lemonades - or in other words, accounting for contingencies and turning the unexpected to their advantage.
In Ramadan of 2016 when Ahmed and his partner decided to take Farm Brown to the Kuwaiti public, they did so on the basis of Ramadan being an off-season - a chance for them to roll out slowly and enhance the service if needed. To their surprise, the demand for their product was much bigger than they had anticipated. Instead of collapsing under the unaccounted-for demand, Farm Brown was forced out of its comfort zone and further investments had to be made.
For Farm Brown to rise up to the occasion, the kitchen staff had to expand as well as the delivery fleet.
Seeing that for two years between 2016 and 2018, Farm Brown only had a kitchen but no location, the business relied entirely on the delivery service to avoid disturbing the neighborhood whence they cooked.
Back then, Ahmed was insistent on overseeing all of Farm Brown’s processes himself. “For the first two years, I refused to join [any third party platforms],” explains Ahmed. “I wanted to learn all there is to learn. I wanted to ensure quality control across all stages of the business.”
At first, hiring their own fleet was financially burdensome. But once the orders picked up a steady pace, the growing fleet was indispensable. Fortifying the delivery service didn’t just stop at hiring more drivers but further extended to investing in induction heated delivery bags that guaranteed their customers received the best quality fried chicken.
Farm Brown’s popularity started echoing across the city and orders started coming in from farther neighborhoods.
“In the beginning, we messed up. We delivered to distant areas because we didn’t know any better. Until we learned that delivering to faraway neighborhoods impacts the performance of our delivery,” says Ahmed. “We would be underperforming in nearby areas. So we had to cut it off.”
Although this was a necessary setback for Farm Brown’s growth, it turned out to be the seed for what is today the newly opened Aswaq Al Qurain branch, now serving a new market of customers.
By 2018, Farm Brown had reached a point where the number of orders outgrew the size of the delivery fleet. And that’s when Ahmed finally decided to get a taste of the relief that comes with third parties taking care of the logistics; however, at a price.
“The commission rates that we paid for the third parties were insane,” Ahmed explains. “In some cases, it reached a 50% cut of the net profit.”
After cross-checking the customers who purchased through third parties and the customer database they already had, Ahmed found out that the majority of customers were returning customers who weren’t acquired through third-party efforts. This raised a huge question on the worthiness of the high commissions he paid for these services.
“When I started Farm Brown, we didn’t take into consideration the commission rates of third parties. We set our prices at the bare minimum. Good quality food at affordable prices,” says Ahmed. “When third parties entered the game, they started taking our clients because they offer an easier channel that appeases to the customers.”
With third-party services permeating the market, business owners were forced to increase their prices to cover the dramatic service cost - a predicament which customers blamed solely on the restaurant owners.
“If only I had my own platform, even if I had to pay thousands to develop it,” Ahmed recalls his frustration. “I know I can’t compete with third parties, but I want to be able to use the insane commissions I pay to third parties to give back to my customers.”
This batch of lemons was soon made into lemonades when Ahmed learned of Zyda which was, at the time, still trying to build a client base.
“People are fixated on their routine. They don’t want to experiment with something new,” Ahmed shrugged. “We need to change this behavior. People need to know there’s always another way.”
Committing to his promise to give back to his customers in value or menu items, the first thing that he did as soon as he set up his independent Zyda-powered Farm Brown store was offering free delivery on all orders placed through the new store.
For entrepreneurs who march into market gaps of unmet needs, the room for partnerships is much bigger than that for competition. That’s why the final principle of the effectuation theory suggests that fervent networking and partnerships are pivotal to successful entrepreneurship.
For Ahmed Abdelsalam, this principle played a part in expanding Farm Brown’s exposure through their regular participation in Qout Market.
It also allowed Farm Brown to stand out for the unique services it offered its customers.
During Farm Brown’s first two years of complete independence, Ahmed focused all of his problem-solving energy on advancing the business in every aspect and not solely the food quality.
Among the drawbacks of taking orders only via phone was restricting payments to COD (cash-on-delivery). Alone, maybe there wasn’t much to do about it, but in partnership with CBK (Commercial Bank of Kuwait), Ahmed managed to innovate a custom-designed solution that allowed customers to enjoy the convenience of choosing between online payment and COD.
Following the same approach, Ahmed noticed that order and delivery tracking services were at the time exclusive to third-party platforms. As part of his heavy investment in Farm Brown’s delivery service, he sought out the necessary partnerships to further enhance the customer experience by enabling his customers to track their orders step-by-step.
Today, Farm Brown is celebrating its geographic expansion and honoring its customers by maintaining consistent quality. In order to uphold entrepreneurial success, Farm Brown will inevitably flow back through the cycle of effectuation that is repeated with every new input, surprise, or milestone.