enterprise emergence by distributed agency: the fairphone case

* Katz & Gartner (1988): Enterprise emergence characterised by

intentionality, resources, boundaries and exchange

1. No obvious technical capabilities/expertise in industry

2. Small group of “creatives” in a small office in Amsterdam

3. Lots of (unsolicited) help

At time of speech (Oct 2012) Dec 2014

0

0

0

60,000

€325

32

2 40

Founders simply want to raise awareness about connection between Dutch consumers and

Congo. No intention to make commercial product

United Nations report on

exploitation of DRC’s

“conflict minerals”

NGOs campaign for ‘fair

practices’ in electronics supply

chain.

ActionAid commissions Peter van

der Mark to develop campaign

Van der Mark, dissatisfied

with petition idea discusses

with van Abel

Team secure €86,000 funding for

campaign

Fairphone as ‘hand-on’

campaign. Target: consumers,

‘creatives

Establishing online presence Urban mining workshops

Designing a

modular “phone”

Awareness campaign to build a ‘fair’ mobile phone (March 2010 -August 2012)

Urban mining

workshops

Online presence

Publicity “stunts”

Radio shows

Source: Fairphone

@

influential actors support

Fairphone even though no

intention to start phone company

MediaCarry positive stories about Fairphone project

CorporationsLend material support

Fairphone project wins

€10,000 ASN Bank Prize

NGOsFairphone appears on

NGO “radars”

PublicNumber of subscriptions to campaign

website increases

Source: Fairphone, corporate websites

Yes, I was doing a presentation to the board of directors 2-3 years ago. I didn’t even know what to ask

these guys. I had just returned from Congo and wanted to show what we were doing. And they said,

‘yeah, nice, what is your proposition. What do you want?...

Alright, we don’t have a proposition. I was just finding out if you are interested.

And they said, ‘it is sad what is happening in Congo and China, but what has this got to do with us?

We don’t produce phones

“

”

No intention to make commercial product—yet

Fairphone CEO, Bas van Abel, speaking about meeting board of Alpha Mobile in March

2011

Serendipity, contingent action and emergence

Campaign team runs of out funds.

Conflict within team

Debate on future direction. Should

we make a phone? A battery? Be

an NGO?

Serendipitous discovery of

accelerator programme

Van Abel and Ballester attend

accelerator programme.

“London was first time someone

told me, “we are going to make

a phone”

Secures €400,000 investment

from angel. Company

incorporated.

First employee: Tessa Wernink

Begin crowdfunding campaign

to fund only 5,000 phones.

Source: LinkedIn, Fairphone

In-depth longitudinal case study over 15-month period embedded in organisation

Data sources Description

Interviews 47

Incl. founders, employees, (disgruntled) ex-associates, NGOs, consumer electronics

firms, government official, MNOs

Average duration – 55min

Fairphone archival data Business plans, reports, internal presentations

Publicly-available sources Fairphone-generated. Facebook, Twitter (1,870), blog posts, newsletters

Third party-generated. Media reports (~150)

Participant observation 130 field visits (6-10 hours/visit). October 2013-January 2015.

Observed meetings, parties, conferences and internal interactions. Made detailed field

notes and memos

e.g. Haugh, 2007; Perrini & Vurro, 2006; Robinson, 2006; Corner &

Ho, 2010; Mair, Battilana, & Cardenas, 2012

The “visionary” explanation and the “biological” evolutionary explanation

Dees, 1998; Thompson, Alvy, & Lees, 2000; Martin

& Osberg, 2007; Light, 2009; Miller, Grimes,

McMullen, & Vogus, 2012

“

”Fairphone founder/CEO, Bas van Abel,

February 2014

I didn’t even know about conflict

minerals when I started this project...

I was interested in making the phone

from a purely design perspective, but

not the business side to it. The whole

aspect of bringing the phone to market

did not interest me

Attribute of artifact Illustrative quote

“We knew it [campaign] had to be a physical product because

otherwise you lose all your research into vagueness. “

(Fairphone founder/CEO)

“Everybody uses a phone…That’s why we went for it”

(Fairphone co-founder)

“…we looked for the electronic device that people cared about

the most. Everybody has a smartphone. If I take your

smartphone and I walk away with it, you feel really

uncomfortable. So different than a television or a tablet.”

(Fairphone ex-associate)

Smartphone deliberately selected as campaign artefact

Mobile phones create environmental and social problems, but there is hope: the

Fairphone is coming.

For the last year, the leader of the initiative Bas van Abel of the Waag Society has been

working on the Fairphone project. The objective: to make a phone in which no

component is made by human exploitation.

(De Volkskrant 19.03.2011)

“

”

Fairphone hailed as “right thing to do” when no track record of performance. No intentionality to make

product

Bas van Abel

Peter van der MarkMiquel Ballester

Manager (Waag)Activist #5 (NGO 1)

Activist 1 (NGO#1)

Tessa Wernink

HRH Prince Jamie de Bourbon Parme

Bibi Bleekemolen

Joe Mier

Activist 4 (NGO#1)

Activist campaign Social enterprise

Gabriel SebastianThe “Mystery man”

Investor (Fund #1)

Manager 5 (CFTI) Manager 6(CFTI)

SwedWatch

Manager 8 (NGO#1)

Manager 2 (Beta Mobile)


Manager 1 (Alpha Mobile)


Manager 7 (NGO#2)

Phase

Roos van der Weerd

Laura

Consultant (Design #1)

Transition

Indirect

Direct

Awareness raising only

No intention, means to make commercial productMaking commercial product predicated on addressing

social problem

Invo

lve

me

nt

The cast: from social activism to social enterprise

The media

Activist 2 (NGO#1) Activist 3 (NGO#1)

“The future is not given. My actions today will constitute the future. No need to predict, but control

1Act using means (identity, knowledge, networks), not searching for means to meet pre-selected goals

Under conditions of uncertainty, expert entrepreneurs do the following: (Sarasvathy, 2001)

2“How much can I afford to lose?” not “how much can I expect to make”?

3Co-creation of business with self-selected effectual network, not competition with existing firms

4Accidents, contingencies “welcome” and exploited to shape enterprise

5

Changing goalsAffordable lossExploiting contingencies

Serendipitous discovery of

accelerator;

Oversubscription

crowdfunding;

Conflict-free mineral

initiative

Acting within means

Founders draw on to

suggest designing smart

phone as campaign;

NIZA activists choose

conflict minerals in DRC

because organisation

had knowledge of

subject

[T]he fact that we were accepted in London

had a big influence.

…The moment the accelerator programme

said, “We want to make this happen; we

believe in your story”…you know, it was like,

“yeah, actually we can make this happen

Small, stage-gated

investments from “pipe-

smoking gentleman”

A prayerLuck,

randomness

An alternative

to rationality

Anything goes,

nonchalance

New product

Existing product

Existing market New market

The “suicide”

quadrant

Source: Sarasvathy, 2003

How do you introduce a new product to a new market?

“I never chose to be an entrepreneur; it just

happened…I can tell you it is a lot of

pressure. At a certain point, you’ve worked

yourself through two or three burnouts

because you didn’t have time to have a

burnout.”

Fairphone CEO, Bas van Abel, December 2013,

giving classic example of non-teleological

emergence

Explanatory concepts from the Fairphone case

Discursive process by which actor

establishes congruence with extant

product category, distinctiveness from

extant industry using an artefact as a

story-telling device

(Unsolicited) commitment of resource,

legitimacy by dispersed actors with

heterogeneous interests, despite

intention of entrepreneur

A logic of decision making under uncertainty in

which entrepreneur acts within means, interacts

repeatedly with stakeholders attracting

commitments expanding cycle of resources and

constrained choices lead to emergent formation

of enterprise

Source: Akemu, Whiteman, Kennedy (2015)

Firm emergence from social

movement

Academics assume linear

purpose. We show non-linear,

non-teleological process

Artefact in effectuation theory

Artefacts central to effectuation,

but have disappeared from theory.

We re-introduce the symbolic role

of artefact

Complementarity between

distributed agency and

effectuation

Distinct, but complementary

processes that lead to emergent

outcomes in social movement

Artefact as boundary object

Artefact “inhabits” various social

worlds. Triggers distributed

agency. Extend concept to non-

hierarchical settings

What does it mean for me? For an enterprise? For Fairphone? for a manager?

Artefact has a certain “power” to

convene an effectual network.

Under specific condition, a network

of people commit resources to

emerging enterprise?

How can Fairphone use “artefacts”

in future?

Telling a story such that you legitimate

Fairphone’s goals vis-à-vis existing category, but

distinguished identity from NGOs and phone

companies.

How to distinguish Fairphone from other players,

yet maintain that goals are not “out of this world”

Is effectual decision making applicable as

organisation grows larger?

1

Entrepreneurs gets “stuff” such as legitimacy, resources from diverse people even when no intention to start

enterprise. Distributed agency occurs in a perturbed contextual condition

Issue framing around an artefact distinguishes and legitimates founders’ despite no intention to begin

enterprise

2

Fascinating case showing the neglected role of the artefact in effectuation

Effectuation and distributed agency are complementary processes that have remained in distinct literatures. Social

movements embody both. We show complementarity

Artefact “inhabits” various social worlds. Triggers distributed agency. Extend concept to non-hierarchical settings

Extend the concept of boundary objects to include non-hierarchical interactions

3

Artefacts—Embody symbolic and functional values. Creative use of artefact can trigger resource commitments. How

would Fairphone use artefacts in future?

Issue framing—How to remain distinctive while being credible