Fairphone: sparking off a revolution in the electronics industry
This article was released on September, 18th 2014 in „Wirtschaftswoche Green “. It was translated from German language by shared.value.chain
By Michael D‘heur
Implementing sustainability in a company‘s core business is new ground for most of them. Due to regulatory requirements many manufacturers have introduced reporting structures which inform about the implementation of CSR measures. This, however, has little to do with the activities of the core business.
Successful business models that are based on implementing sustainability require efficient organisation of the company’s own value chain. It depends on its value chain strategy, how successful the company operates.
Background: origin of a company’s value chain strategy is the business strategy in which basic principles, objectives, and parameters are determined with which the company wants to be successful. These basic principles will be transformed into tangible objectives, work packages, and implementation plans.
The sub-strategies product strategy (“What should our product look like, what value does it have for client, company, and environment, and what raw materials and components do we need for it?”), operations strategy (“Where do we produce and with what partners?”) and communication strategy (“How do we communicate our production and value chain method?”) support the business strategy. As a rule, such a strategy bundle covers a period of three to five years.
Sustainable production methods are often pioneering achievement
Implementing sustainability in the core business often is an innovation and commonly a pioneering achievement. Three principles constitute the underlying value chain strategy and decide on its success:
- The obligation to sustainability has to be strategically ensured; a management decision must be made about this.
- Sustainability criteria have to be applied in the full product life cycle, i.e. in development, repair, or return.
- Measures have to go beyond a company’s factory gates and include clients and suppliers, i.e. a company’s own value chain network, as largely as possible.
Using a specific example, I want to show how a sustainable business model can be drawn up. The Fairphone, a smartphone created under fair conditions, has gained a lot of attention over the past few months.
In 2010, the non-profit organisation Waag Society in Amsterdam initiated a campaign to evaluate the chances of fair production of electronics, using the example of a smartphone. This campaign rapidly turned into a successful “social business”. Fairphone agreed on the following guidelines:
To make sustainable design decisions that permit repair and prolong product’s lifespan, and to create transparent value chains. Furthermore, the company wants to design products and value chain in a manner to have a positive societal impact through production. It wants to find partners who have similar values and who will participate in achieving its corporate objectives.
The objectives can be structured into three strategies