In this paper we aim to:
Explore effectuation as an alternative route to entrepreneurial success.
Explore bricolage as an alternative entrepreneurial perspective.
Explore frugal and grass roots innovation within the context of both effectuation and bricolage., as well as
Examine effectuation and bricolage as well the aforementioned approaches to innovation within the South African context with specific with specific reference to examples.
Definitions of relevant terms
Entrepreneurial Process
“The entrepreneurial process will include the creation of a business and making it into a successful enterprise” (Venter et al.,2008)
(Venter et al.,2008) go on to explain that the entrepreneurial process includes steps which are:
Identifying and cultivating an opportunity from many ideas
Coming up with a business plan
Collecting the resources
Organizing and assembling the entrepreneurial team and lastly
Overseeing new venture creation and growth
Bricolage
(Baker and Nelson, 2005) define bricolage as making do by applying combinations of resources at hand to new problems and opportunities”
The characteristics of bricoleur entrepreneurs can be displayed in their actions of identifying a problem and using experimental ways to resolve those problems conceptually .This can be achieved by using resources at hand and also the skills and knowledge from the people in their respective communities. The available resources are reused for purposes that they are not originally made for the quality of resources used are usually not of good quality but are of good enough quality to assist in resolving the current problem at hand or the lack that has been identified in the community or market. (Fisher, 2012).
These entrepreneurs make creations that are outside the norms of society in order to resolve a particular problem. They are people that are able to adapt, improvise, actively engage and have integrated thinking characteristics (Fisher, 2012).This then provides a platform for innovative ideas and which then translate into either creating new markets or disrupting a current market.
Effectuation
Professor Sarasvathy developed the effectuation theory and therefor defines the theory as a logic of entrepreneurial expertise, a dynamic and interactive process of creating new inventions in the world (Saravathy, 2008)
Frugal Innovation
Frugal innovation is a design process where the needs and circumstances of the citizens of the community in a developing world are put first so that they can develop affordable and appropriate products and services that are easily accessible for emerging markets (Bas, 2018)
Grassroots innovation
According to Smith, Fressoli & Thomas, 2014 grassroots innovators go out to look for innovation processes that are socially inclusive for local communities in terms of the knowledge, processes and outcomes
Explore effectuation as an alternative route to entrepreneurial success (Joel)
Effectuation process commences with a set of means at disposal and contingent desires to choose from an imaginary set of possible effects in general. Both means and desires are subjected to change. The particular effect chosen is a function of entrepreneurial affordable loss, as well as the degree of control over the unpredictable future that the entrepreneur achieves through stakeholder commitment along the way (Sarasvathy, 2001). By focusing on the means entrepreneurs have at their disposal, and of course influence that the entrepreneur exerts, effectuation processes decomposes itself into three categories; who an entrepreneur is, what they know, and whom the entrepreneur knows (Welter, Mauer, & Wuebker, 2016). These categories allow the effectual entrepreneur to reflect on what they can do, the interaction with stakeholders leads to the discovery of new means and establishment of new goals that allow for revaluation of means of possible courses of action (Fisher, 2012). Effectuation process suggests that under conditions of uncertainty, entrepreneurs look for alternatives that exerts control over the set of means at disposal such as at the personal level, skills, knowledge, and social networks which at the firm level may include physical, human and organisational resources (Fisher, 2012)
Effectuation is an element in decision making heuristics of expert entrepreneurs where entrepreneurs create a variety of effects when they attempt to exert influence over resources they can control, such as the means at hand, and the focus on selecting effects that can be created with that set of means. Thus, effectuation process does not set a specific goal but focus on actions that can be carried out (this include influence and means at hand) to achieving an end (Welter, Mauer, & Wuebker, 2016). The principles underpinning effectuation process includes, the actions taken that considers the affordable loss of stakeholders rather than the linear, causal expected returns, commitments of stakeholders rather than competitive analyses, exploitation of contingencies rather than exploitation of pre-existing knowledge, and controlling an unpredictable future rather than predicting an uncertain one (Sarasvathy, 2001)
The opportunity recognition focusing on resources under the control of entrepreneurs in pursuit of venture creation is expected to help them identify opportunities that are actionable. The linear, causal encouragement of looking for a gap in the market has higher likelihood of time being spent on evaluating opportunities that may not fall through, but opportunity recognition that stems from handy resources under the control of the entrepreneur motivates individuals to discover a market gap utilising these resources, likely leading to entrepreneurial action (Fisher, 2012) of opportunity creation under uncertainty (Welter, Mauer, & Wuebker, 2016). As a transformation process, effectuation helps to create new markets within an isotropic process, Isotropy refers to the unclarified information portions that should be identified and analysed to make decisions under future uncertainties of Knightan uncertainty, Mercian goal ambiguity and environmental isotopy (Sarasvathy & Dew, 2005).
Effectual process helps entrepreneurs to engage in early experimentation and interactions with customers in order to overcome complications of linear, causal process associated with new ventures. Effective processes result in community building through the active engagements of an entrepreneur who builds a relationship of committed communities that are beneficial to the entrepreneur’s venture creation. This is true for the feedback and word of mouth leads generation for consumer oriented enterprises. Excessive resources associated with linear, causal entrepreneurial processes may lead to comfortability that quells on creativity, which effective process actionable under resource constraints may trump on (Fisher, 2012).
Explore Bricolage as an alternative entrepreneurial perspective (Ndoda)
“Bricolage” can be defined as making do by applying a combination a combination of resources
at hand to a new problems &
opportunity (Baker & Nelson, 2005, p.3).
Levi-Strauss (1966), states 2 distinction s between actions that would be taken by an engineer & a “bricoleur” or handyman. The engineer would go about this by drawing a plan & then requesting for suppliers. A “bricoleur” would source from his immediate surroundings to find to find materials to build & the intended result would ultimately be the same product.
Focus on explanations of the formative process of teaching (Hatton, 1989), law making (Hull, 1991) & Institution building (Lanzara, 1998). Look at entrepreneurship literature & how bricolage has been used to explain market creation (Baker & Nelson, 2005). Firm growth dwell into innovative literature, bricolage can be used in uncertain environments describes how robust design (Giborra, 1996, Garud & Karnoe, 2003). The bricoleurs are an action orientated or “hands-on” kinda individuals (Senyard, Baker & Davidsson, 2009). They do not see or assign themselves to the thinking of, anything is impossible (Phillips & Tracey, 2007).
Their inept ability to view an opportunity & find creative means to match by means of reinvention makes them highly adaptive to their social circumstances/ limitations (Rice & Rogers, 1986). They are solutions driven & sources out or uncover opportunities to ensure that they meet societal demands (Baker & Nelson).
How are the factors identified relate to outcomes of “Interest”?
Enact bricolage by making do by applying combinations of the resources at hand to new problems & opportunities, 5 domains:
1. Physical inputs- imbuing forgotten & discarded, worn, presumed single- application markets with new use- value.
2. Labour inputs- involving customers, suppliers, and hangers- on in providing work on projects.
3. Skills inputs- permitting & encouraging the use of amateur & self-taught skills that would otherwise go unapplied.
4. Customer/ market- providing products or services that would otherwise be unavailable.
5. Institutional & regulatory environment- refusing to enact limitations with regards to many standards & regulations, and by actively trying things in a variety of areas in which entrepreneurs either do not know the rules or do not see them as constraining.
Explore frugal and grass roots innovation within the context of both effectuation and bricolage (Eva / Tshego)
(Hossain, Simula & Halme, 2016) state that the frugal concept refers to goods that have been made affordable to low-income customers, these goods would in turn be simple and easy to use and they are made with the resource constraints in mind. Frugal innovation has come out to be a approach that is promising to serve low-income mega markets. It is easily identified by the lowcost, easily accessible materials, local used and can adapt well to the local harsh environments (Bound & Thornton, 2012).
Many grassroots innovators who do not have much formal education and do not know much about the technologies that are out there are developing frugal innovations in environments where they are not exposed to many resources and they do not think inside the box, they make new innovations with the resources available (Pansera & Sarkar, 2016)
In south Africa they have managed to have a few frugal innovations, we have managed to find three relevant examples and they are:
The Wonderbag, which is a a simple non-electronic portable slow cooker. This product will continue to cook for up to 12 hours without any other electricity use.
Eskoms prepaid metering service is another example, this innovation enables consumers to have the reliability of having electricity and it also enables them to manage their own consumption and purchase additional electricity when needed, and also top up electricity from a prepaid balance (“Eskom Smart Prepaid Split Meters Programme”, 2018)
Lastly Molodi us a housing solution that is extremely unique in the sense that it combines a reusable, recyclable plastic injection that is lightweight that is molded into a framework and Is SABS approved, and it produces a cast in steel reinforced structure. (“moladi building system”, 2018)
These are just some of the examples that manage to encompass bricolage and effectuation within these frugal innovations. With bricolage they managed to create something that is out of the norm so that they could resolve a problem, like the problem of cooking with a slow cooker enables one to use excessive amounts of electricity and the Wonerbag lets you cook food using the slow cooker method without using as much electricity. Eskoms pre-paid solves the issue of the excessive amount of electric bills that consumers have, being able to top up the electricity whenever you want to helps not only the consumer, but also the government money. The Moledi housing project helps with the expensive housing problem and it also saves the time of building the house. The effectuation part comes where the innovations determine goals according to resources given to them especially the housing project it was made by using plastic as a material. That was something that they had and they were able to use it effectively, and these innovations in turn are able to disrupt the market opening new avenues and new opportunities as well as new markets.
Grassroots innovation can be defined as “an innovative product or process created at the bottom of the pyramid, usually due to necessity, hardship and challenges”. (Hilmi, 2012)
Grassroots innovation is propelled by an individual who lives in the resource-stricken community. (Wohlfart, Bunger, Lang-Koetz, Wagner. 2016) With the problem of resource scarcity among underdeveloped or poor communities, grassroots innovators who may have very little formal education, have an in-depth knowledge of the problems faced in their penurious environment. This individual identification of the problems faced by their community, develops clever and inventive way to assist in resolving the identified problem. The need to resolve the social and environmental problem is the driving factor for this individual, where quantity and not quality is the name of the game. (Wohlfart et al., 2016) Both effectuation and bricolage promote using existing relationship with either friend, family, community etc., to assist in creating grassroots innovations.
Grassroots innovations processes are directed towards including and involving the social community more, in terms of using their knowledge in creating the processes needed to get the desired outcome. (Pansera & Sarkar, 2016) Bricolage uses the amateur skills and knowledge of the community and includes the labour of the community to create products that will fulfil the needs of the people. (Fisher, 2012)
The innovative way in which grassroots innovators solve problems is instrumental in a creating new markets. In view of bricolage and growing economies, this can cause disruptive markets to emerge, as their creations are normally outside the norm or known standards of production and operations of business. (Fisher, 2012) Effectuation promotes a flexible entrepreneurship spirit. As changes to the society in which an individual lives, can cause new problems to emerge, an entrepreneurs is able to identify these new incidences ultimately adopt to the changes in the environment, apply new knowledge and skills to the emerging problem in an endeavour to still meet the needs of their community.
Hardship, poverty, high unemployment, difficult living conditions, or lack of basic living conditions are just a few factors that can cause a platform for innovative ideas to be birthed. (Hilmi, 2012) When one responds to these hardship, grassroots innovators become entrepreneurs in their own right. Some may refer to them as necessity-driven entrepreneurs but they are entrepreneurs non-the less. Necessity-driven entrepreneurs are people who have been forced to start a business i
n order to survive and provid
e an income for their families (Venter et al.,2008).
(Fisher, 2012) As per bricolage, these materials have been used in grassroots inventions that have attracted the attention of first world countries. Materials used in these products and processes were already available within the community and used in ways in which originally, they were not intended to be used for. (Fisher, 2012) An effectual entrepreneur is one who is willing to lose the innovations in the process of becoming an entrepreneur. Grassroots innovators on the other hand have scares, low quality and quantity of resources of which they will not be willing to lose, due to the scarcity and funding problem. They don’t have the means to purchase the needed resource hence the use of available ones. In this instance bricolage would be used over effectuation. (Fisher, 2012)
The grassroots innovator relied on restricted resources to create their item or series of items. A specific method or process is not used to produce the goods or services and many steps in the process may consist of improvised methods. Within the effectuation context of experimentation, grassroots innovators use experimental methods to produce their products. (Fisher, 2012) The process may entail a lot of redesigning and trial and error in order to produce the item that will meet the needs of the community. The production is of mass production, but in this context, it is produced by the masses themselves. The use of mass production is supported by bricolage and effectuation. One of the main challenges faced by grassroots innovators is their inability to upscale due to resource and funding restrictions. (Wohlfart et al., 2016)
Examine effectuation and bricolage as well as the aforementioned approaches to innovation within the South African context with specific reference to examples
Effectuation (Tsebo)
Having explored the process of effectuation and what it entails relative to the conventional causation process, it is important to mention that Sarasvathy does not present the former as being “better” or even “more efficient” than the latter (Sarasvathy S. D., 2001). She further argues that the circumstances under which either causation or effectuation gives an advantage or disadvantage is an issue which is still to be resolved in the future through in-depth empirical studies (Sarasvathy S. D., 2001). If an Entrepreneur has a clear and distinct picture of what they want to ‘build’ perhaps it makes sense following the causation process as it is much more linear and is effect-focussed. However should it be that an entrepreneur only has a generalised picture of a successful venture they want to create with relatively limited resources (or the access thereof), the effectuation process is more likely (Sarasvathy S. D., 2001)
Africa
The entrepreneurship process has resources as a critical sub-element (Penrose, 1959) and by virtue of the definition of Entrepreneurship as the exploitation of an opportunity to create value by putting together resources (Timmons & Spinelli, 2009) it is important to always consider resources as a key sub-set of Entrepreneurship.
When compared to other regions, the development of entrepreneurship in Africa shows slow entrepreneurial activity growth since colonisation (OWUSU & JANSSEN, 2013). Amongst others, the reason for this has been identified as a lack of human and financial capital in developing countries (Mair & Marti, 2009) When comparing causation and effectuation Sarasvathy argues that the causation process entails excellence in exploiting knowledge while effectuation entails excellence in exploiting contingencies (Sarasvathy S. D., 2001). With this in mind in the African context we have seen the birth of Social Entrepreneurs using effectuation, as an effect of scarce human capital or knowledge, and financial capital.
Sakhumzi Restaurant
The now big and well-known Sakhumzi restaurant located in Soweto gives an example of an effectuation-driven entrepreneurial project. As narrated on the restaurant’s website (https://sakhumzi.co.za/our-story/), Sakhumzi began with just a group of friends with beers and what they refer to as “a very special tree”. There were always people gathered together under the tree (as it is still the case even today) drinking and socialising, and they would always ultimately be lured into the house by the aroma of the delicious home-cooked meal prepared by Sakhumzi. From having the house, “the tree”, a group of friends and socialites, and cooking excellence, Sakhumzi moved from being a “hangout corner” to being a small “eat out” and ultimately a full, nationally recognised restaurant. As is a feature of effectuation, multiple stakeholders actively contributed to the ultimate effect (the birth of Sakhumzi Restaurant).
PM Grave Closure
Soweto-born Pitso Maleka wanted to be in business and did not have specific means to initiate a causation-driven (effect-driven) venture. As reported in January 2017 on the New Age (http://www.thenewage.co.za/businessman-driven-to-create-opportunities/) Maleka did not know what specific venture to go into but he knew he wanted to go into business and do something different. Encouraged by means and resources he had he decided to fill graves in Gauteng province, a blue ocean area. His venture boomed in Gauteng and he expanded to other provinces, and now employs more than 1000 people in South Africa as reported on the New Age. Pitso started his entrepreneurial journey without a distinct and precise effect in mind and employed means and resources in his disposal and within his reach.
Cape Gate – Davsteel
The South African steel industry has always been known to be a very competitive and congested industry and managing costs remains a major determining factor on the success of any steel trader, particularly producers or processors. The Western Cape and Vanderbijlpark-based Cape Gate may have been established through the normal linear causation processes back in 1929 but in 1988, with the resources available to the company (human capital, machinery, waste steel material from offcuts, and general waste steel in the community), the company started the Davsteel division, which has changed the face of scrap processing in the steel Industry (http://www.capegate.co.za/aboutus.asp)
Though with certain improvements, South Africa (as with most African Countries) remains economically and resource challenged. The linear (causal) entrepreneurship process plays a significant role in business in the republic however with the country having a significant part of it still under-resourced and with insufficient funding made available, the effectuation entrepreneurial model provides a very strong alternative for potential entrepreneurs whose vision is governed mainly by means.
Bricolage in South Africa (Mndeni)
“Bricolage” can be defined as making do by applying a combination a combination of resources at hand to a new problems & opportunity (Baker & Nelson, 2005, p.3).
Levi-Strauss (1966), states 2 distinction s between actions that would be taken by an engineer & a “bricoleur” or handyman. The engineer would go about this by drawing a plan & then requesting for suppliers. A “bricoleur” would source from his immediate surroundings to find to find materials to build & the intended result would ultimately be the same product.
Focus on explanations of the formative process of teaching (Hatton, 1989), law making (Hull, 1991) & Institution building (Lanzara, 1998). Look at entrepreneurship literature & how bricolage has been used to explain market creation (Baker & Nelson, 2005). Firm growth dwell into innovative literature, bricolage can be used in uncertain environments describes how robust design (Giborra, 1996, Garud & Karnoe, 2003). The bricoleurs are an action orientated or “hands-on” kinda individuals (Senyard, Baker & Davidsson, 2009). They do not see or assign themselves to the thinkin
g of, anything is impos
sible (Phillips & Tracey, 2007).
Their inept ability to view an opportunity & find creative means to match by means of reinvention makes them highly adaptive to their social circumstances/ limitations (Rice & Rogers, 1986). They are solutions driven & sources out or uncover opportunities to ensure that they meet societal demands (Baker & Nelson).
How are the factors identified relate to outcomes of “Interest”?
Baker and Nelson (2005) proposed that when entrepreneurs are faced with penurious environments, environments that present news challenges without presenting new resources. So they have 3 options:
• Seek resources from domains external to the firms
• Avoid new challenges by remaining inept, downsizing or disbanding
• Enact bricolage by making do by applying combinations of the resources at hand to new problems & opportunities, 5 domains:
1. Physical inputs- imbuing forgotten & discarded, worn, presumed single- application markets with new use- value.
2. Labour inputs- involving customers, suppliers, and hangers- on in providing work on projects.
3. Skills inputs- permitting & encouraging the use of amateur & self-taught skills that would otherwise go unapplied.
4. Customer/ market- providing products or services that would otherwise be unavailable.
5. Institutional & regulatory environment- refusing to enact limitations with regards to many standards & regulations, and by actively trying things in a variety of areas in which entrepreneurs either do not know the rules or do not see them as constraining.
Bricolage theory rests on the concept of social construct of resources, it allows for the entrepreneur to creation of something from nothing (Baker & Nelson, 2005).
Bricolage in South Africa
Vanevenhoven, Winkel, Malewicki, Dougan and Bronson (2011) state that bricolage is an entrepreneurial method that is mainly practiced and applied by entrepreneurs who finds themselves in situations that require quick and rapid action, mainly because these entrepreneurs find themselves in situations where they are faced with a situation they need to resolve, but they find that they are they don’t have the necessary resources to immediately resolve the issue at hand and they therefore have to plan and improvise without the luxury of time and resources. Weick (2001) argues that for entrepreneurs to use bricolage successfully in the entrepreneurial process, they must have an intimate knowledge of their available resources, they must be observant, they must trust their ideas, and they must learn and correct through feedback.
In South Africa the use of the bricolage method of entrepreneurship is applied a wide range of entrepreneurs, from multibillion rand state entities such as SASOL all the way to informal street vendors as well as families who run “Spaza shops”, selling everyday goods to members of their communities from their homes. “The country was South Africa and the purpose of the industry was to produce petrol, diesel and industrial chemicals from coal. The company that pioneered the industry in Africa is known as Sasol” (Collings). Fuel is made from crude oil, but when the South African government found Crude oil hard to source, they began to use coal to produce oil. South Africa was unable to trade due to sanctions, which resulted in the shortage of oil, which eventually ran out. Devoid of the necessary resources, SASOL was formed, producing oil from coal which helped the state solve its fuel issue.
Another South African company that started with absolutely nothing and required its founder to be creative and use unconventional methods is YDE. In an interview with Entrepreneurmag, Paul Simon, Founder of YDE shares his journey where from absolutely nothing, he forged ahead and started YDE. Todd (2016) “I found nine other young designers who were interested in operating in a retail environment with fitting rooms, credit card facilities and a proper retail store atmosphere, but couldn’t afford it”. Paul’s search for premises were near impossible, speaking of his endeavor to find the perfect location for the store he says “Cavendish Square wouldn’t even give me an application form. Green Market Square said no. And then I found an empty store off a dingy thoroughfare leading away from Green Market Square. It was a white elephant that had stood vacant for too long, and wasn’t in a prime spot. (Todd, 2016)” Be that as it may by using his skill, together with those of his former school mates, Paul somehow managed to start his business.
In South Africa, many informal businesses are set up using nothing but the resources at the disposal of those who endeavour to set up businesses in the communities. Several examples can be found, such as the Spaza Shop concept, which many families in South African families have adopted. The idea is that a family which has identified a need for everyday household goods will use their house to sell those goods. This is because the family is unable to afford renting a store, so they use their small house, which also happens to be their home. One of the biggest success stories on that front is Rita Zwane’s Imbizo Shisanyama Busy Corner. Imbizo Shisanyama (2015) states that Imbizo Shisanyama was “established in 1997 in a Meating Place container on a dusty street corner in Ivory Park; and two decades later situated in Ebony Park Imbizo Shisanyama Busy Corner as enjoyed by patrons today”.
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