Digitalization in startups: A double-edged sword?

Topic

The focus of this study is to find out how the use of digital tools affects the organization of startups. Startups are often led by younger teams that already adopted using digital tools. However, dealing with the tools and the corresponding influences are two different matters. The study highlights which areas are most affected and supports founders in making informed and conscious decisions.

Relevance

In today's world digital tools are indispensable, a company cannot exist without them. Technology is developing at an acclerating speed and more tools are offered on a daily basis. In the course of this development, organizations are not only changing internally but customers, suppliers, and society are evolving with them and change their demands. Although the influencing factors are changing so rapidly, there is not much qualitative research on the impact of digital tools specifically on startups. The study helps founders to focus on the most relevant areas and take measures where needed.

Results

The data analyzed collected from interviews with nine founders indicates that five areas are influenced. The only area with a significant influence is the processes. The areas with medium influence are the structures, data, people, and innovation. Processes are positively influenced by making them more efficient, especially communication. Negative influences are dependencies on other technology or people using tools.

Implications for practitioners

• Zoom out and determine your position before deciding on additional software
• Focus on the processes where the most significant influences appear. There is much potential for efficiency improvements in communication, and addressing the dependencies of tools on other technology and people involved.
• Influenced areas are connected. Apply a systematic approach; document what you do and the changes you recognize, reflect upon what happened, and take further measures.

Methods

Based on a literature review, the known influences of digital tools on startups were compiled. Through semi-structured interviews, nine founders in startups were interviewed. The interview guide was set up that interviewees could elaborate on the questions in an unbiased way as they saw fit. Transcripts were coded according to the pragmatic grounded theory approach of Anselm Strauss to build categories. The identified areas of influence were derived from the categories and used for the  decision-making framework.