Strategic Approach in Digital Platform Startups

Tatiana Kalakutskaya & Frederik Thue Andersen

Student thesis: Master thesis

Abstract

Despite having a favorable environment for startups in terms of digital maturity, capital and social support, there are currently no companies in Denmark qualifying as Unicorns. This is worrying, as Unicorns seem to have become “the new normal”, well-positioned to being future generators of growth for our society. Today around 70% of all Unicorn startups fall into the digital platform category, making this type of firms important when considering the unfavorable development of startups in Denmark. With this in mind, this paper seeks to provide a set of guidelines to increase the probability of digital platform startups’ success in Denmark, which then may secure future economic growth. As of the already beneficial external environment for entrepreneurs in Denmark, this paper has its focus on what can be done by entrepreneurs internally. This research investigates the ideal strategic approach in digital platform startups in Denmark. This thesis has analyzed three different approaches to strategy; the traditional approaches, focusing on designing, planning and positioning, the experimental approaches, replacing long-term planning with experimentation and fast hypothesis testing, as well as the disruptive approach, providing a strategy that starts targeting a low end of the market, underperforming certain areas, yet moving to the mainstream market as the product gains more traction. This research has mainly been working with the premise that startups are inherently different of nature than established companies. Startups deal with a lot of uncertainty and have limited history and data available, and are therefore in a worse position in making decisions based on analysis and long-term planning, than established companies who have plenty of data and a track-record of what works and what doesn’t. Our analysis has resulted in forming five hypotheses. The first four hypotheses examined that experimental approaches with focus on hypothesis testing and learning, would be the best approach to use in startups; whereas as the company matures into an established stage, a shift to the traditional approaches that favor deliberate planning and positioning, would be the best fit. The fifth hypothesis examined that the disruptive innovation theory is tailored to digital platform companies in general, i.e. startups and established companies. It also pointed out that it would be easier to apply in startups than in established companies. These hypotheses were tested by conducting a set of semi-structured in-depth interviews in Danish platform startups and established companies, as well as experts within the digital platform category. The results confirmed four out of five of the hypotheses. Yet, we still did not consider to having confirmed our initial assumption of applying experimental approaches in the startup stage of the company and then changing to traditional approaches in the more mature stage of the company. We examined that even though results were leaning slightly towards one side in startups and slightly towards another side in established companies, the reality was not as one- 2 sided as following purely one approach in one stage of a company’s life and changing to another in a different stage. We evaluated that the key to succeeding was rather a combination of the different approaches, not one at a time. The more different approaches the strategist is aware of, the better decisions will he or she be able to make. Based on these findings we have provided a guide, a set of advice to the entrepreneurs and venture capitalists within the digital platform category in Denmark. The guide provides a mix of both the experimental-, traditional-, as well as disruptive approaches. We suggest that the areas in the guide are thought of when dealing with digital platform startups in Denmark. At the same time we advice, to increase the understanding of the underlying concepts behind our recommendations, entrepreneurs and venture capitalists shall get familiar with both the traditional-, experimental-, as well as disruptive literature. In that way, they would be better geared to succeed with their businesses.

EducationsMA in International Business Communication (Intercultural Marketing), (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2017
Number of pages135