With the high failure rate of startups, what can entrepreneurs do to drive towards success? Dr. Yolande Chan, professor of information technology management at Smith School of Business, Queen’s University, offers four suggestions for using digital innovation to help your company grow.
By Hailey Eisen
When Dr. Yolande Chan began her academic research in the 1990s, she was focused on strategic alignment — the fit between an organization’s business strategy and its information systems strategy. But over a decade ago, she saw the business landscape becoming more turbulent, and small businesses struggling and failing to adapt quickly.
As instability became the norm, there was less need for alignment and more for agility. Taking note, Dr. Chan — a professor of information technology management at Smith School of Business — shifted gears to focus on what she calls “digital innovation.” Essentially, the ways in which startups and SMEs are adopting emerging technology and technology-enabled processes to stay relevant and support their survival and growth.
“We know that only about 70 per cent of startups survive the first five years,” she says, “and among the primary reasons for failure are resource scarcity and lack of knowledge.” And when resources are scarce, Dr. Chan’s extensive research has found that many successful startups are using technology to inexpensively fuel growth.
How do they do that effectively? Dr. Chan provides four key suggestions around utilizing technology and resources to help achieve success.
1 – Tap into the systems and resources already in existence.
When starting out, Dr. Chan advises entrepreneurs to think of themselves as one business in a system of systems. After making targeted tech investments internally, you’ll want to reach out and access resources from the systems that surround you. For example, in the average North American city today, you’re likely to find an incubator or accelerator to join. In doing so, you’ll gain access to technology, support and training, mentorship, physical office space, and shared peer experiences, among other things. Take advantage of the fact that you can embed yourself in a rich ecosystem already in place and access resources you wouldn’t otherwise be able to afford.
2 – Use SMAC (social media, mobile, analytics, and cloud) technology to your advantage.
Knowing how to access and leverage emerging technology that is affordable and oftentimes free can go a long way toward startup success. As Dr. Chan indicates in her research, “by leveraging emerging technologies in organizational learning processes, startups can better sense market trends in real time, see gaps, and realize opportunities to create new products.” Here are some other ways SMAC technologies can be leveraged by startups.
- Use social media technology to sense your environment and stay on top of your competitors. Track competitors on social media, join their mailing lists, lurk in their groups and get a real sense of what’s happening in your market and how you are positioned competitively.
- Use data analytics to sense trends and understand how the market is changing.
- Use web technology to help pivot when necessary; use it to transform your business model, raise funding, change your website or gain presence in a new market.
- Use mobile apps and communications tools to connect and collaborate with distributors, suppliers and partners seamlessly and often without added cost.
- Use cloud computing to share documents and work together with partners or to offer customer services globally without having to travel.
3 – Only invest in technology when the business need exists.
One of the mistakes many entrepreneurs (and big businesses as well, for that matter) make is to invest in technology for technology’s sake. Just because something appears to have great value or is being used by your competition, doesn’t mean you should purchase it. It’s fine to make modest investments for the sake of experimentation, but when it comes to significant investments, every technology purchase must have a related business goal.
4 – Be sure your ideas are linked with customer needs.
Finally, successful startups are those that respond to customer needs. Having a good idea on its own won’t result in success, Dr. Chan advises. Leveraging data analytics tools to research market trends can be vital in the success of your business idea.
While her research isn’t specifically on female-led businesses, Dr. Chan has had the privilege of studying many women entrepreneurs over the course of her studies, and notes that the startup space is a good one for women to be in.
“While you’ll go into multinational corporation boardrooms and see just a few women at the top, you’ll find a lot more women entrepreneurs at the helm of small businesses,” Dr. Chan says. “It’s an excellent opportunity for women who are often wearing a number of hats and balancing many commitments to engage passionately with a dream and use their resources to birth that dream.”
Looking to start, grow or drive new ventures, whether in a startup or inside a corporation? Register for an upcoming information session on Smith’s Master of Management Innovation & Entrepreneurship