Business models of data-driven start-ups and their positioning along the value chain

Project description

Data-driven start-ups are key actors in the digitalisation of business networks, as they are often the first to market with new digital technologies and capabilities, but their failure rate is very high. A key reason for this is often a lack of strategy on how and where these start-ups can position themselves in complex and rapidly changing digitalised business networks. Moreover, the literature on strategy in business networks has hardly considered the specifics of data-driven start-ups. Therefore, the project formulated the following research questions

(1) What is the role of data-driven start-ups in digitalised business networks?

(2) How do data-driven start-ups strategise differently depending on their role in digitalised business networks?

(3) What dynamic strategic paths do data-driven start-ups follow in digitalised business networks?

To answer these research questions, interviews were conducted with the founders of 23 data-driven start-ups, and case studies were created to describe the different strategic approaches of their start-ups in detail. Based on the analysis, the team identified, and classified four different network roles (Extender, Enabler, Transformer, and Orchestrator). In addition the project showed that data-driven start-ups strategise differently depending on the network role and therefore need to be considered under different assumptions than start-ups whose value creation is based on physical products. Furthermore, the research team demonstrated from a dynamic perspective that data-driven start-ups operate along three central strategic paths between the different network roles: a) from the periphery to the centre, b) from weak to strong relationship intensity for data access, and c) further focusing within a specific network role (enabler and orchestrator). A key finding of the research is that only a gradual change of network role along the axes in the matrix is associated with successful operation in networks.

In addition to insights relevant to the academic literature, the findings have important implications for founders, managers of established firms, and public institutions.

First, they help founders of data-driven start-ups to become aware of their own network role and related strategic characteristics, enabling them to operate more successfully in digitalised business networks.
Second, they provide managers of established companies with a qualitative analysis tool to assess cooperation with data-driven start-ups or to identify the disruptive potential of these start-ups.
Thirdly, they enable public incubator programmes to focus from the outset on a strategy consistent with the role of the network, ultimately increasing the proportion of successful data-driven start-ups.

The project was completed by 30 April, 2021.