Final Project Report: Start-ups

Paper instructions
The main point for this paper is to emphasize the importance of process & communication and learning decision making in the startup area.

Solution

Project Management

Decision-making in start-ups is turbulent and inconsistent, which affects businesses at the micro-level. Besides challenges in decision-making, communication is also hindered in start-ups. During the starting process, leaders and employees remain uncertain about various aspects of their business. Notably, they may keep changing their mind about specific processes since they have performed them only a few times. Regardless of such challenges, communication and decision-making are also the most critical factors for the success of such ventures. The level of communication and effectiveness of decision-making processes depends on the stage of a start-up. For example, companies that have been in operation for one year or less may have poor communication infrastructure and decision-making challenges compared to those that have been established for more than a year. Although various business aspects can be a challenge for start-ups, continuous learning and shared communication processes can lead to an effective decision-making process.

Start-up Case Studies: Our Cooperative education

From our experiences as Co-ops, start-ups at different development levels have unique communication and decision-making challenges. The businesses also have distinct information needs that managers should understand and address. Additionally, leaders heading new ventures navigate the barriers in unique ways. RapidMiner is one of the companies we conducted our cooperative education in, and it is a prime example regarding its communication and decision-making functions. The organization is a relatively mature start-up and has evolved its transmission processes over the years, which was established in 2013. The firm is a data science company that provides a platform for commercial and non-commercial users to engage with data prep, machine learning, and model operations. During the co-op, one of the team members worked in a team of four, a manager and a member working remotely from Germany. Consequently, communication and process learning were critical aspects for the company since it had four offices around the world, Boston, USA (which was the headquarters) and others in London, UK; Dortmund, Germany; and Budapest, Hungry. As a result, the organization has effective communication channels to coordinate activities across different locations.

Currently, just like other start-ups, the company experiences issues, especially among recruits. When new employees come into the corporation, they are not at a similar level of technical competence as the older ones. Thus, it might take time before they familiarize themselves with others, the software, and other communication tools used in the business. Another challenge is the need to coordinate activities across the four offices, which are situated in different regions. Notably, the communication process is prone to technical challenges, which may take time to fix. Hence, operations across teams are challenging due to possible conveyance breakdown and failure to take responsibility. For example, the customer success team demonstrated self-serving bias as they would attribute success to themselves, but blame failure on others, such as the data scientist team. The issue led to conflicts and negative relationships between departments and competition that hindered collaboration. Nonetheless, the situation is typical in many start-ups.

The second company we cooped in to show communication and process in start-ups is Starry. Inc, which was established in 2016. The internet company provides services using millimeter-band LMDS connections. Business processes in the company, such as organizational commitment, continuance organizational dedication, and normative organizational commitment, are effective. Leadership in the organization is adequate, and the manager expresses concern for employees, including coops; hence, they work in a friendly and supportive environment. Working in the supply chain team requires effective communication skills between different departments, such as production and finance, to enhance communication with vendors and coordinate with the financial section to make payments. The company is a model of effective processes that can be used to build commitment and ensure that all employees work towards common organizational goals. The managers ensure that the needs of each employee are met. As a result, the firm has a positive working environment, although the management could improve communication, process, and teamwork.  For instance, my role in Starry is source coop. My sourcing coop manager always values a project, which would require three or four different group mates with various job functions. In this case, teamwork plays a vital role in each project. Along with team work, effective communication in decision-making is the bridge to smoothly process, which should be highly weighted in Start-up companies.

Individual Mechanism

Learning and decision-making in start-ups are interconnected. Such ventures have to make critical decisions to remain afloat, especially in the face of uncertainty. Therefore, firms should focus on product development and strong customer relationships since their success depends on the two aspects. Customer development and lean start-up are essential entrepreneurship processes that require effective decision-making. The process also involves a thorough collection of information and evaluating assumptions to make accurate decisions in the market (York & Danes, 2014). Although decision-making is necessary for all organizational settings, its effectiveness determines the success or failure in start-ups. Consequently, such businesses require leaders who can work closely with their employees to collect and analyze valuable data from the market and use it to create competitive products and customer service. The value creation process should involve a shared decision-making environment since managers cannot work alone to achieve success in start-ups.

Many start-ups in the information technology industry fail since they lack adequate mechanisms to support learning and decision-making processes in human resources. Giardino, Wang, and Abrahamsson (2014) use the example of software start-ups, which are newly created companies to identify reasons for failure to succeed in the market. The businesses have little operating history; therefore, they are obligated to develop innovative and competitive products to succeed in the market. Notably, cutting-edge products are what determine whether they succeed or fail in the market. During the initial days of operation, they have scarce resources, including human capital. Therefore, their effectiveness depends on how well they can capitalize on the available human resources to create secure collaborative networks and support the learning process. The ventures also require effective business practices to overcome challenges, such as decision-making issues, since the failure of a critical project can lead to closure (Artinger & Powell, 2016). Thus, during the early-stages, companies can have no room for failure if they make information-supported decisions.

Decision-making in start-ups is a learning process that requires adequate business intelligence. Successful operations in such firms depend on the ability of the management and employee to gather sufficient business intelligence since the process affects their performance. In a recent study, Caseiro and Coelho (2019) explored the role of network learning (NL) and innovativeness in start-ups. The authors note that success depends on the ability of the members to strategically utilize human and technological networks to collect and analyze adequate information for use as the basis for decision-making and learning processes (Caseiro & Coelho, 2019). After all, knowledge supports the innovativeness and performance of the business during its initial phases in the market. Employees should learn the power of innovations; else, products may fail in a highly competitive market. Notably, several similar businesses in the market exist, especially in the IT industry. Therefore, success depends on the ability to use relevant business intelligence to make decisions and innovate to enhance performance. 

Overall, start-ups require extensive learning and adequate decision-making in a collaborative environment to enhance success. As a result, leaders should take advantage of various specific mechanisms and available resources to increase performance in the highly competitive market. Furthermore, leaders should motivate and address the needs of all individuals in the business to harness their diverse knowledge and skills. Companies should also incentivize employees to create effective teams that can co-create value for their products (Zaech & Baldegger, 2017). Effective leadership determines the performance of individual workers and in essential groups that will create value for the business. Besides, the ability to collaborate among personnel in different teams and departments help businesses to succeed in making practical decisions and support learning in the company. Thus, learning and decision-making in start-ups are the essential functions that will help leaders to explore and succeed in the market.

Group Mechanism

Besides the individual mechanisms, start-ups’ success depends on the ability of teams to collaborate to add value to the business. Team processes require strategic leadership not only to create the groups but also to motivate them to achieve success. Klotz et al. (2014) explore findings in the literature that active start-ups are created through team effort rather than the work of loan entrepreneurs. The authors emphasize the importance of collective effort in starting a fruitful business. The functions of the team involved in a new venture inform the ability of a company to succeed as it begins operating. However, creating a team is insufficient if managers cannot lead and improve performance through motivation. While the team process is necessary for all business organizations, it is more critical in start-ups due to its role.

High-tech start-ups require a high level of innovation than any other venture. Although individual employees can be productive, they cannot achieve success in the industry without collaborative efforts and capable team leadership. Bjornali, Knockaert, and Erikson (2016) integrated the upper echelon theory and the attention-based perspective to explore the role of team leadership in the success of high-tech start-ups. The authors focused on the top management team (TMT) characteristics to determine their impact on the accomplishment of such ventures. Leadership, from the uppermost executives, should support team efforts to succeed in start-ups. The study revealed that diversity and cohesion among top management teams affect the effectiveness of an organization, its performance, and success in the high-tech industry. Such industries need to bring together innovative minds to create marketable products and services to flourish in the high-tech sector. Collaborative teams should operate from the top leadership level to the employees.

Team processes require effective communication between members and across departments in a company. The experiences we analysed from our co-ops revealed the importance of reporting in start-ups as a way to share ideas and ensure cohesiveness. Groups are based on the effective sharing of information horizontally and vertically since business intelligence determines the performance and success of new projects. Paradkar, Knight, and Hansen (2015) established the role of capability-based resources, including effective sharing of information that is imperative for the success of start-ups. Companies with dynamic abilities have the potential to create a competitive advantage as early as possible in their operations. Such organizations require strong partnerships internally, externally, locally, and internationally. The most effective way to create successful relationships is to leverage communicative capabilities. Ventures can use the resources to work with successful teams of employees and external partners to thrive in the market.

From the co-op examples we gave up, it emerges that start-ups in the technology sector require strong teams to prosper. One of the essential characteristics of successful groups is the creation of networks across national boundaries. Effective leaders can leverage the capability to work with remote personnel and take advantage of the best talent in the market. Communication in such environments using mobile applications may ensure that remote teams work towards a common goal (Ehrenhard, Wijnhoven, van den Broek, & Stagno, 2017). With effective collaboration, teams can work in real-time to create value for the businesses. For example, groups can work while sharing information and knowledge in real-time through the mediated environment. In the rapidminer experience, technology helped employees to work across four offices in different countries. Technology improved process and communication, such as through teleconferencing to collaborate in real-time and use the internet to work together on projects. Therefore, leaders in start-ups should embrace the value of group processes and effective reporting to create competitive products and services.

Recommendations for Start-ups to Improve Decision-Making and Communication

Start-ups can implement specific steps to improve individual and group mechanisms as they focus on improving communication and decision-making. The most effective way of transmitting information in start-ups is sharing data between various members of a team within the organization. Information creates knowledge, which plays a vital role in improving processes within a start-up. Therefore, leaders should find effective ways of encouraging communication and information-sharing in their organizations. One of the methods is to create an environment that supports communication, such as by providing employees with automated tools and mobile devices to collect and share business intelligence in real-time to facilitate decision-making. For example, when preparing to launch a new product, teams should have adequate market information. The capability can make a significant difference between the success and failure of the new product.

Another approach is to motivate employees to create and maintain effective teams. Leaders should understand the importance of collaboration and teamwork in their ventures to gain a competitive advantage. Consequently, leaders should implement motivation strategies depending on the needs of individuals and teams. For example, they should identify employees who work effectively remotely and give them the independence they require to provide positive results. Managers should also realize team dynamics to support their creation and success. Such as, the leaders should focus on effective communication between leaders and employees to find the way forward and to give teams a successful communication experience. Teams are motivated by the knowledge that they can communicate and share information openly. The executive should use participative decision-making models to engage employees and encourage them to work toward shared value-creation. The strategy creates ownership and improves commitment to the company and projects. Overall, leaders should understand that employees are their most valuable resources and that they work better in collaborative environments. Furthermore, they should develop the knowledge of managing remote teams to capitalize on the best talents in the market, as suggested by Debrulle and Maes (2015). They can achieve this goal by improving communication process between the remote employees and teams. The requirement is especially critical among tech companies globally.

Managers should also address communication barriers and conflicts that hinder synergy in start-ups. Effective communication plays a critical role in preventing and addressing conflicts between individuals and teams. For example, at RapidMiner, leaders should handle the misunderstanding between the customer success team and the data scientist team to enhance synergy. If such conflicts continue, they can lead to the failure of a start-up. Effective leaders should identify potential conflict early since if they are left unresolved, they can create a hostile environment, ultimately affecting the projects. Effective communication and proper sharing of knowledge across the organization can play a critical role in preventing conflicts and improving decision-making. Therefore, management should encourage communication at all levels, among individuals and teams and between employees and the various teams. The approach can motivate employees to work hard and to support the management in decision-making and in creating competitive products and services without damaging relationships. Motoi (2017) supports the perspective by suggesting that effective communication and improved process motivate employees to achieve organizational commitment. The study was conducted in private organizations to show how internal communication leads to employee motivation.

Conclusion

Start-ups are usually at a very critical stage of their operations, and they can either succeed or fail, depending on the role of leadership in addressing individual and group mechanisms. From the research, decision-making and communication are the most critical processes for start-ups, yet, they are the most problematic aspects. Leaders should understand the way processes collaborate to improve outcomes through business intelligence to support decisions that drive the start-up towards success. The achievement of such ventures also depends on the ability to create effective teams of committed and motivated employees. While entrepreneurs have the vision for the business, they cannot realize it without the input of strong teams. Therefore, they should create active groups that are motivated to achieve organizational goals and objectives. Furthermore, leaders should understand team dynamics, including learning and collaboration in a conflict-free environment. Thus, future start-ups will depend on the ability to manage remote teams as managers leverage talents across the world. Regardless of communication and decision-making challenges that face start-ups, they can improve their chances of survival through continuous learning and shared communication processes to improve decision-making.

References

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Bjornali, E. S., Knockaert, M., & Erikson, T. (2016). The impact of top management team characteristics and board service involvement on team effectiveness in high-tech start-ups. Long Range Planning, 49(4), 447-463. doi:10.1016/j.lrp.2015.12.014

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Motoi, G. (2017). Could employees’ motivation be increased by a better organizational communication? A sociological perspective. Social Sciences and Education Research Review, 4(1), 174-190.

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