Understanding Influences on Startup Decision Making: Applying Systems Thinking and Lenses to Investigate the Perspectives of Startup Leaders

Abstract

A startup is an organization that operates in extreme conditions of risk and uncertainty but can achieve disruptive and radical innovation by solving problems with novel technologies and solutions. While in these conditions, startup leaders continue to inform themselves and make decisions, relying on their perspectives, knowledge, and the team and tools they are surrounded by. However, with a 50% failure rate within five years (U.S. BLS 2016), something is missing. Rather than try to identify failure modes, this research explores the perspectives of startup leaders, who are the people who make startup decisions that could lead to success or failure. This research explores the application of systems thinking to the perspectives of startup leaders within the context of early and growth-stage hardware technology startups across industries in North America. The objectives consist of a literature review on startups, using a qualitative approach to gain insight into how startup leaders perceive their startups, and developing and applying a set of system lenses to assess startups holistically. Data is collected through interviews and processed using deductive and latent thematic approaches, affinity mapping, DSMs, and applying a set of startup system lenses. An extensive literature review explores the literature surrounding the startup ecosystem and is leveraged to derive ten startup system lenses to assess startups holistically. These lenses encompass company and ecosystem elements, including finances, market climate, and business development. By conducting and analyzing the interviews with startup leaders, this research discovers their priorities, execution focus areas, reflections, learnings, and perspectives on the proposed lenses. The analysis captures priorities like speed to market and flexibility, as well as execution focus areas of having a high-performance team and focusing on fundraising and cash flow. This research also elaborates on shared experiences and challenges these leaders experienced, including achieving product market fit and strategically picking customers. The final analysis applies the system lenses using affinity mapping and a Design Structure Matrix (DSM) to holistically view how startup leaders view and discuss the system lenses and the interfaces. This holistic view exposes both which lenses and interfaces the startup leaders are discussing and which they are not discussing. This research lays a foundation for applying systems thinking principles and systems lenses to improve the navigation of unknowns and uncertainties during decision making. There is the potential to assess the quality and comprehensiveness of the information used and the thinking used for decision making within startups. The future work of this research includes understanding the specific connections at the interfaces of the lenses, evaluating the impact of the type and quality of information, and understanding drivers on decision making.