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How do digital startups manage their activities? Insights and opportunities for business process management

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Abstract

Business process management (BPM) aims to help organizations manage their business processes. Startups differ from established firms as they go through different phases of prospecting, developing, and exploiting the new venture. Startups begin to focus on the organization of their processes after they reach the exploiting (scale-up) phase. Digital startups are unique as information technology (IT) becomes the business model itself. These unique characteristics raise a question: how do digital startups at the scale-up phase manage their business processes? To answer the question, two case studies on digital startups in logistics providers are conducted. The case studies are designed to be inductive in nature. Grounded Theory Method (GTM) is used for data collection and analysis. Data is collected via interviews and supporting documents. The BPM capability provides the basis to create guiding questions for the interviews. The interview results are analyzed with a grounded theory approach of open, theoretical, and selective coding. To derive a new theory, cross-case analyses are conducted. Findings from two digital startups allow us to identify important categories that play a role in how digital startups manage their activities: industry and stakeholders, digital offerings, organic structure, process management, performance measurement, employee training and culture. We further theorize that the competitive nature of startups makes them customer-centric and focus on agility. Digital startups continuously improve their product and conduct adaptive process experimentation involving a cycle of process identification, IT-based process implementation and process adaptation. The supporting capabilities that enable the process management of digital startups are agile people and culture and organic structure.

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Acknowledgements

The authors acknowledge the contribution of Prof. Jan Mendling from Humboldt-Universität zu Berlin, who provides insights into the ideation of this research.

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Correspondence to Mahendrawathi ER.

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Appendices

Appendix A: Guiding questions for interviews

Code

Question

BG

How was this startup originally built? What is the drive/background, what ideas/solutions do you want to develop?

P1

How are startup activities and work developed?

P2

Are the inputs, activities, and outputs of all jobs identified and documented? For example, through SOPs

D

Is there an information technology (IT) system that supports startup activities?

C1

What is the mechanism for evaluating the performance of startup activities and work?

A1

How is the achievement of performance targets (KPIs, etc.) of organizational activities followed up?

A2

How is innovation/improvement of activities and work carried out following existing developments?

PS1

How are activities and work related to organizational strategy?

PS2

How does organizational strategy translate into objectives used to manage activities and work?

ER1

How do startups build relationships with stakeholders (customers, suppliers, investors, and other partners)?

ER2

How do startups know and understand customer expectations?

RR1

How are the tasks and responsibilities divided at startup?

RR2

Is there a process management team dedicated to structuring, analyzing, and improving startup activities and processes?

ST1

What is the team's ability to manage activities and work?

ST2

Is there training for the team on a specific activity or job?

V2

How is the startup's commitment to change, continuous process improvement, and innovation?

AR1

What is the mechanism for hiring, developing, and rewarding startup teams?

AR2

What is the basis for awarding?

TM1

Is there an executive team responsible for managing a process-oriented way of working? For example, chief process officer

TM2

How does the startup's executive team view manage activities and work?

OC

Does the startup have an organization chart that explains process-oriented roles? Are activities and jobs explicitly displayed in the org chart?

GB1

Are there teams/units that support innovation, change, and implementation of activities/work?

GB2

Is there a role/unit within the startup that is responsible for the overall performance of the organization's activities and work?

Appendix B: Interviews, interview findings and integrative memo

See the Tables 8 and 9.

Table 8 Data collection interviews
Table 9 Summary of interview findings and integrative memos

Appendix C: Axial coding Lisy and Rise

Lisy concept or category

Main category

Rise concept or category

Main category

Process discovery by understanding the problem and its root cause

 Brainstorming with users

 Shadowing method and quantified survey

Process origin

Process determination based on logistic common practice

Process origin

No business process architecture

Reactive preparation of business processes

Process documentation

 Business as usual has been documented

 SOP in the form of bullet points and basic flowcharts

 Documentation changes are made on the go

  SOP evolves following the problems being addressed

 SOP per department

 SOP changes by supervisor, manager, head, and C-level

 Process hierarchy in the form of a flowchart

Process management

Innovation based on customer demands

Process management

Multiple participants are required for unique customer requests

Project initiatives

 New features based on customer needs

 Business development

Dividing big problems into small problems (Divide and conquer framework)

Inter-departmental collaboration

Product management

 Project (initiative)

  Worked with a cross-departmental team

 Improvement by the product team

Project management

 Application development project led by product manager

  Product management is more structured

 Non-application project led by the initiator

Operational department processes

 The Ops team division based on order type

 Dedicated management by field operations

 On-call managed by operations manager

 Project managed by planner ops

 Workflow documentation every time there is a new shipper

Preparatory meeting every time there is a new project

Order management

 Regular order management (routine)

  Bidding scheme

 Project-based order management

CEO is still doing technical work

RACI matrix for each process

Process formalization triggers

 Customer demand

 Potential strategic initiatives

Root cause analysis

Process improvement

Not all divisions carry out process improvements

Undisciplined process improvement

Sprint retrospective

Continuous improvement has not been done

Post mortem analysis

Decentralized process improvement

Pillar of customer-obsessed to find out the satisfaction of customer problem-solving

Net promoter score (NPS)

Process evaluation

No process evaluation

 Goal-oriented

  No process assessment

  Measurement of the results of a process

  Focus on business KPIs

Improper process evaluation

Weekly review (meeting)

Frequency of evaluation as needed

SOP review every month

 Reactive process evaluation

  Process evaluation frequency as needed

   Monthly review

KPI from shipper SLA

Process evaluation and improvement occur very quickly

Open communication

Culture

Open communication

Culture

Open mentality to any input

 

Open to team ideas

Freedom of change

Growth mindset

 

Learning by doing

 

Internal promotion of potential junior employees

 

Adaptive

 

Agile

Fast-paced

Three main functions

 Commercial (product sales to customers)

  Sales (search customer requests)

  Transporter management (search for suppliers/transporters)

  Operational

   Control tower and customer service as monitoring team and front liner

   Proof of delivery as an inspector of travel documents

   Field operation as the coordinator of the loading process at the shipper's location

   Allocation as a truck unit finder

   Head-manager-employee

   Export–import department

   Management of meeting customer needs

 Product

  Product

   Search for problems and solutions

   Product manager understands customer problems and needs

    Product managers have their own domain experts

   Engineering as a platform developer

 Back office

  Finance

  People operations

Organizational structure

Divisions

 Operations

  Transport sourcing

  Control tower

  Field operations

  Proof of delivery (POD)

  Transport management

 Service Excellence

  Data

  Customer experience

  Operational excellence

 Finance

 Account management

 Business development

 IT

  Product

  Engineer

 HR

Organizational structure

Incomplete leadership position

 Reporting to the position above it

 Number of people that can be coordinated

 Capability or capacity issue

Leadership level inconsistency

 Effect of job scope

 Promotion

 Initial position offering

Head-manager-supervisor-employee

Team naming inconsistency

The structure evolves according to job specialization needs

 Rapid change in organizational structure

  Outside pressure on customer demand

  Inside pressure on high costs and resources

No special function that manages the process

Chief process officer

 Analyst (associate) in product function

  Analyst (associate) attached to a certain position

Project management office (PMO) ensures efficient problem solving

Operational excellence in commercial function

Manager in back office function

Three times organizational restructuring in a year

 HR and finance approval

Informal C-level approval

External consultant

 Business advisor

Filling the leadership vacancies

Team formation follows the leader specialization

C-level

 CEO

 CTO

 CFO

Basic training

Employee training

Product knowledge training

Training

Skill training

Soft skills training initiated by each division

Specific training

Based on the competency mapping framework

Employee onboarding

Services expansion to the export–import sector based on customer needs

Services

Software as a service (SaaS)

Services

70% of orders via WhatsApp

Trucking marketplace

Innovations in ordering processes, unit search, order tracking, and assistance supported by technology

 

Objective key result (OKR)

 Have not implemented OKR in 2019

  The organization is still too small

 OKR each team member

  OKR is derived from the organization's vision and mission

 Performance development and discussion every semester based on OKR

Performance measurement

Index performance plan (IPP)

Performance appraisal

Reward for achieving milestones (ad hoc)

Rewards

Index performance review (IPR)

Rewards

Reward for performance achievement (routine)

KPI achievement

The sales department has a reward system from the beginning

Certain project

Reward in the form of playing together at the beginning of development

Engineering department has a reward system in the first 6 months

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ER, M., Mulyono, N.R.P., Rentio, I.A. et al. How do digital startups manage their activities? Insights and opportunities for business process management. Inf Syst E-Bus Manage 22, 557–598 (2024). https://doi.org/10.1007/s10257-024-00683-1

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