COVID-19 has affected virtually all aspects of our lives, creating difficult conditions for organizations. Many organizations fight for survival while others are making drastic organizational changes to adapt to the change. Startups are particularly affected by the economic shutdown. They lack the resources to survive prolonged periods without cash inflow from investors and customers. Funding sources have dried up as e.g. venture capitalists focus on supporting their existing investments. Customers are also limiting their spending as they hunker down to weather the waves of change.
Thankfully, startups have agility on their side. They are typically more agile than traditional organizations. Especially when they offer digital products and services, which can be easily adapted to the changing environment. In turmoil lies opportunity. It should not come as a surprise that household names such as Uber, Airbnb, and WeWork were founded in the aftermath of the 2008 financial crisis. With that in mind, here are four ways startups can adapt to the new normal:
- Leverage your data and metrics – Customers, both existing and prospective, are quickly adapting to the new normal, and they are increasingly turning to digital products and services as working from home intensifies. This, in turn, generates new data around e.g. customer usage and behavior, also referred to as digital traces. For instance, Zoom has gained unprecedented prominence as a digital tool replacing direct human interaction. In turn, the increasing use of Zoom generates substantial amounts of new data (e.g., in the form of highly granular logfiles) that Zoom can build on to optimize its service. Startups that can identify how to support these trends, and translate usage and behavioral data into insights will be well poised to optimize and adjust their market offerings to identify and meet customers’ demands.
- Deepen your customer relationships – Compared to mature businesses, startups often haven’t had the time or bandwidth to focus on building deeper customer relationships, rather focusing on customer and user acquisition. This is the time to empathize with and connect to current and prospective customers to learn from them and deepen relationships. This is the time to learn and apply these skills, to adopt more empathetic language in communication, and to reach out authentically and generously. For example, startups can consider sending a note to their customers to see how they are doing, or they can find ways to offer helpful content and services, e.g. offering office hours or partnering to provide resources.
- Connect your organization’s relevance to the Zeitgeist – Given that many non-essential operations and activities have likely halted, entrepreneurs have time to revisit and sharpen their positioning and stay relevant in the post-COVID-19 world.
- Plant seeds for the future – Realizing that this downturn will not be forever, startups can look ahead three to six months and be ready to sell when the pendulum swings in a positive direction. This means taking this “downtime” to work on those items that have been languishing in the drawer such as the larger vision or strategy. There is the opportunity to emulate unicorn startups such as those founded after the financial crisis in 2008 and 2009.
The rules are changing
The rules of the game are changing again. Luckily, many of today’s startups already use sophisticated and highly scalable digital technologies, which provide them with the opportunity to anticipate and adapt to a changing environment. Startups can use this time to revisit underlying assumptions of past decisions and product design through digging into their data and learning from customers, can take advantage of the malleability of digital technologies, and cater their products and services to changing needs. As we are heading for a highly uncertain future, startups that can adapt their products to be truly relevant to customers and users in the new economy, stand to emerge strengthened from the crisis.
This blog is part of our future of work series, Marleen Huysman, head of KIN Center for Digital Innovation, shares her thoughts on how the Corona pandemic may broadly shape the future of work. Like to stay updated? Signup to our newsletter
About the authors
Julian Lehmann is an Assistant Professor of Digital Entrepreneurship and innovation at the KIN Center for Digital Innovation, VU Amsterdam. Julian’s main research interests include the emergence of startup organizations in their use of digital technologies, the architecture, and organization of contemporary digital products and services, and new forms of value creation. Julian has worked with startups from various industries, including financial services, manufacturing, and 3D printing.
Shauna Jin is a boundary spanner at the KIN Center for Digital Innovation, with a mission to connect research insights to business and societal audiences. Shauna regularly advises and coaches startups, especially those in the social impact space. Previously, she led new proposition development and innovation activities in the corporate entrepreneurship space to connect humans in a meaningful way to new technologies.
Many thanks to Kamael Sugrim, a founder and advisor to multiple startups, for her rich insights that formed the basis for this article. Kamael is currently the Co-founder and COO of PeopleFirstRH, a startup building the first software platform for reporting and resolving workplace misconduct that is transparent for both employees and organizations. Kamael’s work centers around leveraging technology to achieve global racial and gender equality through social innovation.