Researchers in Lithuania have been working to identify the factors that make innovative companies successful. These success factors are not necessarily what one might have expected.
One might naturally think that the key success factor for a startup would be the creative idea it started out with. For Whatsapp, that idea was free instant messaging, for Airbnb the collaborative economy as applied to rented accommodation, and one could cite dozens of similar examples. But is having a novel idea really the key to success? Research carried out at the Kaunas University of Technology (KTU) in Lithuania suggests that this is far from being the only factor. Kaunas University of Technology (KTU) researchers led by Professor Asta Pundzienė, have looked at 450 Lithuanian enterprises categorised as ‘innovative’ and ‘non-innovative’, conducted extensive research on the impact of their dynamic capabilities on their business competitiveness, and tried to pinpoint the key success factors when it comes to innovation. Their results clearly show that starting out with an imaginative idea is far from being the only consideration. French business information website le Journal du Net has even gone so far as to list the startups which failed in 2014 despite setting out on the basis of a highly original idea.
Novelty of secondary importance
The KTU team highlight the extent to which many other factors enter into the equation that finally determines whether a young innovative company will succeed or not. Their research shows that many Lithuanian enterprises are not sufficiently active in creating local and international collaboration networks. Among the companies studied, those that had enjoyed most success had made efforts to collaborate with research institutions and other companies worldwide, plus the local communities. Asta Pundzienė argues that this dual focus is a major determinant of success. She also stresses the importance of teamwork and personal commitment by employees. “The initiative in those enterprises rises from the employees and not from the management,” Pundzienė underlines.
Risk awareness a vital component
The KTU report also makes a strong recommendation that companies should invest massively in risk prevention before launching an innovative product or service on to the market. Asta Pundzienė points out that while the more novel ideas are likely to generate higher added value, they frequently also carry higher risks. The KTU team reveal that companies which work on a trial-and-error basis, testing out a number of ideas one after another without first performing a proper risk assessment, most often fail. Startups need to understand the importance of taking the time both to explore their novel idea thoroughly and assess the risks and opportunities before launching on the market. This confirms a trend that has already been observed in the Marketing field: risk evaluation is now a major issue for marketers as it is for the majority of entrepreneurs.