欧洲
2013/02/20

Innovative in Many Ways

What makes Berlin-based startups so successful and how can medium-sized businesses profit from them?

LET'S LOOK AT THE DYNAMIC DEVELOPMENT of the business environment in Berlin over the past few years. In particular, companies from the internet, music, gaming, software and medical technology sectors have established themselves very successfully on the market and have a major influence on it. These are becoming more and more interesting for established players and make up an essential part of their M&A strategy. What makes these companies so successful that they are paid considerable purchase prices and receive capital in the millions? Which success factors can they optimally design and how can medium-sized companies learn from them?

Strategy & Markets Went Global

Globalization, which has gained strategic importance for every company today, does not stop at startups. Companies, in which an internationalization strategy is part of the business model and can be implemented quickly, have proved particularly successful. Startups are often globally active right from the start. Today, games are developed simultaneously in over 30 languages for computer, browsers and mobile phones and adapted to the respective national needs. For globally active customers, software must be compatible with every conceivable system landscape. Internet companies and business plans are only supported and financed if they are internationally scalable.

Networks and Partnerships are Part of the Strategy

Young companies are already looking for strategic partners and networks at an early stage. Whether they are looking to occupy global markets or expand their range of services, there are partners who fit strategically and support entrepreneurial development. A decisive factor for young companies is the speed - time to market - with which their sales potential is secured as quickly as possible. Capital links or a merger with a competitor are not taboo if future synergies, innovations and growth can only be achieved together in a timely manner. 

Dynamic Product Development and Innovation in New Markets

Startups often define completely new markets. They serve contemporary niches and innovatively awaken customer needs. Of course, it is essential to calculate demand correctly and systematically drive it forward. The competition in the initial phase is constantly present. This requires flexible, fast action and creative thinking: constant review and adaptation of the offer and permanent interaction with potential customers.

Stringent Processes & Controlling Using Customer and KPI Analysis

A startup works with flat hierarchies and fast decision-making processes. With increasing size, it benefits from organizational structures and processes that give the necessary innovation culture freedom and guarantee efficiency and speed. The most successful startups in Berlin are characterized by a very thorough and regular analysis of their customer needs and key performance indicators (KPIs). Supported by the nature of their business, they often have access to daily and hourly data on customer behavior, which they consistently use to optimize their offerings and processes.

Staff and Culture are Innovative and International

The capital is regarded as an international melting pot for young, creative people with outstanding expertise. Berlin therefore offers the most attractive location for startups in Germany. Startup employees are often younger than 30 years. They are familiar with new hardware tools, software, cloud solutions, etc.. An employee from Moscow has the same career opportunities as someone from Baden-Württemberg or Hessen. English is the company language in many companies. Support with bureaucratic registrations or the search for accommodation up to social integration outside the professional environment are important success factors and part of corporate responsibility in recruiting the best minds.

Financing with External Partners

Startups are mainly financed with the help of external financing partners. Although venture capital investments in 2011 amounted to only EUR 690m or 0.027 percent of the GDP, Berlin as a location in particular benefited from this. The startup companies have been accustomed to communicating and negotiating with external investors from the outset for years. The sale of company shares as part of entrepreneurial development is a permanent process to secure growth and achieve something "bigger" that cannot be achieved alone. The startups pragmatically accept that it can make sense to give away something of the cake if you want to make it big quickly. A not insignificant side-effect is that the usually required provision of company information for financing partners requires the development of a good controlling and management information system, which increases the quality of corporate management.

How Can Medium-Sized Companies Optimally Design their Success Factors?

Startups have also become interesting for medium-sized companies, as suppliers, as development partners, as marketing partners or as examples of successful entrepreneurial management. The proximity and points of contact to the startups will continue to grow. In particular, their intensive and dynamic network and partnership strategy can be considered worthwhile for SMEs. The battle for the best talents from home and abroad and the further internationalization of the workforce does not stop at SMEs and requires organizational and cultural adjustments. The development of new innovative markets, the intensive analysis of customers and their needs remains a permanent task. The raising of growth capital by third parties and thus the opening of the shareholder circle is often perceived as painful by medium-sized companies, but can also be a key to success if the entrepreneurial development can be raised to a higher level. And last but not least, startups are becoming more and more important as suitable takeover targets for medium-sized companies, which not everyone had foreseen until a few years ago.

Summary

Successful startups have a growth curve that today's medium-sized companies cannot match. The success of startup companies in Berlin and other regions is no coincidence. That's why they must have done a lot right in a very short time. Innovation, time-to-market, internationality, consistent customer focus, growth financing and the willingness to enter into strategic partnerships at an early stage are key success factors that can also be highly relevant for many medium-sized companies.

The article was originally published in the special edition "Hauptstadtregion Berlin-Brandenburg" of the magazine Unternehmeredition in February 2013.

 

 

 

Header Pic © pickup via Fotolia