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Four scenarios for digital start-ups to navigate uncertain years ahead
Existing platform businesses, such as e-commerce, may need to face the hard truth of the need to continuously maintain cost efficiency in their current activities.
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Start-up talks: President Joko “Jokowi” Widodo briefs the audience at the opening of State-Owned Enterprises (SOEs) Start-up Day 2022 on Sept. 26, 2022, at Indonesia Convention Exhibition (ICE) BSD City in Tangerang, Banten. (Press and Media Bureau, Presidential Secretariat/Muchlis Jr.)
T
he year 2022 was a tough one for digital start-ups in Southeast Asia. Many dealt with financial turmoil and laid off workers to survive. The storm is not over, though. Digital start-ups still face an uncertain future.
How do digital start-ups navigate the uncertain years ahead? We may utilize scenario analysis to answer this question.
As the future is uncertain, scholars and practitioners have been using scenario analysis to decipher how it may unfold. Scenarios are essentially stories about plausible futures. Decision-makers often make use of these stories to conduct stress tests of their existing strategies. They are then able to adjust their existing strategies so they will be “future-proof”.
Many successful companies have utilized scenario analysis and embraced scenario thinking in decision-making processes. Scenario analyses are usually started by identifying the major driving forces that may shape the future. These driving factors may determine how the future unfolds.
Let’s see what the driving factors are in the digital start-up environment.
Two major driving factors that are often identified as the most uncertain yet have significant impacts on the survival of digital start-ups are the flow of funds from investment or sales and the technology’s acceptance in the market.
A steady flow of funds – from investors or from sales of services – is important for digital start-ups to sustain their activities, and this is often affected by different factors, such as the economy, political issues, as well as the investment appetite of the investors. Every cofounder wishes to have stability, yet none of them know for sure whether they would be able to secure a long-term flow of funds in the future due to the rapid changes in the technology sector.
