UCI Researcher Studies Startups to Find Why Some Fly, Others Flop
Kaye Schoonhoven, who has been studying innovation and high-tech companies since 1979, recently began researching Orange County Internet firms.
Schoonhoven, a professor at the UC Irvine Graduate School of Management, was recruited last year to complement the school’s new focus on information technology management. She established herself as an expert on fast-growing, high-tech companies while she was a professor at the Amos Tuck School of Business Administration at Dartmouth College.
Although she hasn’t yet formed any opinions on OC’s high-tech industry, she is examining 108 U.S. high-tech startups,granted anonymity,to learn what makes them fly or flop.
So what does it take to grow up and be a Microsoft or an IBM?
Schoonhoven doesn’t have a short answer: She’s written an entire book about the subject. But she says one key lies in “the way they’re organized.” That’s not surprising , after all, she studies “organization science,” or how companies are put together. She also is editor-in-chief of the academic journal Organization Science.
Positive Indicators
Schoonhoven does, however, point to several specific characteristics of thriving companies. Some of those include:
n Firms that have developed their technical product within 36 months.
n Firms with a strategic alliance with a larger company.
n Companies that have both a marketing and manufacturing person on the top management team within the first year.
n Companies that are frugal, especially in their start-up years.
n Business-to-business e-commerce companies.
n Companies that are “moderately” innovative, meaning they build on existing technology.
n Companies that have an educated top management team.
The level of innovation in a company depends on the attributes of its “techie” founder, she says, but downplays the importance of “leadership.”
“There’s this mythical belief that somehow leadership is important,” Schoonhoven said.
Employees are driven by their fascination with the work, she said, not because they have a charismatic leader. And new firms aren’t generally founded by a single leader, anyway, she notes. They are created by a management team, and so the makeup of the management team is more important, she said. Companies that get to the market first usually have both a marketing and manufacturing person on their top management team within the first year.
Although Schoonhoven hasn’t worked in industry since 1969, she says that’s not a drawback.
“If you’re in a single organization, you tend to generalize your experience,” she said. But in the academic setting, there is a freer flow of communication between the researcher and the company, which makes it easier to study a large number of companies.
A Tough Market
OC will be a tough study because there are many high-tech companies to sift through, she said. It’s a matter of gathering and identifying a list of OC high-tech businesses from the state of California, then looking for growing companies and companies that intend to grow big. She says she will have a grasp of the OC market by later this year.
In addition to research, Schoonhoven writes books on organization, strategy, innovation and entreprenuership, and teaches organization and strategy classes at UC Irvine. In April, she will teach a new business planning and competition course. n
