Understanding Business Process Evolution in Digital Ventures

Abstract

Business processes are at each company's core and must be adapted permanently to react to changing markets, substantial growth, or legal regulations. Especially digital ventures have the potential to evolve fast, and consequently, their business processes need to change at the same speed. Two streams of literature have looked into this. Traditional business process management sees business processes, once implemented, as relatively stable. In contrast, digital entrepreneurship literature highlights the inherent flexibility of digital ventures. Based on a multiple case study of five digital ventures, we analyze how entrepreneurs deal with this tension when business processes evolve. Building on entrepreneurial bricolage, we propose two types of resource recombination that we find, namely, usage of existing private resources and re-configuring of resources already being used within the venture. These insights contribute to extending our understanding of the evolution of business processes.

Full text

Understanding Business Process Evolution
in Digital Ventures
Research in Progress
Tobias Wuttke, Thomas Haskamp, Michael Perscheid, and Falk Uebernickel
Hasso Plattner Institute, University of Potsdam, Potsdam, Germany
{tobias.wuttke,thomas.haskamp,michael.perscheid,falk.uebernickel}@hpi.de
Abstract.
Business processes are at each company’s core and must be adapted
permanently to react to changing markets, substantial growth, or legal regulations.
Especially digital ventures have the potential to evolve fast, and consequently, their
business processes need to change at the same speed. Two streams of literature
have looked into this. Traditional business process management sees business
processes, once implemented, as relatively stable. In contrast, digital entrepreneur-
ship literature highlights the inherent flexibility of digital ventures. Based on a
multiple case study of five digital ventures, we analyze how entrepreneurs deal
with this tension when business processes evolve. Building on entrepreneurial
bricolage, we propose two types of resource recombination that we find, namely,
usage of existing private resources and re-configuring of resources already being
used within the venture. These insights contribute to extending our understanding
of the evolution of business processes.
Keywords: digital ventures, digital entrepreneurship, business process manage-
ment, business process evolution
1 Introduction
Digital ventures are professionally funded and young firms that work on digital market
offerings (Lehmann et al. 2022). They are characterized by their ability to expand their
user base at an outstanding pace by drawing on and adding digital infrastructure (Huang
et al. 2017). Examples such as Amazon and Google were able to grow to a scale that
took industrial companies decades to reach (Huang et al. 2017). However, the rapid
scaling of digital ventures presents unique organizational challenges, such as managing
rapidly growing revenue and headcount, that incumbents do not face (Tumbas et al. 2015,
Lehmann & Recker 2022). To meet their new organizational challenges, digital ventures
are forced to formalize and evolve business processes from the ground up (Lehmann &
Recker 2022). Traditional business process management (BPM) is based on the careful
modeling of business processes (Baiyere et al. 2020). With that, it aims to improve
processes’ efficiency and quality in a relatively stable environment (Recker et al. 2009).
However, this stability contrasts with the flexibility that potentially poses the competitive
advantage of digital ventures (von Briel et al. 2017). This means digital ventures are
caught between structure (BPM perspective) and flexibility (digital entrepreneurship
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perspective). While both perspectives advance our knowledge of how business processes
and digital venturing unfold, current research only began to explain the dynamics
behind the evolution of business processes in digital ventures (Tumbas et al. 2017b).
Moreover, this knowledge would assist entrepreneurs in making informed decisions
regarding creating their business processes and aligning them to their rapidly evolving
requirements. This advances our understanding of balancing structure and flexibility
in business processes to facilitate entrepreneurial growth instead of hindering it. Thus,
we define our research question as follows: How are digital ventures developing their
business processes by relying on digital technology in their early phases? We build
on a case study with multiple digital ventures from a startup accelerator to address
this question. Our study shows different practices of how early-stage digital ventures
improvise to create business processes on top of low-specificity digital technologies.
2 Related Work - Business Processes in Digital Entrepreneurship
We investigate business processes in the context of digital entrepreneurship, which
Davidson & Vaast (2010) define as pursuing new venture opportunities presented by
new media and internet technologies. Concerning the current understanding of business
process evolution in digital ventures, Tumbas et al. (2017a) find that “born digital”
ventures depend heavily on digital technologies during periods of rapid growth. In
another study, Tumbas et al. (2017b) report on the importance of digital technologies
for various purposes, including establishing knowledge flows, allowing for transparency,
reducing redundancies, and formalizing business processes. Furthermore, von Briel et al.
(2017) explore how digital technologies enable new venture creation processes and
introduce the concept of specificity, which measures a digital technology’s adaptability
and malleability. They suggest that highly specific digital technologies increase the
potential for compression and conservation mechanisms, which reduce time and resource
requirements but decrease the potential for combination and generation mechanisms,
which create new artifacts, such as devices, functionalities, and business models.
For our understanding of the phenomenon of business process evolution, we draw on
a definition from the BPM literature, which understands business processes as “as a set
of activities performed in coordination in an organizational and technical environment.
These activities jointly realize a business goal” (Weske 2012, 5). Their management
–BPM – oversees “how work is performed in an organization to ensure consistent
outcomes and to take advantage of improvement opportunities” (Dumas et al. 2013, 1).
Notably, Baiyere et al. (2020) analyze how the logics of BPM change when a venture
enters a digital transformation. They identify the careful modeling of business processes
(process logic), the design of process-aligned IT infrastructure (infrastructural logic),
and procedural actors (agential logic) as dominant for traditional BPM.
One specific lens to understand business process evolution in digital ventures is
entrepreneurial bricolage. Baker & Nelson (2005) describe the concept as “making
do by applying combinations of the resources at hand to new problems and opportu-
nities” (Baker & Nelson 2005, 333). Its idea stems from the field of visual arts and
describes the creation of works of art from a collection of different resources available
to the artist. Lévi-Strauss (1967) took the term bricolage and applied it to the intellectual

realm. In the spirit of improvisation, the bricoleur gathers resources that can be used in a
later scenario. Even though the bricoleur does not know how, the collected resources
will eventually affect the final solution (Matthews 2021). LeLoarne & Maalaoui (2015)
applied the bricolage lens to analyze how high-tech entrepreneurs model their business
processes, finding that they rely on a trial-and-error approach. Similarly, Karanasios
et al. (2022) applied the bricolage lens to the digital transformation of micro-enterprises
with significant resource constraints, concluding that these enterprises utilize techniques
such as re-purposing, appropriating, and improvising to make the most of their limited
resources. Baiyere et al. (2020) also found this improvisational spirit in the context
of business process enactment in incumbent firms. The authors find that employees at
companies undergoing digital transformation are implementing processes by improvising
with already available tools, such as Microsoft Excel.
3 Research Approach - Multiple Case Study
Since the evolution of business processes in digital ventures is a recent phenomenon
that should be investigated in its real-world context, we rely upon a multiple case study
to investigate the evolution of business processes (Yin 2009). Our cases are startups
from an accelerator in their seed phase following a Software-as-a-Service (SaaS)-based
subscription business model. Our embedded unit of analysis includes the changing hiring,
sales, and product development processes of the startups in which digital technologies
presumably play a crucial role. Table 1 gives an overview of the participating ventures.
This study’s primary data collection method is qualitative interviews (Schultze &
Avital 2011). We triangulate the interview data with public information and startup-
internal materials such as slide decks (Yin 2011). To analyze our data, we rely on the
Gioia methodology (Gioia et al. 2013), which means that we coded the transcribed
interviews over multiple rounds in which themes emerged inductively.
Table 1. Companies participating in the study
Type of product / service Founding year Interviewee (and ID)
SaaS and hardware solution for machine error monitoring 2020 CEO (I01), developer (I02)
SaaS app for dementia prevention 2021 CTO (I03)
SaaS solution for product management 2021 CEO (I04)
SaaS solution to book workplaces in hybrid teams 2019 CTO (I05), admin (I06)
SaaS solution to connect music producers and loop creators 2019 Team lead (I07)
4 Preliminary Findings
This section presents the preliminary findings of our study on the evolution of business
processes – hiring, sales, and product development – in digital ventures.
Regarding the hiring process, the digital ventures within our sample relied on differ-
ent process variations based on the work division of the founding team. For business-
related roles, the CEO usually conducted one or two interviews (I01, I02, I04), while

for technical roles, the CTO conducted multiple interview rounds, including coding
challenges (I01, I02, I03, I05). Digital tools like Zoom, Microsoft Teams, and Notion
facilitated the hiring process, while all ventures used LinkedIn to search for candidates.
Only one venture used Personio for its HR processes (I05, I06). One software developer
mentioned receiving payslips via WhatsApp (I02).
The sales processes of digital ventures are tailored to their target audience. For
businesses-to-business sales (I01, I02, I04, I05), a basic sales funnel is in place, typically
supported by a customer relationship management system (I04, I05) or Notion (I01,
I02). For business-to-customer sales (I07), Notion is used to streamline sales processes.
However, I03 is an exception, as its venture builds an app designed for patients, while
its sales target insurance funds. Video conferencing tools such as Zoom or Teams are
commonly used for customer calls. In one interview (I04), a respondent mentioned using
their sister’s university Zoom account, which provides a premium account for free.
The product development processes of the ventures in our study were predominantly
based on agile software development. All ventures used GitHub for source code version
control and relied on Kanban boards to track progress. Some ventures (I03, I04, I07)
utilized Notion, while others (I01) used the product management app Shortcut. One
venture (I01, I02) implemented a unique communication strategy using WhatsApp to
streamline the development process, specifically for merging pull requests on GitHub.
To unpack the business process evolution, we leveraged the concept of entrepreneurial
bricolage, which revealed two types of business process bricolage with digital technolo-
gies: usage of private resources and re-configuring existing resources within the venture.
The first type of business process bricolage we identified was visible in two of our
cases. Table 2 gives an overview. Interview I02, for instance, provides an example of
Table 2. Usage of private resources for business process execution
Context Quote
Use of private messaging app WhatsApp to send
payslip to employees as part of HR processes
"And apart from that, I somehow get my payslip sent via
WhatsApp every month. (Laughs)" (I02)
Use of private short messaging app WhatsApp to
inform developers about the progress of their
developments in GitHub (venture’s source code
version control system) as part of the product
development process
"Cooperation [is] sometimes a bit difficult, because
people are not there full time and logically don’t
always have an exact plan of what’s going on. That’s
why we introduced at least the other day that [the founder]
always writes in our WhatsApp group when any pull
requests have been merged, so that we at least have a rough
overview of what’s going on somehow at the moment". (I02)
Use of the CEO’s sibling’s Zoom account
to save costs
"I’m using my sister’s Zoom account. She still studies and
gets the premium account for free." (I04)
the usage of private resources in the HR process. A software developer working in a
startup told us that he receives his payslips via WhatsApp messages: “And apart from
that, I somehow get my payslip sent via WhatsApp every month” (I02). The founders
needed a simple way to communicate with their employees, so they chose to use a private
messaging app that was widely available and accepted. When hiring the first employee,
they needed to send out payslips (making do) and find a solution by re-purposing their
existing resources. They could use the app they already had in place (re-combination of

resources) to send out the payslips conveniently and effectively. This approach allowed
them to make the most of what they had rather than invest in new tools or processes.
The second type is re-configuring existing resources within the venture. Table 3
lists our findings. An example of this approach is a venture using the collaborative
Table 3. Re-configuring existing resources within the venture
Context Quote
Use of Microsoft Teams (team
communications app) to track
working hours as part of the
payroll process
"And Microsoft teams we still use sometimes, for the stand-ups, and we have this,
yeah, timesheet-like thing in there, so you kind of record how much you work." (I02)
Use of Notion (note-taking app)
to create and host educational
content for employees as part
of the product development
process
"[...] because people have often asked me, hey, how do I do this now, I don’t know
how to do it. And before I sit down with people every time for a meeting and explain
to them for three quarters of an hour how it works, I thought, you can just make a
video explanation of how you do it. And then you have automated it a bit. It’s actually
working quite well so far, [...] a bit of an education tool." (I03)
For all new business processes:
If a new process needs to be
added, Notion and existing
Notion templates are used
and adapted to support it
"Notion is our operating system." (I07),
"Notion has templates that we adapt to our needs." (I07),
"Notion’s functions are not narrow, like Word or PowerPoint, but rather broad." (I07)
Use of Notion (note-taking
app) to guide employee
onboarding as part of the
HR process
"The entire [company] intranet is hosted on Notion. [...] When you start here, all
the steps are described. But also the individual teams, Tech, Customer Success,
Business, Commercial, for example, all have their sides plus input.
FAQs, for example, are also on Notion for the individual teams." (I06)
note-taking app Notion since its inception (I03). As the company expanded and hired
more employees, it faced the challenge of teaching new employees how to use its
content management system (CMS) to upload content for display in its app (making
do). This became too time-consuming for the CTO. Since they face resource constraints,
he decided to leverage their existing Notion workspace and created a page with a short
video tutorial explaining how to manage content using the CMS to address this issue
(re-combining existing resources for a new purpose): “[...] people have often asked me,
hey, how do I do this now [...]. And before I sit down with people every time for a
meeting and explain to them for three quarters of an hour how it works, I thought, you
can just make a video explanation of how you do it. And then you have automated it a
bit. It’s actually working quite well so far, [...] it’s a bit of an education tool” (I03). This
solution allowed the company to make the most of its existing resources and re-purpose
them for new use rather than investing in new tools or training programs.
5 Discussion and Outlook
Our findings indicate that digital ventures use bricolage to create business processes
using digital technologies. This involves (1) usage of existing private resources or (2)
re-configuring existing resources within the venture.
Regarding (1), we can confirm the findings of Karanasios et al. (2022), stating
that entrepreneurs are using private resources such as micro-loans to afford business

purposes. Regarding (2), however, we noticed that digital ventures seem to use digital
technologies with low specificity to arrange business processes (von Briel et al. 2017).
Entrepreneurs in our sample utilized versatile tools such as Teams and Notion for various
purposes. While Teams is primarily intended for video calls and text messaging, it
is also used to track employees’ working hours (I02). Notion, a note-taking app, on
the other hand, serves as a Kanban board for product development and as a tool for
onboarding employees during hiring (I03). Following the argumentation of von Briel
et al. (2017), such tools should have a low potential for enabling compression and
conservation mechanisms, which might affect their potential to improve organizational
efficiency. However, low-specificity digital technologies have a high potential to enable
generation and combination mechanisms, making them appropriate resources for the
bricolage of business processes. Hence, according to von Briel et al. (2017), early-stage
ventures rank efficiency below flexibility when choosing low-specificity tools. Building
on this, we conclude that low-specificity technologies are enablers of business process
bricolage in early-stage ventures: The lower the specificity of digital technology, the
higher its potential to be used in business processes bricolage in early-stage digital
ventures. This proposition is particularly interesting given that the literature on BPM
emphasizes how technology provides a structure for organizing business processes, as
exemplified by IT infrastructure alignment (Baiyere et al. 2020). However, in many cases,
implementing new digital tools may require actors to adhere to a pre-determined process
imposed on them through the use of new technology. In contrast, early-stage digital
ventures appear to operate differently. Thanks to the low specificity of digital technology
and its editability (Yoo et al. 2010), digital entrepreneurs can leverage digital tools to
design and re-organize their business processes in a flexible and improvisational manner.
This approach enables them to manage the tension between structure and flexibility. By
embracing bricolage, digital ventures construct loosely-structured business processes
(BPM perspective) by experimenting with editable technologies to maintain flexibility
(digital entrepreneurship perspective). In this finding, we see a clear link to the concept
of organizational ambidexterity (March 1991), as digital ventures take initial steps
towards structured processes (exploitation) while leaving room for experimentation and
improvisation (exploration). Future research could leverage the process-technology-
fit framework by Ahmad & Van Looy (2022) to investigate the alignment between
technology and business processes in digital ventures at various developmental stages.
This study would provide insights into the changing preferences of digital ventures for
low-specificity tools as they grow and mature.
Our preliminary findings initially explore how digital ventures apply bricolage to
manage their business processes. We examine three key business processes in digital
ventures: hiring, sales, and product development. We have chosen these processes
because they are essential for the entrepreneurial growth of digital ventures: a digital
offering needs to be developed and sold by employees who need to be hired. Therefore,
our results are limited to these processes, while others may be present in early-stage
digital ventures. In the next phase, we plan to collect additional data from the cases,
including digital trace data generated by digital ventures. As our early findings are based
on initial observations of our digital venture cases, they are meant to stimulate discussion
rather than being considered definitive or broadly applicable results.

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