Structuring your startup

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Structuring your startup


MOST STARTUPS HAVE ALMOST THE SAME SCRIPTED BEGINNING TO their supposedly fairytale journey. Someone pitches to his friends an idea that is going to be a game changer in the market, and they start a company in a small room, or even in a garage, as Sasto Deal did. The usual gameplan in this phase is for the team members to share among each other all the responsibilities. The structure is flat and everyone is willing to and must play as many roles as possible because resources are scarce in the beginning. As Marc Barros, cofounder of Counter, puts it: “Organisational charts are pointless.”

But as the fairytale hums along, things change: New members are added to the team, a new office space is required, new issues arise. The scope of everyone’s responsibility and roles grows larger, and now everyone cannot be doing everything. That is when Marc Barros’ management principle ceases to be applicable—organisational charts and structures would not be pointless at this point. You can’t build forever without a structure.

But your venture’s getting to that point where you have to think about organisational issues is actually a positive sign of growth. And startups must learn to deal with such issues.

Though A Startup Is A Part Of Some Industry, Every Startup Is Unique And Thus Demands A Structure That Fits It Best


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The Howard Roarkian structure

Though a startup is obviously part of some industry, every startup is unique and thus demands a structure that fits it best. Just because others are using a certain structure does not mean that that structure will work for your startup too.

So when creating the management structure, startups need to see how each team member can serve their own unique purpose for the purpose of the startup’s entire structure. The structure is not meant to be just a facade. It should help your startup perform better. That is, it must enable the efficient management of the entire team and sub-teams within the startup, facilitate the delegating of individual tasks, improve co-ordination and help hold each team member accountable for their tasks. This is where the organisational chart comes into the picture. The chart should not be limited to boxes in an Excel Sheet, but must become the basis on which the company is managed. It should not only align your organisational goals but also help you communicate those goals to your entire team.

According to ‘Building Sustainable High-Growth Startup Companies: Management Systems as an Accelerator,’ an award-winning research paper based on a study of 78 Californian companies, by three scholars working in three universities across the globe, “Young companies that adopt structured systems to run their operation in their early years grow three times faster than their competitors and have a lower rate of CEO turnover.” Meaning, it’s imperative that startups seriously think about their organisational structure before it’s too late.


Splitting the roles

As your company evolves, there will come a time when the core team members will have to become masters of specific domains, after having played the role of a jack of all trades. In a company with multiple cofounders, the cofounders’ skills probably complemented each other during the company’s early days—and that is why each member would have taken up the role that s/he was good at. With the custom team structure, leaders, managers and workers need to be differentiated. In a startup, it’s often the other employees who become the workers, while the founders become leaders and managers. But while the founders’ roles must still remain fluid, care must be taken to ensure that their roles don’t shade into each other’s territory, thus impeding everyone’s growth. As such, the leaders and managers can focus on the bigger picture while also developing more skills that help them fulfill their roles better.




Startups often neglect the process of documenting their operating procedures. Indeed, founders have been known to boast about “having everything in the head.” But while you are focusing on the bigger picture and delegating tasks to subordinates, you need to make sure that they are able to replicate the same level of performance and follow the same process, because employees come and go; furthemore, you cannot always be onsite to oversee every procedure. “If you don’t write it down, you don’t own it,” writes Michael E Gerber in the book The E-Myth–Why most businesses don’t work and what to do about it.

For a growing startup, it becomes necessary to identify and monitor repeated tasks, and then document them. You will then be able to keep the processes on track, analyse the processes and make improvements to create even better output. Doing so also reduces training time for new employees.

“Young Companies That Adopt Structured Systems In Their Early Years Grow Three Times Faster Than Their Competitors And Have A Lower Rate Of Ceo Turnover”



Adjusting to change

As your startup grows, you will also start noticing significant gaps in the structure that are limiting your startup from performing to its real capacity. These gaps affect the key components of your business, including your sales growth and customer service. This is when you must realise that you need to add professionals to fill the gaps.

On the flipside, as your startup grows, you will be recruiting even more employees with specific experiences and skills. Startups then need to cluster groups of employees with similar skills and incorporate them in the larger organisational structure. At times, they can fit directly into the structure, but often, you’ll need to adjust the structure to integrate the incoming members. Periodic evaluations of the structure then become necessary to figure out if a change is required.

And yet..


These kinds of decisions should not be subjectively made by the core members. To make things objective, metrics should be set up right from the beginning. The metrics should be easy to collect, related to your goals and actionable. “Metric numbers are only as valuable as their ability to drive decisions and change,” says Paul Arnold, an angel investor and advisor.

It is rare that startups hit upon the right structure from the get-go. That’s why startups need to keep experimenting continuously—until they find the right framework for them that will allow every player to continue to grow and grow the company as well.

* First published in M&SVMAG 



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Guest Monday, 19 March 2018