Choosing The Right Startup Organizational Structure
Startup organizational structure is generally the organizational structure where the possible operations, communication within the team and management processes of an enterprise are planned and usually the distribution of tasks, authority limitations and communication styles are determined in advance thanks to this structure.
It is more difficult for teams that are deficient in startup organizational structure to continue successfully in the long term. Today, many companies worth millions of dollars have created a planned and detailed organizational structure during their establishment phase.
The creation of the most effective startup organizational structure depends on many different factors. It varies depending on the size of your company, its field of activity, mission, and vision.
Startup organizational structure is very important for teams to work more efficiently and to manage workflows on a good communication plane.
If a team does not spend energy on such a structure before incorporating, it may experience communication problems, uncertainties in the hierarchy and operational inefficiencies in the future.
What Is A Startup Organizational Structure And Why Does It Matter?
The organizational structure of a startup team covering the period from the beginning of the project to incorporation is called the startup organizational structure.
Usually, leader definitions, task distribution, authority limitations, and other decision-making mechanisms are created within this structure.
Thanks to the organizational structure, which is decided and created with the approval and cooperation of all startup teams, it is possible to manage the work in a balanced way in the long term.
At this point, startup teams with deficiencies are more likely to encounter negative results such as decreased operational efficiency, communication problems within the team and downsizing.
However, projects that have a detailed and well-prepared startup organizational structure from the very beginning under the leadership of leaders can be more resilient in the difficult conditions of the sector.
No matter which sector you are a participant in, it is not easy to manage startup projects in today’s conditions. In markets where competition is high, turning your idea into a real business requires both patience and team spirit.
If you do not have a good organizational structure from the very beginning, you may face negative developments within your team.
Today, the vast majority of globally successful companies that have reached millions of dollars in value have managed to establish an advanced startup organizational structure at the startup stage.
Types Of Startup Organizational Structure Explained
Although the most effective startup organizational structure varies depending on the sector you are in and the size of your business, it is possible to talk about different organizational structures.
We know that there are 4 different types of startup organizational structures in today’s modern world. The first of these is the functional structure. In this organizational structure, all work tasks are distributed according to the areas of expertise of individuals or teams.
In the matrix structure, which is another popular startup organizational structure type, employees can both continue their tasks related to their expertise and work in project-based teams.
We know that startups, especially in the fintech field, have created an organizational structure with a matrix structure.
In another popular startup organizational structure called the flat structure, the hierarchy is minimal, while decision-making and implementation processes are completed in a more practical way.
The last organizational structure is the hierarchical structure. In this model, authorities are generally limited and roles are distributed more clearly within the startup team compared to other types.
How To Choose The Right Startup Organizational Structure?
Choosing the most suitable one for you from these four basic startup organizational structures depends on different factors.
The determining factors for choosing the most suitable startup organizational structure are your company’s growth potential, current size, financial goals, growth rate, flexibility tolerance in decision-making and implementation processes, efficiency of workflow, operational harmony, and internal communication dynamics.
However, it is also possible for a successful startup project to create its own special and unique startup organizational structure independent of these factors. Since each team is dependent on different dynamics, it is also possible to create different types of organizational structures.
However, it is still very important to distribute the roles for long-term success. Many globally operating businesses have faced the danger of collapse during the startup phase and have lost energy and time due to communication problems within the team.
However, the inspiration taken from such stories is that young startup teams clearly define their roles and make competent role distribution according to experts in the field.
When such an organizational structure is established, possible problems will not completely complete the project and will increase the resistance in highly competitive markets.
Benefits Of A Well-Defined Startup Organizational Structure
Thanks to a well-established and clearly established startup organizational structure, the startup team can face many advantages. Among these, increasing operational efficiency is one of the most important.
In teams where the division of labor is clearly and effectively distributed, the long-term success of the startup project is higher since everyone solves problems related to expert subjects in their field.
In the globalizing and rapidly digitizing economy, startups can evaluate the positive aspects of conducting international operations at an early stage thanks to a good organizational structure.
When we consider that service and product exports are one of the important issues on the agenda of our modern world, it is possible to catch a good opportunity in this area with this organizational structure.
It has become much easier for well-established companies as well as startup companies to conduct global operations compared to a few years ago, and although it is encouraged, almost all of them have a good organizational structure.
With the competence of digital transformation processes in bringing consumers together, serving customers from different countries has greatly improved compared to a few years ago.
At this point, it is necessary to understand the risks and possible consequences well and to consider the organizational structure elements before expanding abroad.
During the interviews with potential investors, in addition to questioning the presence of the startup company in growing international markets, international operation and customer opportunities create a good investment potential, but these are possible with a good startup organizational structure.
In addition, in a well-established organizational structure, the workflow and decision-making mechanisms work without any problems. This results in better team harmony and cooperation.
If you work in a poorly defined organizational structure, it will be more difficult for you to adapt to both the team and the project.
If you want your startup project to grow and turn into a real and profitable business model, you are expected to allocate energy and time for the startup organizational structure, especially if you are a leader, regardless of the sector you are in.
Common Mistakes In Setting Up A Startup Organizational Structure
Although startup organizational structure is an important issue for startup teams in almost every sector, we cannot ignore that some common mistakes are made from time to time.
Especially when establishing the organizational structure, some small negligences can be overlooked by many startup teams or leaders.
Unfortunately, in work teams, either a very flexible or a very rigid structure is usually determined. The form of this structure is mostly determined by the reflexes of the leaders. This is a common mistake when establishing a startup organizational structure.
The important thing is to find the optimum setting that is flexible but not too loose, rigid but not boring by the team dynamics. Otherwise, it becomes very difficult for the startup project to be long-term.
Unfortunately, there is no long-term project story in startup teams where roles and responsibilities are not clearly defined. Teams need to declare their areas of expertise during the startup organizational structure establishment process.
In this way, there will be no problems in both operational efficiency and communication within the team. However, unfortunately, many entrepreneurs can cause merit problems by claiming to be experts in every field.
How Startup Growth Affects Organizational Structure?
Although the establishment phase of a startup involves many difficulties, it also brings many difficulties during the growth period. We have witnessed many times that teams without a good startup organizational structure disintegrate, especially during the growth period.
If things are going well in a startup project and financial growth is experienced, it is an essential skill for that team to be connected to the startup organizational structure. A more flexible structure may be possible during the establishment phase and when the teams are smaller.
However, when the business grows, a hierarchy must be created. If there is no clearly defined hierarchy within the organizational structure, it is not possible to manage the startup project healthily.
As the number of teams increases and operations expand, management wants to become more layered. Management may be easier with project-based or department-based solutions.
The distribution of roles at this point should be made according to the elements of the startup organizational structure. Unfortunately, an unhappy ending awaits you in a clearly defined task distribution and hierarchy: bankruptcy.
Flat Vs. Hierarchical Startup Organizational Structure
The most popular types of organizational structures, flat structure, and hierarchical structure, have many different aspects. One may be more suitable for different teams than the other. In a flat structure, decision-making, implementation, and workflow mechanisms usually work quickly.
However, employees or team members take on simultaneous tasks and responsibilities instead of a single task. Usually, the startup organizational structure of small, mobile or dynamic startup projects is established in the form of a flat structure.
However, a hierarchical structure is a type of startup organizational structure that is needed when the business grows. Leadership roles are clearly defined in this structure. Growing or already grown startup projects should create a hierarchical structure instead of a flat structure.
Thanks to an organizational structure created in this way, it can be easier to combat the challenges of growth in the sector.
The Role Of Team Dynamics In Startup Organizational Structure
When creating a startup organizational structure in a startup project, team dynamics are one of the most important determinants. Directly following universal standards and recommendations may not always be a good choice.
Different teams contain different dynamics, and this is important for creating a detailed organizational structure. If there are experts in different areas in a team, the hierarchical structure and task distribution are more successful.
However, in a startup project that is concentrated in a single area, disruptions may be seen in other operational areas. In order to balance this, a unique organizational structure should be created by taking team dynamics into account.
Different team members may have different competencies and skills. It is among the responsibilities of leaders to bring these to the forefront in the startup organizational structure creation process.
Each individual has a different contribution style. It is very important to produce customized solutions to get the maximum efficiency from everyone. The main factor that shapes this process is team dynamics.
Startup Organizational Structure For Remote And Hybrid Teams
Especially after the pandemic, many different working models have emerged in the world.
Especially in digital fields such as fintech, there are many successful projects where team members never meet physically. This is very normal in today’s digital world where every transaction or operation can be completed digitally.
In addition to the remote model where all operations are carried out digitally, the hybrid model where some days are managed digitally and some days are managed physically has also been a popular business model in recent years.
The development of today’s digital communication solutions makes startups suitable for both models.
In order to create the most efficient startup organizational structure, different special dynamics such as remote, hybrid, office work should be taken into consideration and special solutions should be produced for special conditions.
Future Trends In Startup Organizational Structure
The future seems to shape the startup organizational structure issue, as it does in every field.
The increasing number and impact of digital communication tools are reshaping the organizational structure process by increasing flexibility. Today, many startups that have been able to transform into successful business models are managed entirely through digital environments.
This new world is also making old and traditional startup organizational structures obsolete. The creation of modern organizational structures should not be independent of the dynamics of the new world.
In a world where processes can be managed entirely digitally, establishing an innovative organizational structure that is suitable for working dynamics is just one of the new responsibilities of startup team leaders.
See you in the next post,
Anil UZUN