How to Build the Ideal Startup Team Structure

If you’ve got a great product to sell and a thriving market, your startup should succeed with flying colors, right? But many such startups fail. But why? Even though they had the perfect product. The answer lies in their startup team structure. It matters more than you think. According to Entrepreneur, 23% of startups fail due to an inappropriate team structure.

To avoid such an unfortunate situation, here’s how you can build the ideal team structure:

Ideal Startup Team Structure – What is It?

A team structure for any business is the collection of organizational departments and the right business leaders. A good team structure will have a defined place for every employee at that startup. Each employee’s position at the company depends upon their skills, roles, duties, responsibilities, and how well they can perform them.

A well-organized team structure places all the departments in their designated working environments, sets up management chains, and ensures smooth communication. Thus, your startup’s decision-making is made easier, simpler, and more effective while the core mission remains intact. 

Importance of an Ideal Team Structure for a Startup

An ideal team structure is more likely to get work done than a sloppy team. You have people who make decisions quickly, show up, and avoid delaying tasks. Thus, your team succeeds. This is why an ideal team structure for startups matters:

• Last longer: Most failed startups blame poor partnerships for failure; thus, only about 80% of startups last a year.
• Smooth communication: When each department is organized where it needs to be, communication becomes smoother, making it easier for everyone to work congruently.
• Wiser spending: A good team structure does not spend unnecessarily and, therefore, refrains from going bankrupt like most businesses.
• Faster decisions: A fine-tuned startup team structure brings about quicker decision-making by employing models like RAPID (Recommend, Agree, Perform, Input, Decide).

What Does an Ideal Startup Team Structure Look Like?

In a startup, especially in the beginning, each member has a say in decisions with a short chain of commands. This changes as the company grows bigger, and when that happens, a more defined structure is required. Such a team structure keeps the startup going without hindering its leanness and efficiency. The ideal startup team structure could be divided into:

• Early Stage (Stage 0)
• Scaling Stage (Stage 1)
• Expanding Stage (Stage 2)

Early Stage (Stage 0)

This stage includes the founding members of the company. Most of the successful startups begin with the foundation including:

• Chief Executive Officer (CEO) is in charge of promoting the business, inspiring the team, negotiating with vendors, and guiding the startup toward its mission and vision.
• Chief Technology Officer (CTO) is in charge of the technical aspects of the business, including hiring developers, building a tech stack, and future planning. Until Stage 1 is reached, the CTO also fulfills the role of Chief Product Officer.

Aside from CEO and CTO, an effective startup team structure also possesses a strong sales and marketing department:

• Sales Department focuses on creating the product’s USP (Unique Selling Proposition) to differentiate it from competitors and sell the product effectively.
• Marketing Department is in charge of branding the startup through content, events, ads, and social media to increase brand awareness and make a name in the market.

The leaders of both these departments start with entry-level or manager roles but could, with time and effort, rise to the positions of Chief Marketing Officers (CMOs) and Chief Sales Officers (CSOs).

Scaling Stage (Stage 1)

The scaling stage comes when the product has gained attraction and stability. Further startup team structure roles include: 

• Chief financial officer (CFO) is in charge of finances, such as daily income and expenditures. More than 18% of small businesses consider hiring a CFO. The CFO’s job becomes apparent when the CEO and CTO get busier and busier in the startup’s initial workload, leaving a place for a finance-savvy person to take the lead in the finance department and monitor the cash flow. 
• Chief People Officer (CPO) is in charge of hiring and bringing in newbies (or experienced personnel) who fit the brand image and its requirements to maintain the efficiency of the business. The CPO ensures everything remains systematically fluent and on track.
• Chief Product Officer (CPO) is in charge of the products’ age and competitive spirit. They not only develop the vision for your products in the long run but also ensure they maintain their profitability and competitive edge.
• Business Development Manager helps build your startup with the CSO and CMO and improve its ROI (Return on Investment) with all clients, new or old.
• Customer Service Manager (CSM) deals with the customer services department. A growing brand’s products will always have some flaws every now and then, so customers will reach out to customer support. Effectively dealing with inquiries and improving customer experience will improve the brand image.

Expanding Stage (Stage 2)

When the scaling part has reached its climax, the ongoing need for improvements and better facilities grows higher. In essence, the developers would need someone for the back-end, someone for the UI, and so on. This means the ideal startup team structure has yet to be completed.

These teams will need to be built to keep the scaling stage going (successfully). A stronger force would likely lead each of these teams: someone on the team with a higher rank and considerable experience, like the CTO or operations team manager: 

• Back-End Team will be the people scribing code that is the backbone of your startup’s product, website, or app. This team includes Back-end developers and Middle-stack developers.
• DevOps Team takes care of the maintenance and optimization of cloud infrastructure for the betterment of user experience and to create scalability in the system. This team includes Cloud Architects, Site Reliability Engineers (SREs), and System Administrators.
• Quality Assurance (QA) Team ensures the quality and performance of all of your brand’s products by putting them through rigorous testing (as feasible) for any bugs, errors, or malfunctions. This team primarily has Analysts and Testers. 
• UX Team consists of developers taking care of front-end development of the product, site, or app to improve user experience. This team comprises User Experience Designers, Researchers, and Front-end developers.

IBM’s Successful Team Structure as an Example

A successful company’s team structure might not be easy to figure out from the outside. However, when success knocks on their doors not once, not twice, but multiple times—their organizational startup team structure becomes an inspiration for all.

Consider the team structure example of IBM. They employ a product-focused team structure that is implemented on specialization. IBM’s teams fell into one of four product-type sections, including:

1. Finance
2. Consultation
3. Software
4. Infrastructure

The subcategories of these departments have mostly driven the company’s success based on function and geographic divisions and departments. Thus, IBM maximizes their company’s efficiency by carefully reaping benefits from it’s seamless team structure. By utilizing each department’s specialized skills, IBM harbors innovation and consistently delivers high-quality products across different industries.

Conclusion

Your startup’s future depends heavily on the team structure you build. The startup would likely fail if the leadership roles (as mentioned in Stage 1) are not handled correctly. In essence, the better the employees, the better the startup’s potential to scale, and vice versa.