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4 Tips to Build your Perfect Startup Structure

4 min read

How a startup is organized plays a crucial role in determining its success, particularly in the development team – a fundamental unit of any IT startup. An ill-considered organizational structure plan leads to miscommunication, downtime in the business cycle, and general sluggishness. 

Therefore, investing time and effort in crafting an effective startup organizational structure is paramount. JetRuby began its activity as a startup, so we know. To illustrate this article, we’ve drafted a perfect startup structure frame for a young and technology-driven startup.

Illustration1 development
Perfect startup structure

Core Startup Organizational Structure:

At the core of a startup’s organizational structure are two critical positions: the Chief Executive Officer (CEO)  and the Chief Technology Officer (CTO). This role can also belong to stakeholders or founders. These key roles are leading in the startup structure. 

Let’s delve into the structure of units. The development team is divided into four units, each assigned specific responsibilities. We’ll explore these teams and their roles within the startup structure below:

  1. UX Team:

The User Experience (UX) team is vital for nearly every startup, as it focuses on creating an intelligent, customer-centered, and aesthetically pleasing visual design to offer users the best possible experience. This team closely collaborates with other units to deliver the final work. The proposed model for the UX team unit combines the efforts of the following members:

  • UX designer
  • Frontend developers
  • Team leader.

A UX researcher can join the team depending on how challenging the project discovery work is. Successful companies like Airbnb and Google have proven the pivotal role of UX research in ensuring a positive user experience and product performance. Gifted UX researchers create genuinely user-centered experiences by analyzing user behavior and providing valuable insights.

  1. Backend Team:

The backend team is responsible for developing the app‘s core logic, handling interactions with cloud providers, and facilitating communication with the front end through API endpoints. The recommended organizational structure for the Backend team includes the following:

  • Team lead
  • Middle stack developers
  • Backend engineers.

A team lead coordinates the workflow inside the unit and supervises the job of backend developers. You may wonder about the role of middle-stack developers. We believe they enhance the relationship between frontend and backend developers, acting as a middle chain. This spares the time for both frontend and backend developers without being burdened by the intermediate layer or API endpoints.

  1. DevOps Team in the startup structure:

The DevOps team is indispensable for the processes and tasks related to cloud infrastructure. DevOps ensures the smooth integration of new code into the repository before deploying new versions and conducting thorough code checks. Their primary objectives are to guarantee optimal user experience on their level of responsibility and reduce time-to-market. The DevOps unit typically has the following:

  • Team lead
  • Cloud Architect
  • Site reliability engineer (SRE)
  • System administrator.

The DevOps lead manages the team, allocates roles and responsibilities, and supervises the workflow. Cloud architects handle the development and maintenance of cloud technology, while SRE specialists ensure applications and systems run smoothly without interruptions. The system administrator is responsible for managing and supporting the cloud.

  1. QA Team:

The Quality Assurance (QA) team rigorously tests the application during its active development to identify and rectify bugs and errors, ensuring consistent and reliable operation. The QA team includes the following members:

  • QA lead
  • QA Analyst
  • Testers.

The QA lead manages and supervises the team, sets quality metrics and expectations for the product, and ensures they are met. The lead also drafts test plans and distributes tasks between team members.  

The QA analyst develops and implements test plans, including manual and automated testing, and drafts necessary testing documents and unit tests. Testers conduct and run the checks, review system requirements, test scripts, analyze performance, and report to the QA analyst and Quality Assurance lead.

Types of Startup Organizational Structures:

Of course, startup structure comes in all different forms and shapes of organizational structure. It depends on many factors, including the activity character, achieved goals, and business patterns.  Let’s examine five primary types:

  • Functional Structure

In this type of startup structure, a business is divided into role-based departments or teams, for example, sales, marketing, IT, finance, and human resources. This structure’s advantage is its capacity to enhance performance and productivity by organizing resources according to their purposes. However, it may introduce bureaucratic layers and hinder creativity.

  • Divisional Structure

This structure breaks teams or units into larger divisions based on geographical or product-line criteria. Each division operates with its managers and teams, focusing on specific product or service lines. Unit leaders set up separate divisions in a particular product/service line. 

This way, a product-based system is created. For example, a clothing business creates a product division for women, men, and children. Each of the three lines has dedicated marketing, distribution, design, and customer service teams. While suitable for product growth, it may lead to increased costs due to duplicated efforts.

When you have different design teams in each unit, there is a risk of raising the total business cost as fabric supply is broken into parts. 

  • Geographic Structure

This type of business structure is tied to regional geography. It helps businesses to be cost-effective due to the proximity to specific resources. However, it may decentralize large companies, leading to disengagement of strategies.

Every local unit may become self-contained without much effort to attune one’s actions with other units. Businesses will try to solve this challenge by ensuring a common understanding of the company’s goals and objectives. 

  • Matrix Structure

Initially developed for the space industry, this structure resembles a grid and establishes clear reporting lines between employees and their team leads. Grid encourages collaboration among team members with similar skill sets. An employee reports to their supervisor and functional manager at the same time. This way, operational and project systems overlap, ensuring excellent flexibility.  For example, someone with similar skill sets may be assigned to different units but collaborate on a single project.

However, having multiple lines of command can lead to conflicts.

Matrix structures are easily adaptive.

  • Network 

This structure implies collaboration with other companies or outsourcing specialists, such as contractors and freelancers. Third parties and independent contractors significantly contribute to the company’s activities.  

You can find a lot of external similarities between the network and functional structures. If you’re considering employing this model, you should consider how much you are ready to rely on third parties. Suppose a significant part of your development work belongs to in-house activities. In that case, it may not be the most reasonable solution to integrate the network of freelancers or those specialists who are not reporting directly to your leading team. 

How to Build Your Perfect Startup Structure?

Involving the right talents in your startup organizational structure requires careful consideration. You have three main options:

  • Local Team

The traditional approach of hiring a full-time local developer team might seem logical. Hiring a full-time local development team allows for quick control and management. It provides you with complete control and quick access to your team. However, this approach can be costly due to expenses such as payroll taxes, employee insurance, office space, and supplies. For startups, this may not always be the most cost-effective option.

  • Partial Outsourcing: 

Under this model, the startup identifies specific areas that should be outsourced and delegate those tasks to an external team, including project management. The startup provides technical specifications, while the outsourced team handles the rest. 

Another option within this scenario is to recruit remote workers for specific roles through a recruiting firm. The remote hires become part of the team but operate from the staffing company’s headquarters, which covers their employment obligations. In this case, the hiring firm represents the official employer, handling taxes, salaries, and employment benefits. By employing this model, you can recruit several remote developers and organize them into dedicated development teams.

  • Full Outsourcing: 

Some entrepreneurs may choose full outsourcing, working with a specialized software development team located overseas, prioritizing cost savings. Another possibility is to employ a technical software development team. A dedicated team will handle the entire development work compared to partial staff recruitment, which involves hiring remote developers for a few key roles. This model is similar to the local team option, except it is located overseas and operates at the staffing company’s headquarters. 

Bottom Line 

Choosing the proper organizational structure is crucial for startup success. Adequate delegation of roles is essential to streamline operations and achieve your business goals. Suppose you have established your first startup organizational structure but are hesitant about further product development steps. What happens, then?

Seeking professional guidance in navigating the startup landscape can help. Over the past decade, our experts have assisted numerous startups in bringing to life one-of-a-kind digital products. Through our Product Development Strategy Session, we provide personalized business consulting and craft a detailed plan for your product development.

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