For startups in their first phase of building product to find the market fit, organization design is a unique challenge. Typically between two and ten employees, the organization in this phase is evolving fast and often (mostly) there isn’t a structure stable enough to be expressed in an org chart. For the founders, it is important to understand that in this early phase your org is a form to embody and express your culture. Saying “we have a flat org” is a cultural statement but may not convey much useful information to your early employees trying to find the boundaries of their work and decision making flow.
Culture in this early phase is an expression of founder DNA melded together with the DNA of early employees and undergoing evolution as a response to its environment. In fact, evolution is a very useful analogy to understand startup orgs. Startups are not products of creationism by a single supremely gifted founder or investor. They evolve continuously influenced by the source DNA but are not limited by it if they build the right culture and communications as they add employee DNA to the mix. Added to this starter set of conditions is the DNA of all other key employees. This organism responds to market conditions, competition, technology, and is trying to find a way to survive and thrive and grow.
Culture = Founder DNA + Employee DNA + Environment + Adaptation
A critical factor in early org design is the requirement that the founder(s) understand their own skillset – in a brutally honest way and then recruit + surround themselves with people skilled in everything the founder(s) are not. Doing so also ensures that hierarchical structure and thinking does not set in early. The right hierarchy in organization is required at some point but likely not when a startup has less than ten employees. As I have written elsewhere, there are four canonical horsemen of successful startups:
The eternal optimists (usually the founders) – these folks have an uncanny ability to freeze everything except their vision of the product in a future time.
Grumpy ass kickers (usually the early employees) – bound to create reality, they crave reality and making things vs. dreaming them up, and
Intuitive humanists (sometimes the founders, usually later employees) – they care about the human emotional needs of employees and the collective org. They will build links where none exist and are a much needed part of care and feeding of startup employees.
Chameleons (sometimes tech-founders) – these are the folks that can play whichever roles are required (dev, production, design, …) for a short duration to get-stuff-done. Finding a stable, long-term role for them in a large startup on its way to becoming a company is typically quite hard. Chameleons love startups and will hop to another one vs. scaling/changing with a single startup.
Org charts are also a proxy for communications in a startup. Silos of information appear when the charts are not heavily interconnected. An early sign of such dysfunction is the onset of process in a startup. Process != communications and when used as an excuse for not communicating usually leads to an early demise for the startup. In addition to communicating product, technology, mission, and their vision for a startup, the founders must also ensure that everyone understands the ephemeral nature of their organization and org-charts. They need to have everyone understand that:
- The org is going to change.
- The org is going to be flat with identified decision flows. Information must flow everywhere.
- If you cannot look back and say what you did last week, something is not right.
- Responsibilities assigned to everyone enables them to operate out of their comfort zone – you, the founder is likely already out of your comfort zone.
- The org chart helps delineate responsibilities – especially for decisions.
Does your startup have an org-chart? Do you think you need one? Help me think more about this topic – @rohit_x_