How to Optimize Organizational Design for Startups?

Organizational Design for Startups
June 18, 2021
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They grow up so fast. You know, one minute you are pitching to ‘Series A’ investors and making Senior, and Quality Assurance Engineer hires on the next. Oh my! What does a Senior Engineer even do in the first place?

Optimizing your startup for efficiency, decision-making, transparency, and communication are painstaking. Yet, it is next to impossible for a startup founder to wear the many hats of organizational management. This calls for task delegation!

Organizational Design for Startups

When the business majors say ‘Organizational Design,’ they’re talking about more than the traditional graphic design. It is a blanket term used to cover everything from workflow, procedures, structures to systems.

Organizational design principles are realigned to match prevailing business realities and corporate goals. The process focuses on improving the technical and human side of a startup. 

It touches on many different aspects of organizational management. That includes team formation, shift patterns, lines of reporting, decision-making, and more. Optimizing organization design can impact corporate results (profitability) and employee well-being. 

Faced with everyday existential challenges for startups, founders should adopt a comprehensive and holistic approach to design improvements. The plan should touch on every aspect of organizational life. 

The Pareto Guide to Organizational Design has three factors founders should consider enhancing roles and work processes as they grow. They include bands, layers, and spans.

This is why should startup founders bother with organizational design optimization

  • It’s a clear strategy for managing and growing the startup: Optimized startup organizational designs become more competitive and achieve strategic advantages. It positions the organization to respond better to unexpected environmental changes.
  • A culture of committed and engaged employees: The arrival of the future of work is a significant threat to startups. More so for startups, which have to contend with, manage, and motivate geographically distributed workplaces.
  • Improved efficiency and cycle time: Organizational design impacts employee performance, according to a study. A poorly designed organizational structure leads to low efficiency, less task delegation, and centralized decision-making.
  • Improved profitability: Efficiency is the key to unlocking the value potential of the startup. There exists a positive correlation effect between organizational design and financial performance.
  • Reduced operating costs: Managing such a workforce efficiently and at optimal cost will not be easy. It calls for a restructuring and deliberate rethinking of organizational design to cope with ongoing and future workplace changes.

Founders of startups that rely on people need to be obsessed with organizational design, just as manufacturing companies are about the production process. Here also you can go about organization design optimization as a proven roadmap to success. 

Optimize Organizational Design for Startups

1. Work from the Future Backwards

The best approach to optimizing your current organizational design is to think about where your company will be two, five, ten years from now. So having organizational goals and objectives is essential. These are not your typical new year resolutions.

For a startup experiencing a great deal of uncertainty, plan out with short intervals. The more predictable your startup’s future, the easier it gets to find an organizational ecosystem that fits. In this case, longer time intervals are more effective.

If your startup is experiencing unprecedented success, consider professional help. It is going to be much harder to find the right organizational design fit. But if you are unsure about the future of your startup, start with some ‘scenario planning.’

Projecting your startup’s future will be transformational in building momentum for your company. It will not only help you better manage your startup but also see a lot more talent and hire the right people. That means everyone is better calibrated to achieve the organizational objectives.

2. Extract the Roles

Review the projected future outlook of your startup and list everything that would make that future possible. Use your answers to list the related activities, responsibilities, and competencies that serve to see your startup through that future.

Keep in mind that for early-stage startups, one person can juggle multiple roles at once. As the company grows, management can turn towards specialization gradually. Focus on the objectives that need to be achieved to extract roles, skills, and experience to succeed.

Group activities, responsibilities, and competencies into a function, depending on the nature of your startup. Client types, for instance, create roles based on the kind of clients, such as enterprise or individual accounts.

3. Scope the levels of decision-making authority

The first thing to ask yourself: do you have a strategy, or do you need someone to define it? Do you want to make independent decisions? Whatever your answer, there is a tradeoff.

A key component of designing your organizational structure is understanding the level/band of each role. For instance, the executive suite is more focused on vision, system building, and strategy. So how do you know when it is time to bring in a strategic leader into your startup?

First off, are you stretched out thin with your work? Second, does quality take the toll of learning ‘on the job’? To mitigate this challenge, create room for leaders of specific startup functions. They will build out a playbook from which the work process will get done.

If the head of ‘functions’ keeps up with the growing pace of your startup, they will create opportunities to grow their work. However, if your startup needs specific skills more urgently, then it might be time to roll in the executive suite.

If you feel stuck, listen to leaders who have been through the stage you are in now. Share takeaways and ask how they went about optimizing an organizational design. Consider joining a founder peer group and forum where you can connect with mentors.

Final Words

Keep in mind that optimizing organizational design for a startup is not approaching it as a one-time fix to structural challenges. The actual gains of an optimized organizational design compound are when the best habits become part of the organization’s DNA. Like this kind of content? 

About AbstractOps

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