Startup organizations change as fast as they are agreed to by the core management team. That is very frustrating for leaders who take pride in their being in control at all times. It is also frightening to managers doing their first startup. But serial entrepreneurs expect such chaotic organizations, in fact, they endorse their strange forms because that facilitates success.
Today’s modern corporation is rapidly morphing beyond the virtual organization of the 1990s which introduced global enterprises to aggressive outsourcing to gain strategic competitive advantage. Experts today see fresh forms that include metaphors related to proteins (see for example “the protean corporation” in “The Future Arrived Yesterday” by Michael S. Malone) and rings and balls and orderly chaos.
Startup organizations begin with a core team consisting of a founder and three others. Typical this consists of a person who has run a business before, a marketing business development veteran and a technical or idea leader. Together they form the vision for the new enterprise and raise its seed financing.
The work done in the early Chaos Stage is performed by a mix of full time employees, part timers, contractors, and outsourced service providers. Examples include project engineers who are expert at setting up testing facilities, finance people who set up the early accounting system, legal services, marketing research, and public relations buzz. It is not uncommon to find more people working for the startup than it has full time employees in the early days of the new enterprise.
I like to keep startup organization charts simple and think mostly in the form of a circle surrounded by concentric rings. Or it could be in the form of a three dimensional ball with layers like a baseball. Or even an orange with sections. Whatever you use to describe it, be sure to leave room for a lot of change.
The next ring around the organization arrives with strategic partners. These can be key suppliers (servers or telecommunications services), middlemen in the chain from you to end user (independent Internet service provider, game publisher, module manufacturer), or strategic investor (Intel, Cisco, Netease, Shanda). These increase and decrease in their importance as the company moves on to successive stages of growth during which more strategic partners are added to this organizational ring.
The board of directors is added when investors sign big checks. That will add a governing group formed with an independent director, the representatives for the investors, and a couple from management, typically the CEO and founder.
All of the startup organization is constantly shifting and changing as the startup grows, runs into surprises and adds to its increasing complexity. That behavior makes it very challenging to manage the startup organization for the first time startup CEO.