From start-up chaos to growth: structuring for success

A young start-up usually has a simple structure and works in a project-oriented manner. The number of people that help start up the new company is often limited and everyone is clearly aware of the distribution of the roles. If you want to survive this start-up phase, you need a strong vision and very flexible people. At the start there will be no secretary to purchase your office supplies. All the administration is also borne on your shoulders. Unlike an established company, you cannot rely on existing logistics.

If the company manages to grow it will soon require a more concrete structure. People will need to start managing different projects and take daily decisions. They will also have to manage and coach the new workers.

The company's founders mostly make up the operational management. They organise the daily management to ensure that the company operates efficiently.

Typically a high-tech start-up will have one person who is responsible for the technological development and another for sales and marketing. As the company grows it will also need a CFO.

The CEO: the boss is always wright

The person in charge of the daily management is the Managing Director (MD) or the Chief Executive Officer (CEO). He or she will regularly report to the Board of Directors.

Since most high-tech start-ups use external capital, there will also be a Board of Directors. The board is mostly made up of representatives of the stakeholders and possibly a few external independent directors. The Board will meet at regular intervals and examine the company's status. They discuss progress in terms of profitability, sales, product development, growth, financial situation, strategic decisions, and so on. As co-owners and stakeholders they have every interest in ensuring that the company is doing well. They will, in consultation with the CEO, provide guidelines, which the executive committee are obliged to take into account. We recommend that in addition to the CEO the entire team of founders is appointed to the Board of Directors.

The CEO will not only report to the Board, he will also be the spokesman to the outside world. He or she is in direct contact with sponsors, financiers and the authorities. The CEO is the captain on board. He or she has to make sure everyone is pulling in the same direction.

The CEO's role is subject to change. Obviously being the CEO of a small company involves different tasks than those of the CEO of a listed company. The CEO will see that the challenges change along with the growth of the company. In fact it is not unusual for a founder-CEO to resign at some point because the necessary profile and skills for the CEO position have changed so radically.

Checklist: what makes a great CEO?

A great CEO:

• communicates clearly and effectively.

• is a strong strategist, knowing the company’s direction and keeping employees informed.

• listens well and can break down complex problems.

• makes quick and confident decisions.

• handles tough choices and explains them clearly.

• values honesty, commitment, and engagement, expecting the same from their team and leading by example.

Because a company is constantly subject to change you need to think proactively and prepare for the future. In order to achieve the best results, it is very important for each team member to know exactly what is expected of him. This division of labour is represented very clearly in an organisational chart. This organisational chart shows everyone's responsibilities and serves as the company's backbone during the growth process.

The organisational chart is also something that evolves. It is a tool to manage the company in the best possible way. As the company grows, the organisational chart will be regularly modified and adapted. Change and its implications are not always self-evident and therefore you have to realise that growth often brings growing pains. One of the CEO's responsibilities is to clarify these changes and inspire the co-workers to adapt to them.

Organisational charts are also useful to the outside world. They provide a means for customers and suppliers to quickly navigate the company structure, and this can only increase efficiency.

The members of the Board of Directors will also find the organisational chart very useful. They get an overview of the company's structure at a glance and what the various departments do. It is thus not a bad idea to incorporate external advisers or subcontractors on behalf of the Board in the organisational chart using dotted lines. It can show for example that your company has an external officer for Public Relations, or that your bookkeeping is done externally.

To a certain extent the lines in the organisational chart explain the flow of communication and the reporting in your company. Each person has one manager to report to. An organisational chart helps ensure that tasks are performed only once: two people will never perform the same task and furthermore you can be certain that required tasks will indeed be executed.

A matrix structure, often found in larger companies, is interpreted differently. In such an environment you sometimes report across departments to several superiors. The matrix structure is one, which has two lines of authority. This is often ambiguous and therefore not recommended for young start-ups and small companies.

This formalisation of structure is also an important management tool because you can use it to help allocate costs and resources in detail amongst the specific departments. As a result you can obtain an overview and keep control over your budgets, and you can measure how efficiently they are being used.

When preparing an organisational chart, keep in mind that you can manage maximum eight to ten people, reporting directly to you.

"As an entrepreneur, you have the freedom to shape your business and eventually find a role that suits you best. Since January, for example, I’ve appointed a CEO. I no longer handle personnel matters - that’s not where my passion lies." Leen Peeters – founder and manager of Think-E

It is obvious that the CEO does not operate alone. He or she will surround himself with people who assist him or her in making decisions. It is important that they can identify themselves as being one TEAM with one GOAL. A capable CEO makes certain that there is excellent complementarity between the members of the team. Each can then speak with sufficient authority in his or her field of expertise.

They will also have to show leadership qualities. They will each have to inspire co-workers to do their best in order to achieve the company's objectives.

Besides the job of CEO, there are several other special roles. We often speak about the COO (Chief Operating Officer) and the CTO (Chief Technical Officer), who are appointed from the beginning. At a later stage there may be a need for a CFO (Chief Financial Officer).

The COO: the (wo)man who does it all

The COO is responsible for operational management. The COO ensures that daily operations run smoothly. He or she is close to the CEO with whom he or she will consult about new developments, design, production, services and improvements. The COO makes sure that the right people and resources are allocated at the appropriate time. The COO has practical experience, knows the processes and is responsible for quality. He or she will make considerations when planning and determine what the priorities are in addressing customer issues, challenges for the staff and organisational problems.

The CTO: the geek

The CTO is responsible for the technological development of the company. He or she is the guardian of the developers of new technologies and products. In the start-up the CTO is the person with exceptional knowledge of the technology and may have personally laid the foundation of certain technological developments.

“Jorrit is a true business leader, capable of running any company, whether it’s bikes or sewing machines. I’m the product guy, with a deep passion for it, but that can be a pitfall too. I often joke with Jorrit: 'Without me, there wouldn’t be a bike,' and he’ll respond, 'Yes, Tomas, but without me, none would’ve been sold.' It’s a perfect example of how much we rely on each other." Tomas Keppens – founder and CTO of Ellio

The CTO makes the important technological decisions in association with the CEO and the COO. He or she decides how to solve certain technological challenges and what the products will ultimately look like.  This obviously has to match market expectations and objectives in terms of budgeting and timing set by the company. Architectures, technological coherence and technological choices, patents, research and development... these are the CTO's concerns.

The CTO sets out the technology roadmap. It is a long-term development plan that specifies which new technologies are to be developed and when these new technologies are then used as input for an R&D planning and will eventually result in useful products and services.

The CTO holds a lot of responsibility because - especially in technology-driven companies - the product sales will depend on the strength of product development.

The CFO: the (wo)man with the money

The CFO is responsible for the financial aspect of the company. He or she rarely witnesses the start-up phase. The CFO usually comes on board by the time the company has grown sufficiently and when his or her presence is justified and absolutely necessary.

A possible trigger to hire a CFO can be the need for extra capital. The CFO can then be assigned the task of preparing and supervising this process. The role of CFO becomes particularly responsible when preparing for an IPO.

Another milestone can be the moment when the company has grown sufficiently and it is useful to replace the external accountant by people who take on this task inside the company on a daily basis.

The CFO will keep the CEO informed of the company's financial status, and has a finger on the pulse of the company's financial health at all times. The CFO will be responsible for the management of the multi-annual budgets and the monitoring of the forecasts.

Internal communication

Ironically in these times of e-mail and texting we sometimes do not communicate enough.

E-mail has several definite advantages, but consider the fact that you can sometimes communicate much more efficiently and directly by phone. You have immediate feedback, during your conversation you can directly answer any questions and you can take immediate action or adapt where necessary. If necessary, you can confirm issues discussed in writing afterwards. If you have a difficult situation to deal with, a telephone call will give you the opportunity to gain insight into the relevant sensitivities sooner and respond appropriately. Misunderstandings can be rectified. Face to face still works best.

Attracting new employees

When a customer has signed your first assignment and the workload for the starting team has increased, the need for new employees grows. "Triggers" are often mentioned beforehand in the business plan. This is a carefully thought out decision, which has its organisational and financial consequences. You recruit someone for the long term. You will invest a great deal in your new employee and you will want to maximise the chances of success by being thoroughly prepared!

Applying for a job in a young start-up is not for everyone. Some candidates prefer to work in a large and well-established company because they consider it too risky to start in a small company. However large companies often restructure so even there are important risk.

Set high standards when recruiting new employees. In a high-tech start-up you need solid brains. Recruiting the right people gives you the opportunity to achieve industrial state-of-art expertise. You will not have to reinvent the wheel. Search for the very best candidates but make sure that they fit in in your company's culture. A good "match" is essential. Be frank in your communication about the company's culture and about the things that are important to you.

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