In the early stages, a loose, informal structure among a small group of initial founders is usually enough to get the job done. But once the job gets bigger, it typically becomes harder to coordinate increasingly complicated tasks among the growing number of people on the team. At some point, usually sooner than anticipated, it becomes necessary to divide up the work according to a more formal structure.

Formalizing an organizational structure involves defining the specific roles and responsibilities that people involved with the business will be required to take on. By doing this, it becomes possible to:

• Plan and organize work and deploy resources for maximum performance
• Establish a basis for setting performance metrics
• Provide a framework for creating effective recruiting and compensation schemes

Not to be overlooked, another important reason for becoming more formally organized is to satisfy the needs of potential investors and regulatory bodies, particularly with respect to the assignment of fiduciary and other related ‘structural’ accountabilities and responsibilities.

Examples of executive and senior management roles within many information technology-based companies are described elsewhere on this site in an article titled, typical executive roles & responsibilities.