For Startups: The Most Efficient Way to Set up Your Software Development Team Structure

The team is essential in a start-up business; it could make or break the company. In starting a software development company, evolutionary ideas can be a huge factor of a company’s success, however, a huge chunk of it is due to the shared responsibility and effort carried by the team members. That is why this question often comes to mind, “What is the most efficient way to set up a software development team structure?

Before you build your own team, you need to know the type of start-up team structure you want to create, the changes and evolution of a software development team, and the main team dynamics for a productive software development team.

Team Structure Options

A team is a group of individuals working on different tasks yet share a similar goal for outcomes. A team is always a basis for every software development organization. In information technology, having a team is more productive and cost-effective than contracting individual freelancers. But building an efficient team is never an easy feat. First, you must decide which software development team structure fits your management.

There are three common team structure options that work in software development. Teams can be organized according to their tasks or function, the product they are working on, or a bit of both.

Functional Teams

Functional team structure is often used by a lot of organizations. This framework organizes the team members according to their function or job description. For example, all frontend developers are grouped in one department and all mobile developers are grouped in another department. Through this structure, employees have a high percentage of gaining a specialization in their given field. Why? Since each member shares similar task interest, sharing of knowledge is highly probable since they learn and develop expertise through their peers. This structure is quite popular due to its efficiency and productivity response from the team. With a team that shares similar knowledge, interest, and expertise, they also have parallel mindsets eliminating misunderstanding and tensions.

Though the functional team structure greatly helps in improving the team’s skill set and expertise, it follows a few downsides. Since they are grouped only among their peers, lack of interdepartmental communication and interaction may become a problem. If the members are isolated among their peers they may start viewing the company and processes solely through the lens of their job function. Unfortunately, this kind of perception may create tension between departments, or worse, affect the whole company.

Cross-functional Product Teams

This team structure is very common among start-ups. It is hard to have a large team when you are just offsetting your software development organization. Most of the time, start-up businesses hire a few individuals and create a software development team of differing roles. Unlike a functional team where developers are grouped together, a cross-functional product team may consist of a designer, engineer, and a PM; individuals with interdependent tasks yet working together to achieve a similar goal and success of the product.

With cross-functional product structure, members are able to share their ideas as well as their perspectives per their job function. This process of cross-pollination of ideas eliminates the tension between members of various skill set which may result in the production of an exceptional product for the team. However, since they function differently and work on their individual tasks, it is a challenge to bring them to coalesce on their first project together.

Hybrid Structure

For some organizations, a functional team structure is just not enough, even a cross-functional product team is not sufficient as well. So what works then? Well, it’s a bit of both. Another application development team structure that may work for you is the hybrid team structure. This usually happens when a particular job function or skill set is scarce.

Trial and Error

There is no perfect structure that works completely and permanently for all organizations and companies. Cross-functional product structure may work as you start your business but later on, you will realize that this structure no longer helps your team progress and be productive. Sometimes you may opt to switch to a functional structure or even hybrid team structure. Switching structures doesn’t matter as long as it serves its purpose. In building your business and your team, you should never be afraid of experimenting when needed. Changes happen all the time for nothing is constant, even in business. Changes mean that your organization is growing and failure is not something you can avoid all the time. You only need to learn from them.

Stages of Evolution

There are no shortcuts even in building your business, everything goes through processes. Once you’ve chosen the team structure that fits with the type of team that you want to set up, what’s next is to be ready to face the stages that your team may encounter. These were elaborated by psychologist Bruce Tuckman which accurately describes the stages that most teams experience.



The forming stage at the beginning of the team where each member interacts and gets to know each other. At this stage, everyone is optimistic and positive in performing their tasks to reach the goal. Every team acts this way at first encounter. They start to share ideas and expectations which is why they are optimistic.


The storming stage is critical in team building. It is through this stage that teams can begin failing or growing. After a couple of days or weeks of the getting-to-know stage, members start pushing boundaries and differences start to build tension. A conflict between members is a signal that the team is entering the storming stage. In this stage, the team leader’s authority is being challenged. This is the time where leaders should aggressively work to impose their authority and keep the team intact.


If the team surpass the storming stage, they come out better and more resilient and then enter the norming stage. After going through arguments and issues, differences are acknowledged and conflicts are resolved. Each member sees and appreciates the efforts and strengths of their colleagues which holds the team together stronger than when they are in the forming stage. The team is now stronger and more committed to achieving the team’s goal.


Without tension and conflict, what remains are recognition and appreciation among team members. It is in this stage that the team work hard together which may lead to the achievement of a shared goal.

Full Scale’s Software Development Team

The founders of Full Scale, Matt DeCoursey and Matt Watson, knows the challenges that accompanied their start-up organization yet they were not fazed by the uncertainties. In one of the episodes of their hosted podcast under Startup Hustle, the Matts shared advice on building and scaling software teams for startup software development organizations. Being founders of a fast-growing offshore software development organization, they’ve gained the wisdom that no research can provide but a hard lesson learned from experience.

Here are a few things that Full Scale is practicing among its teams which is making them flourish in the software development industry. As founders, the Matts do not solely give the process of hiring of developers to the recruitment team, instead, they make sure that each candidate is keenly scrutinized to make sure that they are committed and efficient in delivering impeccable development service for the clients. Even if they are countries away, their absence is never a problem. They have assigned reliable experts to manage their offshore development teams in the Philippines. Expectations are properly set, individual performance is constantly tracked, and honest feedback are given to members; in short, they have established their presence among their teams.Setting up a software development team structure can be challenging for start-ups. However, all it takes is the determination to succeed and sufficient research and knowledge, and you can achieve your goals and succeed. Listen to more topics and dialogues for start-ups at Startup Hustle.