Appex Corporation –Managing Change at Organization Level

Fong Kit Ling, Catherine

Lee, King

Ng Lai Wah, Kanas

Sin Wai Yu, Cortina

Wong Kit Lee, Tammy

MGTO 650n Corporation – Team 2 Organizational

StructureKing

Catherine

Kanas

Cortina

Tammy

Pros Free flow of

knowledge Everybody

do everything High

flexibility No

hierarchical problems

Cons No clear

individual responsibility

Depends on natural leaders

Depends on self discipline

Agenda1. Background of Appex

2. Diagnosis – needs Structure and Control

3. Appex Structural Development

4. Shikhar’s Philosophy & Comments

5. Suggestions on Structural Change

Background of Appex• Provided management information systems and

intercarrier network services to cellular telephone companies.

• “the fastest growing high-technology company in the United States” 1990 Business Week

• Early 1988, expanded fast, hired more people, spent cash quickly and not monitored expense

• May 1988, Shikhar Ghosh was recruited as COO and shortly afterwards CEO to reform Appex

Harvard MBA

Background of Appex• Provided management information systems and

intercarrier network services to cellular telephone companies.

• “the fastest growing high-technology company in the United States” 1990 Business Week

• Early 1988, expanded fast, hired more people, spent cash quickly and not monitored expense

• May 1988, Shikhar Ghosh was recruited as COO and shortly afterwards CEO to reform Appex

Harvard MBA

Appex needed structure and control.

Diagnosis - Structure and Control

No formal procedures

No job description

Spending cash quickly w/o monitoring expenses

No longer term plan: “fire fighting”, no planning structure, no priority for anything a week away

No body had time to plan schedule or meetings , difficult to accomplish basic tasks

Could not handle the increased demand of customer request

Problem on information flow, e.g. one developer would not know what another developer was doing.

Problems from lack of Structure

Organizational

Departmental

Individual

Level of Responsibility

Diagnosis - Structure and Control

No control in office hour

Everybody did things on their own time

Everybody just did what they felt like

Not putting customers as first priority. Received complaints from customers, e.g. one customer called 150 times before he received a response

Playing basketball in office hour

No financial planning.

All planning seemed useless, e.g. 103 employees in 1989 but the latest forecast was 79

Problems from lack of Control

Entire Organization

Administrative

Financial

Front Office

Level of Responsibility

Appex Structural Development

Time Staff Structure

86-87 < 26 Informal - Start-Up

Summer 88 < 26 Circular

Late 88 ~ 26 Horizontal

Feb 89 ~ 40 Hierarchical/Functional

Aug 89 ~ 80 Addition of Product Teams

Nov 89 ~ 100 Addition of Business Teams

Aug 90 ~ 150 Divisions

Informal - Start-Up

Pros Cons

Innovative, committed workforce

High-bandwidth communication

Fast, extensive idea generation

Quick market response

No underlying planning structure

No product accountability Unclear reporting structure “Fire-fighting” mentality Lack of customer service

focus

No structure

Circular

Pros Cons

Free flow of information Theoretically customer-

based Theoretically responsive

structure

Employees “could not relate”

Aimed at response, not planning

Unclear decision hierarchies

Customer became the “enemy”

CEO

Horizontal

Pros Cons

Impression of traditional structure

Complete failure Employees gave no

response

Hierarchical/Functional

Pros Cons

Focus on task completion Increased planning System for assessing

accountability

Development of sub-functions

Polarization of teams Reduction on cooperation Poor skill/management

matches

CEO

Sales

FIN

IT

HR

Product Teams

Pros Cons

Improved planning Application of

management vs. skill to products

No system of authority Extensive executive

decision support No system of priorities

between products

Product Manager

Product Manager

Business Teams

Pros Cons

Decision making authority Resource allocation

authority

“More tail than tooth” – too many people in overhead

Too many layers of management

Internal process focus Loss of customer focus Loss of P&L

accountability

GM

BT

BT

PT

PT

PT

PT

Divisions

Pros Cons

Improved accountability, budgeting, and planning

Extensive communications within divisions

Resource allocations squabbles

Cross-divisional antagonism

Second guessing of Sr. Management

No cross-divisional communication or cooperation

Financial gamesmanship

CEO

Div Div

Shikhar’s Philosophy & Comments

• “When a company has grown 50%, it is time to change.”

• Many structural changes reflected employees’ suggestions

• Change the structure to match the people and the business with the structure

• Incentive scheme, resource allocation system, and other systems had to reinforce the change of new structure.

Cultural:

artifacts values assumptions

Political:

interests coalitions resources/power

Strategic:

leadership timing linking process

Three Lenses for Organizational Change

Shikhar’s Philosophy & Comments

Power struggle? Any hidden

agenda for the changes?

Sudden & immediate

changes? Business alignment? What to achieve? Well-thought process?

Company culture matches with new

structure? Staff adaptation and

behavioral change?

Suggestions on Structural Change

Before determining a structure,• Ghosh needs to communicate his vision to the

entire company to create buy-in• Anticipate the advantages & disadvantages of new

structure• Set a detailed plan with a specific timetable to

manage the expectation of employees• Establish the measurable goals, e.g. financial

target, Balance Score Card to maintain focus

Suggestions on Structural Change

After determining a structure,• Ghosh needs to communicate the progress to all

employees so that they can understand the status of the change

• Review the result after the change i.e. financial result, resource allocation

• Get feedback from employees to fine tune the structural change

Suggestions on Structural Change

Structure changes gradually with Culture• No specific structure for any organization,

changes in different stages • Organization evolves, not changes

suddenly • Change to achieve specific goals or align

with business development, not due to the "time set" (every 6 months)

• Each change of structure needed to be complemented by cultural changes

Question & Answer