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 Structure
Pros
 Free flow of
knowledge
 Everybody
do everything
 High
flexibility
 No
hierarchical
problems
King
Catherine
Kanas
Cortina
Tammy
Cons
 No clear
individual
responsibility
 Depends on
natural
leaders
 Depends on
self
discipline
Agenda
1.
2.
3.
4.
5.
Background of Appex
Diagnosis – needs Structure and Control
Appex Structural Development
Shikhar’s Philosophy & Comments
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.
Appex needed
• “the fastest growing high-technology company in
structure and control.
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
Diagnosis - Structure and Control
Problems from lack of Structure
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.
Level of Responsibility
Organizational
Departmental
Individual
Diagnosis - Structure and Control
Problems from lack of 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
Level of Responsibility
Entire
Organization
Administrative
Financial
Front Office
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
 Innovative, committed
workforce
 High-bandwidth
communication
 Fast, extensive idea
generation
 Quick market response
Cons
 No underlying planning
structure
 No product accountability
 Unclear reporting structure
 “Fire-fighting” mentality
 Lack of customer service
focus
CEO
Circular
Pros
 Free flow of information
 Theoretically customerbased
 Theoretically responsive
structure
Cons
 Employees “could not
relate”
 Aimed at response, not
planning
 Unclear decision
hierarchies
 Customer became the
“enemy”
Horizontal
Pros
 Impression of traditional
structure
Cons
 Complete failure
 Employees gave no
response
Sales
Hierarchical/Functional
Pros
 Focus on task completion
 Increased planning
 System for assessing
accountability
FIN
IT
HR
Cons
 Development of subfunctions
 Polarization of teams
 Reduction on cooperation
 Poor skill/management
matches
CEO
Product
Manager
Product
Manager
Product Teams
Pros
 Improved planning
 Application of
management vs. skill to
products
Cons
 No system of authority
 Extensive executive
decision support
 No system of priorities
between products
BT
Business Teams
Pros
GM
BT
Cons
 Decision making authority  “More tail than tooth” –
 Resource allocation
too many people in
authority
overhead
 Too many layers of
management
 Internal process focus
 Loss of customer focus
 Loss of P&L
accountability
PT
PT
PT
PT
CEO
Divisions
Div
Pros
Div
Cons
 Improved accountability,
 Resource allocations
budgeting, and planning
squabbles
 Extensive communications  Cross-divisional
within divisions
antagonism
 Second guessing of Sr.
Management
 No cross-divisional
communication or
cooperation
 Financial gamesmanship
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.
Shikhar’s Philosophy & Comments
Three Lenses for Organizational Change
Power struggle?
Any hidden
agenda for the
changes?
Company culture
matches with new
structure? Staff
adaptation and
behavioral change?
Political:
interests
coalitions
resources/power
Cultural:
artifacts
values
assumptions
Sudden &
immediate
changes? Business
alignment? What
to achieve? Wellthought process?
Strategic:
leadership
timing
linking
process
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