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
Shikhars 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

Shikhars 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.

Shikhars 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