Q 1. What were the challenges Shikhar Ghosh faced when he joined Appex?

In May 1988, Shikhar Ghosh joined Appex Corporation as Chief Operating Officer. Appex Corporation
provided management information systems and inter-carrier network services to cellular telephone
companies. At that time, Appex was relatively small in size with twenty-five employees and was
entrepreneurial and loosely structured. Recently the firm has been experiencing rapid losses due to
following challenges in its structure:
1. Jack of All Trades, Master of None: People had expertise in definite sectors but everybody did
anything which came to their mind.
2. Informal and fluid structure: Employees were focused and worked in close interaction with
each other during start-up phase. As the company grew there was a need for a growth
structure to accommodate the growth of the organization.
3. No role allocation: in the absence of the organization structure no employee was given
clearly defined roles to perform. As a result, all of the employees got used to fire-fighting on
every issue on a day-to- day basis
4. No resource allocation: As there was absence of structure in organization, there was no
resource allocation system in terms of its judicial usage.
5. Work environment: it became chaotic from entrepreneurship with the induction of new
employees
6. Customer service: customers became increasingly dissatisfied with the services the company
service department rendered and as a result the employees were forced to practice with
fire-fighting attitudes.
7. HR conundrum: due to poor allocation of roles, employees were getting confused at their
nature of the job and the functions they were required to execute. Additionally the growth
of the company brought in changes with which the employees were not able to withstand
the chaos and eventually quit.
8. Changes of structure: as APPEX was the 1st generation company it became increasingly
unclear as to what organization structure would best fit the companys needs. The same has
been evidence through number of structural changes the company underwent through 2
years.
Q 2. Evaluate the importance of each of the structural changes Shikhar Ghosh implemented. How
important were they? What problems did each new structure address? What problems, in turn,
did it create?
Innovative structure
Ghosh first tried the innovative organization structure where he implemented a circular one similar
to what he had seen in some of the Japanese companies and next he tried a horizontal structure.
Circular structure consisted of concurrent circle with innermost circle consisting of senior executives.
As we go outward the next layer consisted functional manager followed by employee in that
function. And around that circle were the customers of Apex.
Importance of this structure was to create a non-hierarchical organization in which communication
would be freely and there would be no hindrance in transfer of information not just within
organization but between organization and customer as well.
Problems addressed using this structure.
1. It led to the Improvement in coordination and integration within organization.
2. It was an improvement over flat structure and chaotic atmosphere as there was no ambigiuity.
Problems created using this structure
1. Employees could not relate to his innovative structure especially new hires who expected to see
the traditional structure could not understand how they fit in the organization. They didnt know
whom to talk too, didnt understand the power structure, and didnt know how their
performance will be evaluated.
2. A mentality developed that the customer was our enemy.
3. It was focussed towards responsiveness and not toward planning and tasks which required
planning didnt get done.
4. There was no authority structure which led to lack of control.
Horizontal Structure which was basically a vertical organization turned on the side.
Importance of this structure was that it was a non-hierarchical structure in which people could
participate more. Since, the company was initially flat so bringing in hierarchy structure was not
feasible at that time. It was a structure facilitating the best fit scenario for employees in general.
Problems addressed by this structure.
1. Since it was non-hierarchical structure, employees could participate more.
2. Responsibility was clearly defined and there was no reporting structure.
3. Teams were Self-Managed.
4. It removed layers from organisational hierarchy.
Problems created using this structure
1. Employees didnt respond to the new structure enthusiastically.
2. There was a lack of authority and control because of which employees were not responsive.
Hierarchical & Functional Structure
It was a more broadly classified structure with clearly defined functions and division of teams which
had better hierarchy and flow of authority.
Importance of this structure laid in clearly demarcated functions of each employee, team in addition
to establishment of hierarchical structure based on functionality of department.
Problems addressed by this structure.
1. This structure provided clarity of responsibilities and authority across different functions/teams.
It led to employees focusing on their area of expertise.
2. It led to employees focusing on their area of expertise and achievement of companys goals and
objectives.
3. It laid clear emphasis on accountability as it resulted in greater degree of assertion in control.
Problems created using this structure
1. Assignment of functions and administration of team resulted in confusion while assigning new
managerial roles..
2. This structure granted power to heads of functional cum hierarchical team which led to
organisational politics. As a result, there was little cross-functional rapport amongst teams due
to polarization of teams.
3. Broad definition of functional and administrational scope of team sowed seeds for further
subdivision of functions and allocation of new management roles within existing team structure.
Heads of team started vertical expansion with no regard for complexity in its management.
4. It led to increase in resource allocation to each team.
5. Also, personalities of key personal in each function determined the standards rather than
company policy. One of the possible reasons of these issues could be that head of each function
was a functional and not managerial expert.
6. People experienced in management heading the teams lacked functional knowledge due to
which it was difficult to gain respect of the teams because the employees were geared to value
functional expertise more than managerial competence.
Product Teams were basically teams oriented on product centric approach.
Importance of this structure was it was product centric approach for teams. It helped set up
separate product teams for each of Appexs main products. Product team managers were assigned
with the role of writing business plans for the products and integrating the functions represented
within them

Problems addressed by this structure.

1. It led to efficiency in the working of functional teams as they were informed about the product
happenings on a daily basis.
2. Functional Teams were abreast of product happenings on daily basis.
3. Business Plans for multiple products were put in place which resulted in flexibility of managerial
powers of product managers as their activities were sometimes beyond scope of their briefs.
Problems created using this structure
1. There was no mechanism to specify the extent of authority in making decisions within multi-
functional teams.
2. This led to conflicts between product managers and operations personnel.
3. Product team managers tried to make key decisions not strictly within their scope such as sales
price and allocation of resources. Each product team demanded resources that couldn't be
justified when looked from the entire firms perspective.
Business Teams were basically decision making teams above the product teams.
Importance of this structure was it included members of senior management and they acted as
intermediaries between product teams and corporate management teams. They had authority to
take decisions on resource allocation issue for multiple product teams.

Problems addressed by this structure.

1. The cumbersome issue of authoritys scope and resource allocation amongst teams was
adequately resolved with this team.
2. Corporate Management Group was spared the burden of final decision making process as its
scope was minimized with business teams advent.
3. There was decision making body for customer base which were catered to by product teams.
Problems created using this structure
1. A lot of people were involved in non-revenue generating activities.
2. Firm created more product groups, managerial layers as number of products increased. This led
to considerable increase in training costs.
3. Customer focus diminished and people became concerned regarding internal processes.
4. There was no profit and loss accountability leading to less concern of company-wide financial
goals among team members.
Divisional Structure basically divided organisation into business segments.
Importance of a structure is that there is more cooperation and accountability and where Ghosh has
to spend less time focussing on small problem

Problems addressed by this structure

1. This structure improved accountability, budgeting and planning.

2. Employees focussed on meeting financial targets.
3. Cooperation within division increased.
4. Role of Ghosh changed from addressing day to day operation to planning on strategy
decision.

Problems created using this structure

1. Resource allocation between divisions became non-equitable, as employees thought that
senior employees were giving more resources to the divisions they came from.
2. Divisions wanted control over all their resources and didnt want to share resources with
other teams thereby increasing costs of resource employed by company.
3. There were high walls between the divisions due to poltics. Flow of ideas between divisions
was very less.
4. Brand new ideas reduced significantly as they needed cooperation between the divisions.
5. With time, the divisions began to act as small companies like each division wanted their own
technical platform. As each division grew, it faced questions like whether it should divide
itself into functions or to impede cooperation within division.

Q 3. What would you have done in Shikhars place? Were all the changes in structure necessary?
How would you address the challenges Shikhar is facing towards the end of the case?
The steps that we would have taken are:

1. The rate of change in the companys structure was very fast which resulted in lack of
acceptance and difficulties in adjusting to new one. We would have provided ample amount
of time for every employee to adjust in the company.
2. Non-hierarchical structure: In initial structural change Shikhar implemented circular
structure which was a non-hierarchical structure even though it added a free flow of
information yet the employees could not relate them to the company fit.
3. Structural complexities: as it is evident in hierarchical and functional structure, the structure
was changed too many times which resulted into lack of focus on customers needs as
everyone was concerned with departmental issues.
4. Lack of customer focus: in the first two structural changes we have seen there has been
increasing level of structural complexities. We would have attempted to reduce the
unwanted functional complexities of the structure by giving it a clear, well defined and
balanced structure which would have led to timely execution of customer focus
5. Profitability: in any structural changes we would have laid part equal emphasis on the
profitability on the company by assigning objective to all employees
 6. Check on expenditure: due to numerous structural changes and requisite employees
adjustment to the same, company could not control haphazard expenditure patterns. We
would have implemented checks and balances on expenditure by making only requisite
functional structural changes .

Different structure and their necessity

Circular structure: It was not needed. Since the organization was non-hierarchical, issues regarding
accountability, authority could not be solved by this structure. Long term planning would not be
effective because as the organization grew it would become difficult to coordinate.
Horizontal structure: It was also not required as it also had the same problem of accountability
which was not present. Lack of accountability result in careless attitude.
Functional structure: This structure was necessary to gain control and provide direction for the
company. It resulted in setting of goal setting and created awareness for responsibility.
Product Teams structure: It was essential to determine a clear definition of job responsibilities for
each product manager and teams. It is essential for better planning and inter departmental working.
At the same time, the issues faced within this structure of resource allocation and goal setting could
have been handled by aligning each team with company's overall vision and financial target. A
centralized planning system would have helped in resolving the issue.
Divisional Structure: It was necessary because of growth in the organization. Also required for better
resource allocation and providing better accountability. Could have focussed on improving
coordination between different divisions.
While designing a new structure in Appex, Ghosh needs to consider the following:
1. Create a hierarchy in the organization and establish authority by means of a mix of functional and
divisional structures.
2. Improving coordination between employees of not only one division but also between different
divisions to generate new ideas and help in key decision making process.
3. Using the contingency approach to handle the uncertainties and coming up with Organic
structures
4. There should be a balance between Vertical and Horizontal differentiation to maintain the needed
level of control, bureaucracy and functional activities related to the product development
Shikhar should introduce a matrix structure in Appex to address the current challenges he is facing in
the organization. The grid structure will increase cooperation and communication between product
teams as well as functional teams by reducing barriers. Also, It will lead to development of broader
perspectives and skills delivering value to the business.

In Oct 1990, Electronic Data Systems (EDS) acquired Appex requiring Shikhar Ghosh to align Appexs
structure to EDSs requirements such as financial, resource allocation systems and administrative
processes. He had to realign Appex's divisional structure considering its role within a larger,
bureaucratic organization. He can integrate Appex with the existing support functions of EDS. This
would eliminate the need for individual support functions for the divisions and will reduce the cost
of the overall company. He can make the organization leaner by making senior management of EDS
with relevant skills head different divisions within Appex.