Appex Corporation

By Group 10:
1112005 Anjan Kumar Dash 1112011 Arvind Raman 1112018 Chandrashekhar S 1112030 Manoj Kumar 1112058 Shamik B

Case context

Timeframe : 1988 (Mobile telephony still in infancy!) Company : Start up, 25 employees, $2M revenue & loosing money

Player : Shikar Ghosh COO; {Consultant @ BCG (Managing managers)

Business Manager}

Structural Evolution @ APPEX

Year Emp. Rev. Structure Informal - Start-Up Fluid, informal organization 86-87 << 26 $1M Strong informal ties + Effects Innovative, committed workforce High-bandwidth communication Fast, extensive idea generation Quick market response - Effects No underlying planning structure No product accountability Unclear reporting structure

Circular Non-hierarchical Summer 88 < 26 $2.3M

Fire-fighting mentality Lack of customer service focus Free flow of information Employees could not relate Theoretically customer- Aimed at response, not based planning

Late 88

~ 26

Concentric circles expanding Theoretically responsive out from executives to Unclear decision hierarchies structure customers Customer became the enemy Horizontal Complete failure Non-hierarchical Impression of traditional Employees gave no response structure Typical org-chart turned sideways

Structural Evolution @ APPEX

Year Emp. Rev. Structure Hierarchical/Functional Separation into functional teams (e.g. Sales, Service, Operations) + Effects Focus on task completion Increased planning - Effects Extensive politics Development of sub-functions Polarization of teams Reduction on cooperation Poor skill/management matches No system of authority

Feb-89

~ 40

System for assessing accountability

Aug-89

~ 80

$6.8M

Addition of Product Teams Overlay of functional representatives for each key product

Nov-89

~ 100

Improved planning Application of Extensive executive decision management vs. skill to support products No system of priorities between products Decision making More tail than tooth too Addition of Business Teams authority many people in overhead Intermediaries between product Resource allocation Too many layers of teams and corporate authority management management Internal process focus Loss of customer focus Loss of P&L accountability

Structural Evolution @ APPEX

Year Emp. + Effects - Effects Improved accountability, Resource allocations Divisional budgeting, and squabbles planning Extensive Separation into three divisions, communications within Cross-divisional antagonism ICS, IS, and Operations divisions $16.6M Second guessing of Sr. Management No cross-divisional communication or cooperation Financial gamesmanship Rev. Structure

Aug-90 ~ 150

Oct-90

EDS Acquires Appex Corporation

Structural changes did address - organizational and - environmental concerns (to an extent)

However the number and frequency of the changes resulted in environment - fiefdoms - employee anxiety and - power struggles.

Q1 : Challenges in front of Shikhar Ghosh

Q1 : Challenges in front of Shikhar Ghosh

People
People not empowered. Key executives made all decisions Peoples expertise not properly utilized. Everybody did everything

Products and Services

No product plan. People did what they were interested in. Lack of coordination would result non-interoperable code. Missed deadlines. Customer service was crumbling. Could not address all technical assistance requests of customers Few business processes No financial planning. Spending cash quickly and haphazardly and not monitoring its expenses

Processes

Environment changing from entrepreneurial to chaotic

Q1 : Challenges through the STARS lens

Strategy, structure w/o boundaries Limited resources Recruiting high performing team Strong team may already be there People are motivated Foundation for success may be there Strategy, structure w/o boundaries & resources Recruiting high performing team Do things right from start People energized by possibilities

Sustaining Success

Turnaround
Reenergizing demoralized employees Going deep enough w/ painful cuts Everyone sees that change is necessary Little success goes a long way Affected constituencies offer external support

Convincing employees that change is essential Restructuring the top team & refocusing org

Significant growth pockets exists in org People want to continue the success trend

Systems & structure that permit scaling Integrating many new employees
Potential for growth motivates people People inclined to stretch

Q2: What would we have done?

Q2 WHAT WOULD WE HAVE DONE?

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Q2: What would we have done?

Questions To what extent do we have leadership throughout the organization? Principles What we would have done Establish a sense of urgency - to 1. External leadership: ability to translate external needs to change and seize the opportunity. internal vision Examine the realities and identify bottlenecks to fulfilling the market 2. Internal leadership: ability to translate vision to opportunity. employee action 1. Symbiosis: ability to remove boundaries between external threat and Internal action 2. Reflexiveness: ability to learn from previous actions 3. Alignment: ability to integrate tasks, structures, processes, and systems at the technical, political, and cultural levels 4. Self-renewal: ability to change over time Will created a guiding team: comprising of Brain Boyle (CEO), Jim Driscoll Paul Gudonis & Paul Senn to implement the accelerated growth challenge

To what extent do we have the capacity for change?

To what extent do we use all management practices to build shared mindset?

1. Integration: ability to integrate all the management practices 2. Unity: ability of management practices to build internal and external unity

Craft a vision : To help direct the organization to achieve the accelerated growth objectives. Develop strategies to support the objectives.
Communicate the vision The purpose is to focus the organization on the opportunities and the behaviors that would be needed to achieve the vision. 10X

To what extent do we have a 1. Internalize customer values: ability to make customer shared mindset inside and outside values employee values the organization? 2. Mindset dispersion: ability to have the mindset shared within and outside the organization

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Q2: What would we have done?

Questions To what extent does my business have world class performance in each source of uniqueness and have the ability to integrate across the four sources of uniqueness? Principles 1. Paradox: ability to deal with competing demands What we would have done Will empower other to act on the vision. To build uniqueness by integrating the four paradoxes. Tell Appex employees all management action will be guided by the vision statement Create short term wins: Celebrate new product release, a customer acquisition or a competitive win. This will create momentum for the vision and belief Institutionalize the new approach; communicate again linking new behavior and success . Plan for leadership development at Appex

To what extent do we understand and meet customer needs?

1. Customer intelligence: ability to continuously scan and learn from customers 2. Competitor intelligence: ability to continuously examine and learn from competitors 1. Continuous Learning: ability to constantly learn about business conditions which affect the business

To what extent do we understand economic and social conditions affecting our business?

Our position : Functional Structure (to gain execution efficiency)

1. Align incentives such that it rewards Business Goals achievement 2. Arrive at a core set of values that need to be exhibited while achieving business goals

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Q3 : Address challenges at the end of case

Fitting Appex in divisional structure of EDS
EDS CEO

EDS Division 1

EDS Division 1

EDS Division 1

Appex Corporation

ICS Division

IS Division

Operations Downsizing of this division

Finance & HR

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Downsizing of this division

Q3 : Address challenges at the end of case

Challenges
Downsizing: Many functional groups such as Finance and HR will need to be downsized Operations team will need to be realigned. Change of corporate culture: Appex would need to align with the culture of EDS. Live with reduced autonomy Aligning reward mechanism along the lines of EDS Fight for Resource Allocation: Appex now have to compete with other EDS divisions for resources Appex as a division needs to learn how to get work done using shared resources. Foster cooperation within divisions of EDS Reverse Leadership Passage for top Management: Sikhar has been CEO for some time. He have to now work as a business manager Preparing for new growth: Matrix structure

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Q3 : Address challenges at the end of case

Deal with downsizing
Managing change : Change management will be carried out using 4Rs. Those are Restructuring, Revitalizing, Reframing and Reskilling. Managing Transition : Process of managing transition can be done in 3 ways Deal with Endings: After using 4Rs framework if some people have to move out of organization, the endings should be managed properly using a closing ceremony Neutral Zone: 4Ps framework should be used. Purpose is clear as Appex have been taken over for better growth due to synergies. Picture the scenario should be made to make people understand the purpose. Plan about future should be communicated to all employees. Part: Every employee should know how they are playing part in the new process. Beginning change process: Change process should be taken up with focus on internalizing culture of EDS in Appex.

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Q3: Address challenges at the end of case

Deal with downsizing : When reorganization work ? framework

Powerful Idea

Right Timing

Reluctance of managers Shikhar have to deal with the reluctance of managers who have went through many reorganizational changes in past

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EDS Merger has been done based on analysis & good reasoning. This idea needs to disseminated through all means

In time of M&A, everyone expects change. This is the right time for Shikhar to announce reorganization changes

Q3 : Address challenges at the end of case

Deal with corporate culture change

Establish sense of urgency

Form a powerful guiding coalition

Create a vision

Communicate the vision

Follow 8 steps to transform organization

Institutionalizing the approach

Empower others to act on vision

Plan for short term wins

Consolidate change

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Q3 : Address challenges at the end of case

Follow eight steps to transform the organization
Sense of urgency: Sense of urgency can be created by putting a deadline on the merger completion.

Forming a powerful guiding coalition: A coalition consisting of Paul Gudonis, Bob Lentz, Ted Baker etc. should be formed
Creating a Vision: A vision of making Appex the most successful division of EDS should be shared among employees Communicating Vision: This vision needs to be communicated to all the employees of Appex Empowering others to act on vision: Encourage risk taking and non-traditional ideas, activities and action Plan for short team wins: Creating short term goals and revenue targets will help achieve this goal

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Q3 : Address challenges at the end of case

Follow eight steps to transform the organization
Consolidating improvements and processing still more change: More change can be realized by promoting people who can implement the vision Institutionalizing New approaches: Articulate the how new behavior is linked to success in corporate ladder

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Q3 : Address challenges at the end of case

Deal with Fight for resource allocation
Fight for Resource Allocation: As a part of small part of a large organization, Appex now have to compete with other divisions of EDS for resources. Clear value proposition of the projects and alignment to the EDS corporate strategy is most important to get resources.

Deal with Reverse leadership passage

Reverse leadership passage: As Shikhar and other top management team worked in start-up and high growth mode adjusting to large bureaucratic organization. EDS top management can decide whether to work with Shikhar or find another leader for the new division.

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Q3 : Address challenges at the end of case

Deal with Prepare for new growth
According to Greiner model of organizational growth Appex needed a transition to the fifth phase of collaboration.

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Key aspects to overcome the red-tape crisis and foster collaboration are identified which will be essential in integrating with EDS Phase 5 focuses on management actions through teams and alleviation of interpersonal differences. Social controls are to be used to replace the formal control mechanisms used in phase 4. Teams are to be combined across functions to handle specific tasks. Key managers are to meet regularly to focus on the major problems. Educational programs are to be used to train managers in behavioral skills for achieving better team work and conflict resolution.

Source: Evolution and Revolution as Organizations Grow - Larry E. Greiner

Q3 : Address challenges at the end of case

Create the organizational design & check it using the checklist Will the new design Fit?

Business Unit strategies: Does design direct sufficient attention to intended sources of competitive advantage

Corporate Strategy: Does design allow corporate parents to add value

People: Can key people implement design & functioning well within it

Resources: Is design feasible given available resources

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Q3 : Address challenges at the end of case

Create the organizational design & check it using the checklist Are there potential problems with the new design?
Coordination: coordination between different business units that Appex will now be part of must be fostered. Specialist Culture The specialist cultures must be retained and be protected from influence of the dominant culture of EDS. Redundant Hierarchy As identified above, redundancies must be identified and avoided while integrating into EDS. Accountability Appex as a division will need to be accountable and have clear performance measures. Flexibility The design must be flexible enough to cope with the uncertainties and new challenges. Excessive Complexity The design must be sufficiently straightforward for customers, employees, partners, regulators and suppliers.

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Q3 : Address challenges at the end of case

MATRIX Structure:

Based on Greiners model of transitioning into phase 5 of organizational growth and the checklist for organizational design a matrix structure is recommended for Appex for enabling innovation, performance, and growth after integrating to EDS. The matrix facilitates communication and information sharing which lead to improved multi-functional coordination. The matrix also provides a mechanism for Appex to leverage aspects of EDSs infrastructure and competencies. The matrix organization is also suited to deliver results in the fast paced and technologically driven industry where Appex is playing by remaining customer focused while providing importance to the functions.

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Thank You
any Questions ?