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

Cortina

Kanas

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

Level of Responsibility

Organizational

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

Departmental
Individual

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.

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
Summer 88 Late 88 Feb 89 Aug 89 Nov 89 Aug 90

< 26
< 26 ~ 26 ~ 40 ~ 80 ~ 100 ~ 150

Informal - Start-Up
Circular Horizontal Hierarchical/Functional Addition of Product Teams Addition of Business Teams 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

Circular
Pros
Free flow of information Theoretically customerbased Theoretically responsive structure

CEO

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

CEO

Cons
Development of subfunctions Polarization of teams Reduction on cooperation Poor skill/management matches

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

PT

Business Teams
Pros

GM
BT

PT PT PT

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

Divisions
Div Pros Cons

CEO Div

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

Sudden & immediate changes? Business alignment? What to achieve? Wellthought process?

Cultural: artifacts values assumptions

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