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Harvard Business School

9-491-082
Rev. February 10, 1992

Appex Corporation
In May 1988, six months after being made a partner at the Boston Consulting Group, Shikhar Ghosh decided to accept a position as Chief Operating Officer of Appex Corporation, with the understanding that shortly thereafter he would be made Appex’s Chief Executive Officer. At BCG, Ghosh’s specialty was organizational structure, particularly how to create rapid-response organizations. “I left BCG with my head full of ideas of how to structure organizations. I was eager to try out my ideas at a small company where there was little hierarchy,” Ghosh stated. Appex, at the time, was a relatively small company, with twenty-five employees, and $2 million in revenue. The company was entrepreneurial, technology-driven, and loosely structured. But it was losing money rapidly and the venture capitalists who had invested in the firm were hoping that Ghosh would be able to turn it around. Ghosh commented on the nature of Appex when he arrived: Everybody just did what they felt like. For instance, customer service people were supposed to start at 8:00 a.m. They wouldn’t arrive until 10:00 a.m., but they would work until 2:00 a.m. Everybody did things on their own time, and the attitude toward the customer was—”We’ll call you back.”

The chief financial officer of one of our customers told me of an incident he experienced at Appex. He arrived at 8:00 a.m. to find few employees present. He waited for two hours. The Appex group was playing basketball at a court nearby, and showed up at 10:00 a.m. Sweaty, and in their athletic clothes, they greeted him. Needless to say, we lost that account.

Reflecting on his initial impression, Ghosh stated: “I knew what had to be done. Appex needed control and structure.”

Company Background
Appex Corporation, headquartered in Waltham, MA, provided management information systems and intercarrier network services to cellular telephone companies. The company was founded in May 1986 from the merger of Appex, Inc. and Lunayach Communications Consultants (LCC). LCC specialized in the design and engineering of cellular radio networks for cellular companies. Appex, Inc., founded in 1984 by Brian E. Boyle, focused on management information systems for the cellular industry and credit scoring systems for financial service companies. The consolidated company, named Appex Lunayach Systems Corporation (ALS), integrated LCC’s Research Associate Julie A. Gladstone prepared this case under the supervision of Professor Nitin Nohria as the basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. Copyright © 1991 by the President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Harvard Business School.

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This document is authorized for use only by Zhongyun Gu in Introduction to Organizational Behavior taught by Mallika Banerjee from January 2013 to April 2013.

For the exclusive use of Z. GU
491-082

Appex Corporation

engineering expertise and Appex, Inc.’s business and systems expertise. ALS changed its name to Appex Corporation in May 1989.
In 1990, Business Week rated Appex the fastest growing high-technology company in the United States. Revenues grew 1600% between FY1987 and FY1990 (fiscal year September 1-August 31), and were expected to continue to grow rapidly.

Total Revenues (million)
1987

1988

1989

1990

$1.0

$2.3

$6.8

$16.6

As of April 30, 1990, Appex employed 172 people, of whom 153 were salaried and 19 were compensated on an hourly...
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