January 27, 2013
1. What were the challenges that Appex CEO Shikhar Ghosh faced when he joined Appex? Why were “structure and control” deemed necessary? Following were the challenges which Ghosh faced when he joined Appex: * The organization was initially small and the decision-making was centralized among the key executives. All other employees were only involved in developing and selling products. * People had expertise in definite sectors but everybody did nothing. * There was no functional structure, roles were not defined and there was no job description * As the market was growing, more projects poured in and people worked on many projects at once * The environment started becoming chaotic and the company was spending cash quickly without monitoring its expenses. * Employees were only “fire-fighting” with the existing operations and there was no development or underlying planning structure. * Customer complaints started increasing and Appex was unable to handle the increasing demand and volume of customer requests. * Company started missing the installation dates and fell behind schedules, there were failures in product development. * Information flow started becoming difficult, there were clashes in the product development process and coordination and integration started falling apart. * There was no financial planning, the operations became unproductive and looseness of projects didn’t work. 2. Evaluate the importance of each of the structural changes Ghosh implemented with respect to importance, problems resolved, and problems created;(a) start-up, (2)circular, (3)functional,(4)teams, and (5)divisional. As the company was rapidly growing and there was a need for organizational structure change, Ghosh started by implementing innovative structures. There were a series of problems and limitations that followed after each structural change in the organization and hence Ghosh kept on implementing new structures to address the issues at each level. Following are the stages of Appex Corporation’s structural changes done by Ghosh: I) Innovative Structures
a) Circular Structure – Concurrent circles with inner most circles containing the senior executives followed by the functional managers and employees respectively. The environment around the circle represented the Appex’s customers. Importance: It was a non-hierarchical structure with continuous and free flow of information within the organization and with the environment (customers) Problems Addressed:
1. Introduction of a flat structure with defined roles and less chaotic atmosphere 2. Improvement in coordination, integration and planning over the earlier Problems Created or persistent:
1. Employees could not relate to the unfamiliar circular structure – New hires couldn’t understand how they fit in organization, with whom to talk to get things done, how the performance was evaluated, what was the power structure and who had authority to make which decisions. 2. There was a mentality developed that the customer was the enemy 3. It was aligned with responsiveness but had no accountability for planning and the task s that required planning were not get done b) Horizontal Structure – The traditional, vertical organization chart turned on its side Importance: It was a non-hierarchical structure in which employees could fit themselves Problems Addressed:
1. Employees could now relate themselves with the new structure 2. It was similar to traditional organization structure with clarity of responsibilities and reporting structure Problems Created or persistent:
1. Employees didn’t respond to the new structure enthusiastically 2. There was a lack of authority and control because of which employees were not responsive II) Hierarchical, Functional Structure
a) Stage 1 – Functions were organized as teams in Feb. 1989: Sales/Marketing, Software...