APPEX Corporation: A Case Study

Group 3 - (Amit Kumar Agrawal, Kaushal Kabra, Kunal Desai,

Shubham Goyal, Jatin Tuteja, Aaron Antony)

1. What were the challenges that Shikhar Ghosh face when he joined Appex?

Shikhar Ghosh, an ex-partner with the Boston Consulting Group, had been exposed to a variety of
organizational structure related projects and had novel ideas in mind, and had signed up to set things
right for Appex – a fledgling fast-growing company facing multifarious problems lately – the culture
had changed from ‘entrepreneurial’ to ‘chaotic’. However, Ghosh was quick to realize that the problems
he faced and the challenges he had to overcome at Appex were multifold:

I. Highly individual-dependent work culture: The work regime prevalent at Appex was
concentrated around key figures (as mentioned the then CEO’s innovative technical solutions
helped the company compete against established firms)
II. No structured procedure for task management: People used to work haphazardly on projects
assigned to them, without coordinating much with each other primarily because of lack of
clarity as to what each one was supposed to do and less knowledge about what others were
doing
III. People expertise not sufficiently harnessed: Specific skillset of employees were not utilized
effectively as each person used to participate in activities he wanted to take part in, and there
was no control over who would be assigned what part of a project
IV. Lack of control/authority over employees: Instances like keeping a customer waiting in the
office while the employees are off playing football in the working hours is clearly suggestive
of a lack of control and authority over rules and norms in the work place
V. Fire fighting was more routine than planned work: With lesser planning focus and chaotic
management of work-at-hand, fire-fighting was the rule of the day. This hindered the
development process of the company and also affected its ability to create new products in
the planned timeline
VI. Poor human resources and finance practices: Chaotic environment and unplanned work
systems created stress among the employees, also leading to attrition among those who could
not cope up. Also the fact that projected number of employees to be added on to the roll list
varied a lot from the projection suggests that people management and financial practices were
not up to the mark at Appex

All these factors combined to result in a situation that led to a lower customer satisfaction, opaque
employee career development path and narrow-minded focus on only short term issues of the company.
The investors too had felt that Appex was spending cash too quickly and not making judicious use of it.
Ghosh appreciated the fact that a structured organization structure would be required to address all these
challenges together.

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?

After joining Apex, Ghosh realised that early on the structure was very informal and fluid. But the
atmosphere was changing from “Entrepreneurial” to chaotic. He believed that Appex needed to address
both Long Term planning issues and immediate issues. He tried to implement various structures, which
have been detailed below:
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 1. Circular Structure
Importance: It created a non-hierarchical organization where information flowed continuously and
freely within the organization and between the external stakeholders and the organization.
Problems addressed: Created a Flat organisation by removing the organisational hierarchy thus
leading to free flow of communication within the organisation
Problems created:
 New hires couldn’t understand how they were meant to fit into the organization.
 Employees had no idea about the power structure and who had authority to make which
decisions; they did not know how their performance will be evaluated.
 Developed a mentality among the employees that customer was the enemy
 Decisions were based on Responsiveness rather than Planning

2. Horizontal Structure
Importance: Non-hierarchical structure where the traditional vertical structure was turned to the side
Problems addressed: Employees were familiar with this traditional structure; Clarity of roles and
whom to report to
Problems created: Employees turned unresponsive; Lack of orderliness in the structure

3. Functional Structure
Importance: The functions were organized as teams i.e. Sales, Software Development, Engineering,
Operations, Finance, Human Resource and Administrative team. Brought in a structure with
minimizing the sense of hierarchy

Problems addressed:
 Focused the employees on completing the tasks. Sales people focused on sales and Finance
people focoused on Financial planning
 Improved basic capabilities of the company
 System of accountability within the Team Heads as they reported to Ghosh
Problems created:
 Complexity increased as organization began to expand and heads of each team started
creating sub teams and sub-roles
 Polarization started as people started focusing on their own functional goals rather than the
overall business objective.
 Politics came into existence
 Standards were set by individuals rather than company policy. Role of personalities increased
 Team heads had functional expertise but they lacked managerial competence
 Ghosh did a lot of reshuffling and job rotation within the team within a very short duration
which led to a lot more chaos and confusion among employee

4. Product Teams
Importance: Separate product teams for each product with the functions integrated into the Product
teams.
Problems addressed: Functional teams and the product team co-existed together. Functional teams
were informed of happenings on product teams on daily basis
Problems created:
 No system was in place to understand the level of authority to make decisions
 Constant disputes among the functional representatives in the Product team
 Product teams didn’t know where their authority ended. No clarification on tasks to be
performed
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  No system to set priorities about how the resources should be divided within the team

5. Business Structure
Importance: Intermediaries between the product team and the corporate management team.
Consisted of representatives from senior management who had authority to take decisions on both
functional and product staff.
Problems addressed: Authority and resource allocation problem
Problems created:
 There were lots of people at planning roles rather than in the revenue producing roles
 Customer focus diminished. People became more concerned with internal processes
 Lack of profit and loss accountability thus people were less concerned with meeting
customer’s needs

6. Divisional Structure
Importance: Two broad divisions were established for different product. A separate division called
Operations was established to service these two businesses. Each division had one head who was
responsible for the entire division and reported to Ghosh
Problems addressed:
 Improved Accountability, budgeting, and planning
 Employees focused on meeting Financial targets
 Lesser dependency on Ghosh as functional responsibilities were taken up by the divisional
heads

Problems created:
 Problem with resource allocation; senior executive’s decision wasn’t perceived as equitable.
 Lack of communication flow across divisions and little cross pollination of Ideas
 Divisions wanted control over all their resources, hence increasing the input cost
 Each division in itself was a small Appex Corporation and faced problems which Appex
faced when young. There was a lack of communication and cross-pollination of ideas.

3. What would you have done in Shikhar’s place? Were all the changed in structure necessary?
How would you address the challenges Shikhar is facing towards the end of the case?

Appex Corporation’s spending had increased rapidly because of an excessively complicated

organisational structure. They were missing deadlines due to lack of customer focus and lack of proper
planning.

Shikhar kept on changing the organisational structure at frequent intervals, thereby creating confusion
among the employees and not allowing any long-term plans to take shape. If we were in Shikhar’s place,
we would have first looked at the primary problems he was facing and then come up with a structure
that directly addresses these issues, keeping in mind the high growth rate of the company.

The various organisational structures implemented by Shikhar were as follows:

 Circular Structure
 Horizontal Structure
 Hierarchical/Functional Structure
- Product Teams
- Business Teams
 Divisional Structure

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 The circular and horizontal structures implemented by Shikhar were flawed and lacked long-term vision.
These structures lacked clarity regarding the decision-making authority, and caused ambiguity among
employees. If we were in Shikhar’s place, we would have avoided these innovative structures because
of these reasons.

The functional structure was a more traditional structure which experienced success initially. But this
structure started facing problems later on due to introduction of unnecessary hierarchical layers. In
Shikhar’s place, we would have done the following:

1. Clearly define the functions that each department will handle.

2. Define organisational policies and enforce them in order to prevent different functions from
developing their own policies.
3. Set targets based on overall business objectives for each department to promote inter-departmental
collaboration.

The product and business teams were introduced in order to deal with the shortcomings of the traditional
structure. But these structures created their own problems like loss of customer focus.

The divisional structure was thus introduced to deal with these problems. In Shikhar’s place, we would
have done the following to improve the performance under the divisional structure:

1. Stick to a single structure for a longer duration of time to ensure stability and avoid confusion
among employees.
2. Create cross-divisional teams to enhance flow of information between divisions.
3. Encourage divisions to focus on organisational goals instead of divisional goals by practicing
better resource sharing.

Appex as an organisation has been focused on providing innovative cellular services at low costs. Hence,
cost minimisation is one of the major performance parameters for Appex. The current divisional
structure has led to duplication of resources, thus creating additional costs.

Hence, we suggest a combination of divisional and functional structure. This structure would combine
the benefits of both the structures. These would include:
- Increased customer focus by providing more autonomy in projects.
- Creating cross-functional linkages to enhance communication between different departments.
- Creating centralised resource allocation teams that focus on organisational objectives.
- Enhancement of cross-functional knowledge sharing to help various departments learn from
each other and develop new ideas.

Post-Acquisition by EDS

Since Appex now functions as a division of EDS, it needs to incorporate the following structural changes
to align itself with the larger bureaucratic organisation:

- Integrating senior executives from EDS at the top of Appex’s structure.

- Integrating support functions provided by EDS with Appex’s existing structure. This would help
reduce additional costs related to individual support functions.

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