Appex Corporation Analysis
Fastest growing high-technology company in United States Revenues grew 1600% between 1987 and 1990 As of April 30, 1990 – 172 employees: 153 salaried and 19 (Hourly compensated) Hire rate: 10 new people every month Cellular Telephone Industry High growth industry Roaming – 10% of total subscriber revenues Papers Products & Services CICS – 60% of the revenue IS -? 40% of the revenues – 75 customers, 250 markets in IS. S. , 34 markets in Canada Marketing: Cellular Business, Mobile Phone News (Magazines), Monthly Newsletter Challenges faced by Shirker Gosh when he joined Apex:
Everybody did things on their own time, attitude towards customers: “We’ll call you back” No formal business procedures Decisions -? Key Executives People had particular expertise, but everybody did anything people did whatever interested them Nobody had any sense of their JDK Structure – Informal & Fluid Employees – Focused, Committed, Hardworking Worked in close interaction, Responsive & Effective Innovative technical solutions Project based, Continued the structure when the projects increased Quick Cash spend and no Expense monitoring Atmosphere changing from Entrepreneurial to Chaotic
Fire-fighting every day, No underlying planned structure Anything a week away had no priority Operation Sequence: Brian (Ideas) C Michael (Reality) 0 Allen (Sales) Mark (Money) Attrition due to chaotic environment Customer Complaints: NO response, technical assistance requests not addressed Increased demand could not be handled Fall behind schedule, miss installation dates, failures in product development – No Information Flow No Financial planning, No recruitment planning Solution: System of Accountability and Structure, Defined areas of responsibility Innovative Structures:
Circular Structure: Concurrent circle expanding out from middle circle.
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(Innermost) Senior executives C Managers & Employees (Functions) Customers (Environment) Non-hierarchical organization in which information flowed continuously and freely within organization and between the organization and the customers (environment) Failure: a. Employees could not relate and were completely unfamiliar b. New hires didn’t know how to fit c. Power structure, Decision making power, Performance evaluation – all grey areas d.
Completely geared towards responsiveness and planning oriented asks failed e. “A mentality developed that the customer was the enemy’ Horizontal Structure: Traditional vertical structure transposed in sideways Failure: a. Employees unenthusiastic Need for Control through traditional hierarchical structure. Hierarchy kcal, Functional Structure: Functions organized as 5 teams: Sales/Marketing, Software Development & Services, Engineering & Technology, Operations, and Financier HER & Admit.
Issues: How many distinct teams, Who should head, Responsibilities now and after growth Diagram: (which minimized the sense of hierarchy) Horizontal for functions reporting to CEO Gosh), displeased the board of directors Titles given informally, but people cared a great deal about the titles, desk locations – Start of Company politics Succeeded in focusing on completion of tasks System of accountability was in place Heads started creating sub-functions Popularization of teams Inhibited working relationships, increasing expenses Personalities arose, Standards set up by individuals rather than company policies The ‘Ego Box’ Meeting Source of Authority: Functional, not managerial expertise Difficult to measure managerial expertise
Need for broader functional expertise: Reshuffling, Hiring, Promoting and Demoting Emerging need of the company – Quality control instead of fire- fighting by the “great Band-Aid” people Paul Godsons: Product Teams, Functional teams informed about product happenings on a daily basis No system specified who had the authority to make which decisions Conflict between Product managers and Operations Product teams did not know where their authority ended Senior executives attended meetings, but needed time for their main responsibilities No systems to set priorities about how resources should be allocated among the team Business Teams -? Intermediaries, representatives from Senior management, Authority in decision, resource allocation Shortcomings: a) More tail than tooth b) Escalating Infrastructure Costs c) Customer Focus Diminished d) Less concerned with Company goals, No P&L accountability, ‘Who-cares” Attitude Divisional Structure: 2 Broad Divisions: Inter Carrier Services (CICS) & Cellular Management Information Systems (IS) Operations: Utility functions that serviced both divisions HER.