Essay on "Harvard Business Case Analysis"

Essay 6 pages (1962 words) Sources: 6

[EXCERPT] . . . .

Appex Case Analysis

Summary of Significant Problems and Issues

Appex Corporation has experienced hyper growth as a result of favorable market dynamics in the management information systems and intercarrier network services industry for cellular telephone companies. The company founder and CEO, Brain Boyle, who was primarily a technologist, was not prepared or trained for the many leadership and organizational challenges the company's explosive growth would present. As company culture will often reflect structure over time, the continual lack of focus on these factors can eventually lead to a chaotic condition within many businesses (Morgan, et.al.).

The lack of structure was also leading to critically important business processes also breaking down and not working correctly. As the case's short vignettes illustrate, customer service workers would start the day with a vigorous game of basketball for two hours then come to work at 10am. Only after the CFO of a leading customer came in at 8am to meet with service did this situation get resolved. This story shows that there is a lack of purpose in the roles of service at the time. Lack of leadership and the ability to infuse work with meaning leads to lost productivity and lack of focus as well (Wheatley, 122-123).

The continued lack of focus on roles and responsibilities due to the non-existent structure began to manifest itself in many other areas of the business as well. These are all symptoms of systemic structural problems in the core operations of the business. Lack of follow-through with customers, missed delivery times and installation dates, and a complete lack of financial planning all signal a structural breakdown in the business. While competitors in this industry worried about having an agile and flexible enough organizational structure to stay in step with rapidly changing market conditions and customer demand, Appex was just trying to get the basics of being a business completed.

The experimentations by Shikhar Ghosh did little to solve the problems, with the circular structure initially implemented doing little to solve the complex structural and performance problems of the company. The circular model, ironically meant to create egalitarianism, only created division and discord. The hierarchical functional structure created silos that often did not speak with each other, eventually leading to a reduction in innovation and cross-pollination of ideas. Enterprises that have a very high level of innovative thought and action typically are very well attuned to each department's information needs, wants, preferences and most importantly, strengths (Morgan, 235). This had also broken down in Appex, further multiplying the many coordination, communication, collaboration and leadership challenges throughout the company. Ironically only after Appex adopts a divisional structure does it return to a level of performance that can sustain its existence as a business.

Analysis of Problems and Issues

The chaotic nature of Appex is a direct result of the lack of structural integrity and with it, clarity and communication of expectations and roles by department, functional area and individual contributor of the company. The continual chaotic nature that can't seem to be addressed with a circular structure, tactical management strategies that are transactionally-based in nature, and the focus on short-term fixes to very systematic and fundamental problems in the business persists. The lack of insight surrounding just what needs to be fixed ironically makes the many problems just escalate more out of control. It is very much like watching a race car driver overcompensate for a spin and cause an even worse collision; Appex is on a collision course unless it can get back in control of the organizational structure and with it, the culture of the company. Yet this is just the foundational problem of the company; there are fundamental leadership gaps and non-existent leadership frameworks to ensure the business functions as it needs to in order to survive.

At the leadership level, specifically Mr. Ghosh's direct reports, transactionally-based leadership strategies dominate. These are evident in how short-term rewards are structured and in many cases, no incentive of guidance at all for how to create a more effective individual and team-based level of performance. The absence of examples of transformational leadership is also contributing to the chaotic nature of Appex, as there is no solid directional vision and mission the company is working towards (Rifkin, 134 ). Creating a solid vision that galvanizes a company towards it objectives and also creates a value system for defining which actions, strategies, processes and systems is the foundation of transformational leadership (Fitzgerald, Schutte, 498). Yet Appex lacks this level of leadership and has reverted to a transactional approach to managing its many departments and divisions. Transactional leadership is also predicated on short-term rewards and punishments that often fail to scale to the more complex, and all-encompassing challenges of unifying a company toward a common goal (Senge, etl.al.). For Appex the lack of transformational leadership is leading to a myriad of communication miscues and missed commitments due to no one being completely sure what their jobs are and worse yet, if they really matter. The cancer that strikes many high growth companies, apathy and a lack of intensity on serving customers, festers and grows when there is a lack of a compelling vision and goal to be achieved (Fitzgerald, Schutte, 496, 497). Only after creating the divisional structure does a semblance of transformational leadership take hold based on the autonomy that employees have to excel and accomplish shared objectives. In conclusion there is a compete lack of autonomy, mastery and purpose in place for this organization today, which is largely due to the lack of leadership. it's being accelerated by a lack of consistent structure. And while agility of any organization is crucial to its survival in such turbulent markets as high technology, a lack of real leadership and stable structure are making this company's future a very uncertain one.

Discussion of Major Alternative Courses of Action

For Ghosh, the alternatives include continually pursuing a divisional structure, expanding and creating more efficient business teams, moving towards a more cross-functional structure, or breaking apart the company into completely separate business units and operating them as independent companies. All of these alternatives have risks and will force Appex to face one of the most daunting, difficult challenges that permeate the case: amidst all the chaos the company is experiencing they have no way of ensuring a solid foundation of knowledge transfer much less knowledge management. Of these alternatives the company is still going to have confront the lack of information flow and the lack of knowedlge cross-pollination that is critical for their business to continue growing.

The first alternative of pursuing a divisional structure will allow for a level of autonomy to be created in each business unit which will galvanize departments to a common objective. It will also serve to create information-based economies of scale to ensure higher levels of customer service incouding the meeting and exceeding of customer expectations. A divisional structure will also allow for more precise financial reporting and analysis as well. The downside of this approach is the lack of interprocess integration and lack of knowledge management capabilities inherent in this structure. Highly divisional organizational structures, when they become globalized, often lead to duplicated systems, processes and lack of oversight and compliance to broader corporate initiatives (Ritzer, et.al). This is the risk Appex runs if they continue on this path.

The second alternative is to create business teams that are cross-functional structure and continually seek out a modified matrix-like structure to support this option. The benefits of this plan are the ability to bring greater levels of expertise to a given problem including the reduction of the learning curve for these areas of the business. The downside of this is the role- and time conflicts that are inherent in this specific type of organizational structure. There is also the fact hat this type of organizational structure has typically not scaled well in complex industries including aerospace and high technology (Morgan, et.al).

The final option is to go for a completely broken out organizational structure that is where the company is headed today. This is going to just exacerbate the communication issue and also lead to less knowledge sharing and knowledge management over time. It will make the company run smoother in the short-run yet will force greater stress on operating units to collaborate and communicate clearly.

Statement of Specific Actions Recommended

Ghosh needs to define an organizational structure rigid enough to support and strengthen the core aspects of Appex while also allowing for enough agility for the company to meet continually changing market demands. A divisional structure is the best possible alternative given the need for teams to be cross-functionally coordinated to compete complex projects while at the same time enabling knowledge management. A hybrid divisional structure will also allow for greater flexibility in responding to the very turbulent nature of the business Appex is in, and will also ensure a more effective level of collaboration and knowledge management as well.

Implementation Strategy

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