Name – Aruna Perumal

Case 1 – Appex Corporation

1982, is an evolution of Cellular Telephone Industry in USA. Appex Incorporation, as a start up it had ‘first mover’ growth. Like
any start ups, Appex Inc. had Entrepreneurial culture and Flexible structure which enabled them to achieve $2 million as
revenue with 25 employees. Appex Corporation was founded in 1986 (merger of Appex Inc. and Lunayach communication
consultants), a consolidated company with engineering expertise, business and system expertise.

Historical events (chronological order)

Period Event brief Then Then Decision making Then

Org. Structure
Until May Mr. Brian Boyle, first >>Flexible structure –
1988 CEO of Appex Inc. everybody just did what they
felt like
>>Very informal and fluid
Org. Culture process How was the Business ?
Entrepreneurial culture >>Individual decision >>Appex was very
– people had particular making styles were very responsive and effective at
expertise, but prevalent getting things done quickly
everybody did anything >>Rational Approach- >>Also relatively cheaply
Boyle’s innovative >>Appex growth rate was
technical solutions much faster/ higher than
enabled them to Industry growth rate
compete against
established firms

May 1988 >>Mr. Shikhar Ghosh >>Project-based structure Shift from >>No particular decision >>Appex was spending cash
appointed as COO for >>Work was organized around “Entrepreneurial” making process was quickly and not monitoring
Appex Corp projects culture to chaotic evident as there was no its expenses.
>>Investment group accountability >>Customers began to
targeted Ghosh to bring >>this led to complain
more control to Appex unproductive Appex >> Failures in product
development, no financial
planning
Subsequent >>As new CEO. Ghosh Circular structure <<‘Flexible’ culture to <<Imbibed from <<employees could not
months was eager to try ‘Control’ Japanese companies relate to the circular
innovative <<Power distance is <<Imitating, Intuitive structure
 organizational structure HIGH <<employees mentality of
>>Implementation of ‘customer was the enemy’
first structure <<operating cost was high
Feb 1989 >>Innovative structures <<Hierarchical, Functional <<’Control’ culture <<Shift from Individual <<minimum threshold of
were inadequate structure decision making process control was achieved
>>Ghosh established <<Lack of managerial to Organizational <<within few months,
Hierarchical, Functional expertise gave way to Product decision making process functional teams created
structure Teams, followed by business << Incremental Decision sub-functions within their
teams process model was teams
evident eg., BODs were << teams became
displeased who wanted polarized, Appex ended up
Ghosh to present a spending more money on
traditional diagram of a System development and
hierarchical Operations
organizational structure <<Power and politics came
from horizontal fashion into existence
<<Customer focus
diminished
<<company-wide financial
goals became less
concerned
As of Apr <<Appex employed 172 <<Hierarchical <<’Control’ culture <<Dominant coalition <<Exponential Revenue
1990 people <<Product team / Business groups evolved growth from $1.0 million
<<10 new employees team structure <<Gudonis and Ghosh (in 1987) to $16.6 million
were added every month thought process synch (in 1990)- grew by 1600%
led to combination of <<creation of product
Carnegie and teams solved some of the
Incremental Decision functional structure
process models problems but generated
new problems
<<No system of profit and
loss accountability
Aug 1990 <<Implementation of Divisional Structure << Cultural Shift from <<Divisions began to act >>Business Work rated
Divisional Structure ‘Control’ to like small companies Appex the fastest growing
<<Established two broad ‘Accountability’ <<as Learning high-technology company
divisions – ICS and IS <<Collaborative and Organization, Garbage in USA
 Competitive Can model evolved. Eg., >> uncertainty caused by
while there was structural changes were
cooperation within mitigated by financial
Divisions, there were targets.
high walls between >> Targets established
them stability
Oct 1990 EDS acquired Appex Divisional Structure Bureaucratic Unknown >>Appex followed EDS
requirement like Financial
planning systems, resource
allocation systems and
administrative procedures

With the above facts, each of the three components ie., Organization Structure, Organization Culture and Decision making
process do strongly impact and influence each other in the following ways:

 Success of an Org. Structure is strongly dependent on Culture. Mr. Ghosh coming from consulting background (from BCG)
believed Appex needed control and structure with the initial analysis. While Appex experienced success of $2 million
revenue with 25 employees with more Flexible culture and structure. An initial challenge posed by Ghosh was largely
influenced by Appex’s prevailing culture.
 Circular structure failed, as it was imbibed from Japanese companies. USA and Japan are culturally two different
countries. At Appex, employees were unable to relate Circular structure and its benefits. It was completely unfamiliar
among the existing and new hire employees. Ghosh’s Individual decision though Rational did not led to desired results. Its
extended effect also led to attrition as people who could not withstand the chaos QUIT.
 ‘Fail Fast’ approach helped Ghosh to go back to Identification phase again and again as part of Incremental Decision
making process, within 9 months another structure was implemented ie., Hierarchical / Functional Structure. As a
culture, Ghosh believed that when company grows at 50% rate, it is time to change the structure.
 Introducing Structural changes very often (ie., at 9 months, at 6 months and at times even within 2 months) clearly lead
to Operational cost. Any kind of Org. Changes needs high level of efforts during implementation process. These speedy
changes, uncertainty conditions resulted in many Org. Decision ERRORs. This case is clear indication of how Org. Structure
/ Org. Culture / Decision making process not only influence but also impact each other.
  As learning organization, Appex evolved like matured organization by revisiting their decisions often. Their collaborative
team (ie., functional and managerial) recognised and designed Operations and Administrative Divisions, along with two
key Divisions ie., ICS and IS. Structural changes influenced the Org culture to shift from ‘flexible’ to ‘control’ to
‘accountable’ to ‘Target driven’
 Though Appex initially suffered heavy Operational cost, lacked financial planning, accountability among the functional
teams due to their strong Technical Solutions its growth rate was well ahead of the Industry. Market Environment, a key
external factor was very friendly with less or no competition.
 Also recognizing the positive and healthy outcomes, Structural and Cultural changes influenced Incentive schemes. Ghosh
established bonus system which fostered team work.
 Company-wide financial and strategic GOALS became more focused.

Further In the process of Structural, Cultural changes Appex compromised on diminishing ‘Customer Focus’. While Appex earned
exponential % of Revenue there were heavy cash spending, no monitoring of expenses. Until implementation of Divisional
structure financial planning and budgeting were compromised. Ghosh’s effort to balance between day-to-day operations and
strategic directions got streamlined and focused with Divisional structure and collaborative culture.