APIGEE: People Management Practices and the Challenge of Growth

Submitted by Group 8
Adwait Wagh – PGP35251 Piyush Kedia – PGP35278
Gargi Mahato – PGP35262 Prativa Das – PGP35259
Neha Gupta – PGP35275 Shivam Chopra– PGP35291
Nikita Agarwal – PGP35276 Saurabh Paul – PGP35286

Situational Analysis:

The case deals with a well-known application programming interface (API) provider, Apigee Technologies
Pvt. Ltd., the key drivers for its outstanding success in the recent past and reasons for concern facing the
senior management of the company, led by its Vice-President and Managing Director, Mr. Srinivasulu
Grandhi.

Brief Introduction: Apigee was founded in 2004, with its headquarters in San Jose, California and regional
offices in Bangalore and London. The CEO, Chet Kapoor, joined in 2007 and the VP & MD, Mr. Grandhi
joined in 2011. Apigee offered an excellent API platform that enabled companies to securely share their
enterprise data & services in an attempt to provide connected digital experiences. Its mission was “to
deliver products that help make every business a digital business” and its API offerings helped businesses
to innovate and adapt to rapidly changing customer & market needs. Apigee’s total revenue grew from
$27.6mn in FY12 to $52.7mn in FY14, and in April’15 it came out with its IPO. By 2015, it became the
leading player in enabling digital transformation across industries, and diversified into 3 main areas of
operations – products, consulting & implementation. It constantly worked on innovation, having strategic
alliances with Accenture, SAP & GSMA.

The Unique DNA of Apigee: The distinguishing factor which was driving the success at Apigee was its
heavily people-centric culture – Apigee strongly believed in prioritizing ‘people over processes’. This
unique culture, “The Apigee Way”, was the outcome of culture-building exercises initiated to identify the
company’s core values. Its leadership team had developed a bottom-up approach of culture building, and
ultimately 3 critical values were internalized throughout the organization – passion, a bias for action, and
respect. Apigee believed that a strong people-culture would automatically drive the performance of its
employees, and enable it to beat its competitors in terms of the quality of services being offered. A light-
hearted and friendly office environment was fostered, customer-centricity became the cornerstone of
decision-making, and a flat organizational hierarchy was followed. All this allowed quick decision-making
and a consequent low response time for clients thereby enabling rapid resolution of client needs. The
work culture enabled autonomy, openness & spontaneity, empowering employees to take new challenges
and be innovative in their approaches.

HR Practices: The HR practices at Apigee were also designed in order to support and enhance the core
values mentioned above. Hiring was done so as to ensure only people with the highest integrity and sense
of commitment were brought into the system, thus requiring a rigorous selection process. The
performance management system, which was earlier bi-annual, was later replaced with a dynamic app-
based system that captured performance in real-time, through monthly reviews & self-reviews. As a flat
organization, Apigee couldn’t frequently change employee designations, and hence growth and
promotion were not characterized by change in designation but by increased responsibility. 70% of the
employees mentioned work-life balance as their top reason for working here, given that Apigee
encouraged an ideal work-life balance by offering flexible work hours, giving a work-from-home option
and enabling family vacations for employees. There was also no formal “meetings culture” – as a
consequence of which the office layout was simply one with desks laid out in a large hall and not a single
cubicle. In terms of compensation, Apigee offered stock options and more-than competitive salaries to its
employees, thus ensuring all-round employee satisfaction. Its policy of self-managed teams (called
“molecules”) centered on “empowerment” and “innovation”, encouraging the molecule leads to
experiment with people management practices within their respective teams.

Given that the company had these strongly imbibed practices and culture in place for its people, and that
it was currently in a rapidly growing phase (91% over the past 2 years), this gave rise to the problem
statement discussed below.

Problem Statement:

•Can APIGEE’s culture thrive even when the organization grows?

•Would moving too fast lead to breakdown of APIGEE’s culture?

•Was it possible to embed APIGEE’s culture into people’s consciousness through use of institutional
process? Or would such an effort betray APIGEE culture of autonomy and freedom?

These are the questions that Mr. Grandhi wants answer to towards the end of case.

However, the main question remains the same as of the past when Grandhi expanded the company from
250 employees to 400 in 2015, that will APIGEE be able to sustain and nurture its existing culture upon
expansion!

Alternatives:

We know that the unique culture of APIGEE and its effectiveness has been the major cause of its
exceptional success in the industry thus, risking the same at the cost of organizational expansion would
surely be unacceptable and not the best strategy.

The various alternatives we have are:

1.Change the organizational structure along with the expansion now into functional or divisional or mix
of both to incorporate this expansion successfully and be relieved of any expansion in future.

2.Standardize and document all processes and tasks thereby implementing organizational policies for
employees to strictly follow the same.
3.Sustain and nurture the existing culture just by implementing proper monitoring on employees.

4.Sustain and nurture the existing culture by trusting the maturity and capability of the employees and
making sure hiring new talent process is the best and gives you people who align with organization values
and mission without any push or pull.

Criteria for Evaluation:

The following criteria are important:

1. Hierarchy - The hierarchy in positions will bring out a structure in the organization.

2. Culture fit – Considering the Apigee work culture, it’s important to have people who for into the culture
of the company.

3. Employee monitoring – Considering the free end and relaxed work environment of Apigee, monitoring
employees is important.

4. Hiring process – Summarizing the above criteria, the Hiring process is an important criterion to evaluate.

Analysis and Decision:

Cons of rejected options:

Option 1:

We see the current organizational structure of APIGEE’s is flat, which is although a proven effective way
to handle the workforce but it has its limitations since there is no power distance and therefore, expansion
can lead to loss of effectiveness in worse case however, changing the organizational structure by divisions
and functions is surely a safe way on the current expansion and future ones too, but it does not preserve
the current culture.

Option 2:

Another way to protect the effectiveness of the organization in major expansion is by standardizing all
processes and make sure all employees follow the documented SOP’s. This would make the organization
effective overall but for sure will strike off the unique culture of APIGEE as it would take away freedom
and major levels of individual ownership and decision making from employees which in turn would affect
all the other variables of the culture at the organization.

Decision:

Following option 3 and option 4 together i.e. proper hiring processes, making sure that a candidate hired
is the best fit for the role and sound from the cultural aspect i.e. mature and capable plus loves freedom
at work to make effective decisions and not utilizes given freedom to waste time and energy, also has
passion for his work and takes swift actions i.e. responds quickly to clients problem and respects peers.
Monitoring shall also be implemented in order to make sure that people who are not the top performers
i.e. mid and low level performers are not let free to relax instead are checked time to time and talked
upon by their seniors for various actions and causes so as maintain the push towards effectiveness for
which the organization is known.

This shall also preserve the other variables of the APIGEE unique culture which have acted as the DNA of
the organization and have been the major cause of its success.

Contingency Plan:

The risks with our chosen alternative remain the same as mentioned in our problem statement – will the
organization be able to sustain the culture and work ethic embedded despite the high growth phase and
large number of employees in the future. Even currently a small number of employees misuse the freedom
being offered, so there is a high probability that this number would increase in future, if sufficient controls
are not put in place. Continuing with a flat hierarchy with an increased workforce might lead to problems
of its own, in terms of lack of streamlining of processes and overlapping of decisions.

With respect to having a backup plan, with an increased workforce it might be prudent to do away with
no restrictions and filters used on office work-systems, as it would be difficult otherwise to ensure that
no employee would compromise clients’ work. Also, in case the chosen plan of focusing more on hiring
with the current HR practices and organization structure in place doesn’t work out as planned, as a
contingent plan the company should keep an alternate organization structure in place having some levels
of hierarchy in order to better monitor the large workforce and streamline the processes in a better
manner. Also, some HR policies such as unlimited leaves might also need to be re-looked at, and a formal
leave policy put in place.