Appex Corporation Case Analysis: Structure and Leadership

Summary of Significant Problems and Issues

Appex Corporation 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's founder and CEO, Brian 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 causing critically important business processes to break down and stop working correctly. As the case's short vignettes illustrate, customer service workers would start the day with a vigorous two-hour game of basketball and then come to work at 10 a.m. Only after the CFO of a leading customer arrived at 8 a.m. for a service meeting was the situation resolved. This story reveals a lack of purpose in the service roles at the time. A lack of leadership and the ability to infuse work with meaning leads to lost productivity and diminished focus (Wheatley, 122–123).

The continued lack of focus on roles and responsibilities, owing to the nonexistent 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 absence of financial planning all signal a structural breakdown. While competitors in this industry worried about maintaining an agile and flexible enough organizational structure to stay in step with rapidly changing market conditions and customer demand, Appex was simply trying to complete the basics of running a business.

The experiments conducted by Shikhar Ghosh did little to solve the problems. The circular structure initially implemented did little to address the company's complex structural and performance challenges. The circular model — ironically meant to create egalitarianism — only created division and discord. The hierarchical functional structure that followed created silos that often did not communicate with each other, eventually reducing innovation and the cross-pollination of ideas. Enterprises with a very high level of innovative thought and action are typically well attuned to each department's information needs, preferences, and — most importantly — strengths (Morgan, 235). This, too, had broken down at Appex, further multiplying the many coordination, communication, collaboration, and leadership challenges throughout the company. Notably, it is only after Appex adopted a divisional structure that it returned to a level of performance capable of sustaining the business.

Analysis of Problems and Issues

The chaotic nature of Appex is a direct result of the lack of structural integrity and, with it, the lack of clarity and communication of expectations and roles by department, functional area, and individual contributor. The continual chaos — which the circular structure, transactionally based tactical management strategies, and a focus on short-term fixes could not address — persisted because of the fundamental, systemic nature of the underlying problems. The lack of insight into what actually needed to be fixed ironically caused the many problems to escalate further out of control. It is very much like watching a race car driver overcompensate for a spin and cause an even worse collision: Appex was on a collision course unless it could regain control of its organizational structure and, with it, its corporate culture. Yet this was only the foundational problem; there were also fundamental leadership gaps and an absence of leadership frameworks necessary to ensure the business could function and survive.

At the leadership level — specifically among Mr. Ghosh's direct reports — transactionally based leadership strategies dominated. These were evident in how short-term rewards were structured and, in many cases, in the complete absence of incentive or guidance for creating more effective individual and team-based performance. The absence of transformational leadership was also contributing to the chaotic nature of Appex, as there was no solid directional vision or mission for the company to work toward (Rifkin, 134). Creating a solid vision that galvanizes a company toward its objectives and establishes a value system for defining which actions, strategies, processes, and systems to pursue is the foundation of transformational leadership (Fitzgerald and Schutte, 498). Yet Appex lacked this level of leadership and had 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, all-encompassing challenges of unifying a company toward a common goal (Senge et al.). For Appex, the lack of transformational leadership was producing a myriad of communication miscues and missed commitments, as no one was entirely sure what their job was — or, worse, whether it really mattered. The apathy and lack of intensity in serving customers that strikes many high-growth companies festers and grows when there is no compelling vision or goal to pursue (Fitzgerald and Schutte, 496–497). Only after creating the divisional structure did a semblance of transformational leadership take hold, rooted in the autonomy employees gained to excel and accomplish shared objectives. In sum, there was a complete lack of autonomy, mastery, and purpose within the organization, largely due to deficient leadership and accelerated by an absence of consistent structure. While organizational agility is crucial to survival in turbulent markets such as high technology, the lack of real leadership and stable structure made Appex's future deeply uncertain.

Conclusion

For Appex, the future depends on overcoming the chaos it faces. Only by creating a more effective organizational structure that capitalizes on the shared knowledge and expertise within the company will customers be better served and new products more efficiently produced. There is also the challenge of knowledge transfer across the entire organization — a challenge that could be better managed through a more organized approach to defining divisions and shared resources. Above all, the company needs to develop a far more effective approach to leadership, including defining autonomy, mastery, and purpose for each employee so that they understand how their contributions affect customers and the future of the business (Fitzgerald and Schutte, 496).

References

Fitzgerald, Susan, and Nicola S. Schutte. "Increasing Transformational Leadership through Enhancing Self-Efficacy." The Journal of Management Development 29.5 (2010): 495–505.

Morgan, Gareth. Images of Organizations. Upper Saddle River, CA: Sage Publications, 2006.

Rifkin, Jeremy. The Empathetic Civilization. New York: The Penguin Group, 2009.

Ritzer, George. The Globalization of Nothing. Upper Saddle River, CA: Sage Publications, 2007.

Senge, Peter. The Learning Organization. New York: Doubleday Publishing, 2006.

Wheatley, Margaret. Leadership and the New Science. New York: Berrett-Koehler, 2007.