Appex Corp. was tagged as the fastest-growing high-technology company in the US in 1990 by the Business Week. The company provides management information systems and intercarrier network services to cellular telephone companies. However, as the firm grew, it failed to prepare for its long-term initiatives. When Ghosh assumed as the new CEO, he implemented changes to Appex’s organizational structure. But in 1991, the company was again challenged when, after being acquired by EDS, it has to develop its structure as a division of a much larger organization.
Nitin Nohria; Julie Gladstone
Harvard Business Review (491082-PDF-ENG)
February 14, 1991
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Appex Corp. Case Answers
This paper presents five new types of organizational structure and highlights the match between the Appex Corp. and the holacratic model. Although there are many illustrated reasons to support the fit, Appex’s CEO should be aware that every organizational structure corresponds to a series of trade-offs. No established model will fit all the company’s needs.
The article, therefore, concludes the discussion with the suggestion of not blindly implementing holacracy, but rather adapting the model to important main points that it does not currently account for (e.g., training of newly-hired employees so they understand the dynamics of their roles, and how accountability and communications happen in the company’s structure).
Context – Appex Corporation
It is 1990,1 and the Appex Corporation, a cellular-telephone company that resulted from the merger of Appex, Inc. and Lunayach Communications Consultants, has been struggling with its organizational structure for nearly three years.
Originally, the company had a project-based structure that was informal and fluid. It allowed Appex to be responsive and innovative, but the entrepreneurial environment became chaotic as the company grew. Appex Corp. had no structure to plan long-term initiatives – they solely tackled problems as they showed up.2
When, however, Ghosh assumed as the new CEO, he implemented changes to Appex’s organizational structure that failed for the respective reasons below:
- Circular – an unfamiliar structure to the employees that targeted customers as an enemy,
- Horizontal – employees did not respond,
- Functional – authority and resource allocation became issues, and
- Divisional – did not solve the issues above and made inter-division communications harder
Hiring about 10 new people and growing approximately 10% every month, Appex Corp. needs a structure that promotes innovation through the flattening of work relationships. Innovation, however, must not compromise accountability or communications among teams, as well as the institutionalization of customer-centricity.
On top of all this, the structure should provide Appex with a model that is…
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