What do you think of Shikhar Ghosh’s views of organization structure?

Please discuss each stage with

specific references to Greiner’s model of organization growth [p.326-331] and the characteristics of
different organizational structures.

On May 1988, Shikhar Ghosh was recruited as COO and shortly afterwards CEO to reform Appex
Corporation.

The primary problem that Shikhar Ghosh faced on arriving at Appex Corporation was the chaotic
condition of the company’s current organizational structure. From the case it is evident that as the
company grew, there was need for organizational structure change. Shikhar Ghosh continuously tried
out new ideas by implementing different organizational structures. there were a series of problems and
limitations that followed each structural change in the organization and hence he kept on implementing
new structures to address the issues at each level. We will now describe each stage of the appex’s
structural changes done by Ghosh.

Firstly Appex Corporation started out with a close-knit group of employees that could easily adjust to
changes and solve problems rapidly. This is similar to Stage 1 of Greiner’s model which talks about
Growth through Creativity. Innovation and entrepreneurship went hand in hand. Decisions were made
by the key executives and everyone else was involved in developing and selling products. However, as
Appex Corporation grew and new employees were hired, the former business structure began to fail.
Employees were more focused on solving day-to-day problems. They were unable to address the
increasing number of customer complaints. There were significant failures in product development.
Information Flow was becoming increasingly difficult.

Secondly, Shikhar Ghosh understood that there was a Crisis of Leadership and decided to hire
experienced managers to lead different functional teams. Here, this is similar to Stage 2 of Greiner’s
model which talks about Growth through Direction.

New managers now led teams and provided them with proper direction. As far as the division of labor is
concerned, people with functional skills focused on products and the managerial tasks were done by the
new hired managers. This phase was a stepping stone for role assignment based on expertise.

But this stage brought certain problems with it which Shikhar Ghosh had to handle. The new managers
did not know much about the product and the product team. There was a credibility crisis. This also
resulted in setting of standards by individuals rather than adhering to the organizational policy. Shikhar
Ghosh also found it difficult to measure managerial competency. This ultimately led to a Crisis of
Autonomy.

Thirdly, after a suggestion from Paul Gudonis, Senior Vice-President of Sales and Marketing, Shikhar
Ghosh reorganized the structure by setting up different product teams for each of Appex’s products.
This resulted in a Product division structure.

This structure was in alignment with the product philosophy. Each product was managed by dedicated
managers. They were responsible for planning and execution of business plans along with integration of
functions. The product teams could work in synchronization with the functional teams. The functional
teams were well-informed about the product updates regularly.
But this again created several new problems. There was no clear indication of who had the authority and
no one knew who could take decisions in such teams. There were teething problems between the
product managers and the operations team. The product teams also generated more resource allocation
problems. This ultimately resulted in Crisis of Control.

Fourthly, to solve this crisis of control, Shikhar Ghosh tried to find a right balance between centralized
control (top of the organization) and de-centralized control (functional and divisional level). So, he
decided to introduce the Business Teams which acted as intermediaries between the product teams and
the corporate management team. They had the authority to make decisions, including resource
allocation decisions, regarding the products. This phase is similar to Greiner’s stage 4 – Growth through
Coordination.

But soon Shikhar Ghosh realized that now the organization had a lot of people planning, counting and
greasing the wheel. There were more product groups, meetings and layers of management. This
resulted in diminishing of customer focus. The organization plunged into a Crisis of Red Tape making
organization overly bureaucratic. Now Shikhar Ghosh had a challenge to avoid failure and falling into the
chasm.

Finally, Shikhar Ghosh decided to implement a divisional structure thereby heading towards stage 5 of
Greiner’s model – Growth through Collaboration. In order to push the organization up the growth curve,
he established two broad divisions – Intercarrier Services (ICS) and Cellular Management Information
System (IS). A third division, Operations, was also created to service the two businesses. This new
structure improved accountability, budgeting and planning.

This also resulted in Shikhar Ghosh spending more time on planning its strategic direction.
Divisional structure generated its own problems and challenges. The problem of resource allocation still
existed and divisions did not want to share resources. There was little communication flow across
divisions and hence, it generated less cross-pollinated ideas.

In conclusion, we think that Shikhar Ghosh’s eagerness to try out new ideas brought with it its own
benefits as well as problems. We were able to correlate this case with Greiner’s Model of Organization
Growth in which he tried to solve the crisis at different stages, thereby preventing the organization from
falling into the chasm.