Celeritas Case Study 6p292r

Zineb Mouline

CELERITAS, INC. CASE STUDY LEADERSHIP CHALLENGES IN A FAST-GROWTH INDUSTRY SYNOPSIS Celeritas was founded in 2003 by 3 MIT engineers, and soon became the leading company in enterprise network optimization, particularly in Wide Area Network (WAN) acceleration. In 2011, their market share was increased further by the onset of cloud computing as IT service delivery. However, Celeritas’s leading position became increasingly uncertain as its growth started to decline compared to its competitors, which was a wake-up call for its management team to intervene. The People Celeritas executive team was composed of Philip Boyer the CEO and 5 Senior Vice-Presidents (SVPs) representing the 5 divisions: Shawna Davis (Business & CFO), Carlos Rivera (Engineering & CTO), Vishal Arul (Research & chief Scientist), Mike harper (Operations & COO) and Dave Lloyd (Sales & Marketing). The company also counts 21 vice presidents (VPs). The problem CEO Philip Boyer believed in 3 main problems: high employee turnover, low moral across the company and lack of cooperation among divisions. The intervention Boyer hired Carla Reese as organizational consultant to revive the organization. As the consultant went on interviewing each of the 5 SVPs to search for the underlying informal structure, they reported Boyer’s ineffectiveness as a leader. He reportedly solicits information rather than opinions during weekly executive meetings, and makes all major decisions by himself. Also, a general dislike of Dave was reported by all four of his fellow SVPs. The issues were summarized by Reese into 4 main areas of concern: 1. Lack of trust and communication General avoidance of direct communication between SVPs, supposedly due to different personality trails and backgrounds, which led to a lack of trust and blame shifting when customers’ demands are not met. In order to restore the teams’ channels of communication, the consultant would need to apply concepts of organizational behavior in relation with trust and teamwork, by urging the employees to

embrace the differences in their personalities and mental models, particularly when these are conflicting. This is the bottleneck in solving deeper issues such as trust, power and shared leadership. 2. Inconsistent decision making and follow-through The SVPs were seeking Boyer individually to make their case, which yielded to a sense of partisanship and inequity in strategic decision-making, lack of transparency, as well as frustration due to frequent decision reversals. Also, SVPs reported not being involved in the corporate goals and strategy-related decision-making during meetings, as the CEO was the sole decision-maker. These situational features and artifacts impact significantly the company’s decision-making and problem solving procedures. An effective intervention must unknot the organizational tensions related to shared leadership in decisionmaking, and autocratic leadership style of Boyer. 3. Confusion about goals and priorities The communication of the company’s goals is considered by SVPs too broad and leaves room for conflicting interpretations, thus creating division. Also, no guidance is provided as to how to achieve these goals, which further increases the organizational ambiguity. This lack of a unified strategy destabilizes the corporate culture and its underlying espoused values. Common goals give a clear focus and direction to the teams, and help them recognize when they are off track. It is also a valuable way to measure the company’s success, by having clear milestones to measure against. From an organizational behavior stand point, a highly effective team must maintain a shared purpose, which has to be understood the same way by all , agreed on, and be meaningful. While the later might apply to Celeritas’s employees, the other 2 components do not. This causes a considerable decrease in employees’ motivation, engagement and a high turnover rate. 4. Poor coordination among business functions and units Boyer’s description of Celeritas’s early days under its 3 cofounders, seem to be congruent with an Otype organization, with an adhocracy culture, and just enough structure to keep going. As the company grew as well as the number of its employees, it evolved into the more segmented M-type, where spontaneous collaboration and horizontal flow of information across divisions became virtually nonexistent. Dave Lloyd, with his confrontational style and unrealistic promises to his clients, had apparently contributed further to this issue by putting everyone at odds. His management style was unanimously judged unfit for the company by his fellow SVPs. The reason is that Lloyd felt that Sales & Marketing division didn’t receive enough budget, while Research & chief Scientist Arul argued that since their products were of superior quality to the competition, any additional finances should go to technology and innovation instead of Marketing. Implementation Step

After the offsite meeting, Reese and Boyer met with the 21 VPs to introduce the new approach which was going to pave the way to increasing market share and profits. Unfortunately, their efforts were met with incredulity (since prior efforts to improve the status quo were unsuccessful), as well as strong criticism of the executive team’s leadership styles. The VPs –who would be the main actors toward change– were left out of such an important decision making, which by itself contradicts with the new values they were trying to convey. 6 weeks later, revenues and morale continued to go down, and the SVPs lost confidence in Lloyd, which led Boyer to ask him to resign. ALTERNATIVE ACTIONS The organizational realities which Celeritas needs to cope with include diverse interests, leadership styles and cultural typologies, as well as ambiguous corporate culture demonstrated by the absence of shared values, goals and direction. The firm must engage in a transformational Leadership transition and a deeper organizational learning, to re-evaluate and update the governing values and beliefs that guide their behavior and routines. This could include efforts to: 1. Revisit the Corporate culture Celeritas needs to change its cultural values to celebrate differences and encourage all employees to share their ideas and act on them. The company should provide a safe “psychological” space through which employees can express their opinion, learn, and improve. This could help dissipate tension stemming from organizational politics, increase individuals’ self-regulatory processes (motivation) and effectiveness to achieve target goals (performance). Boyer needs to energize his teams, by celebrating achieved milestones, acknowledging the teams’ efforts when its due, giving them the focus to complete their tasks (Responsibility) and showing them how their work fits into the bigger picture (Vision and Advancement). 2. Encourage decentralized decision-making and entrepreneurial mindset Boyer’s visionary leadership style, which has driven Celeritas successfully from phase I to phase II in its development stages, is most likely the main factor preventing the organization from advancing to Phase III. With very little emphasis on capacity building, delegation and succession management, Boyer tend to exert absolute control over decision making, which led the company into a crisis of delegation and autonomy. To enhance autonomy, Celeritas needs to create an entrepreneurial frame which defines in advance the criteria that would make a business opportunity worth pursuing, then capitalize on those opportunities. This would increase the employees’ motivation and sense of ownership, while avoiding micromanagement which undermines their authority.

Also, Celeritas should find a way to rationalize decision-making with both quantitative and qualitative metrics: while numbers are essential, Celeritas should pay attention not to alienate teammates who work with critical qualitative information such as Customer Relations (Dave Lloyd). This would prevent harmful decision reversals, increase ability and hinder Boyer’s autocratic leadership style and monopoly over decision making. 3. Improve organizational communication through formal and informal channels Effective meetings through the official hierarchy of command should be based on proactive preparation, to avoid poorly thought-out meetings that waste valuable employees’ time. Information including vision, direction, and challenges facing every division, should flow upward, downward and horizontally to encom all units and individuals, and avoid organizational silence. Whether in the form of meeting minutes, newsletter, or any other suitable format, an improved organizational communication would increase management credibility through transparency, enhance productivity and strategic planning by providing critical market information, and boost employees’ motivation by celebrating their achievements (recognition). A democratic access to information would also enhance camaraderie, cooperative relations and equity. 4. Avoid organizational inertia and build capacity In the face of uncertainty in fast-growing industries, companies tend to leverage on their existing capabilities, showing organizational inertia. To remain competitive, Celeritas should facilitate the learning of new knowledge, provide employees with increased flexibility in their routines, and build their capacity and adaptability throughout planning and execution, to allow changes in direction and business reconfiguration as necessary. 5. Keep Dave Lloyd A firm can’t expect loyalty when it readily lays off its most valuable employees as soon as profits go down. This creates precedence, damages company’s reputation and sends a strong signal that the employees are disposable, thus creating a decrease in loyalty and engagement and high turnover number. It also leads to a monolithic organization, where exhibiting differences in opinion and style is not encouraged. Lloyd’s 20+ years of experience are of enormous value to Celeritas, and letting him out would be considered as a strategic mistake. Boyer should have an in-depth discussion with Lloyd to understand his motivators and the ‘Why’ behind his behavior (Power? Recognition? Finances? Or other reasons he may not even be conscious of), then assess if Celeritas can meet them under its new values framework.