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Wipro Limited and Zappos

Paper type: Essay
Pages: 9 (2014 words)
Categories: Economy, Finance, Macroeconomy, Management, Organizational Structure And Design
Downloads: 36
Views: 9

The company started in 1945 as a manufacturer of vegetable and refined oils under Mohamed Premji. It started venturing in IT domain in 1970-1980, and in 1982 the company entered in IT Products business. In 1990s it leveraged hardware R&D Design and software evelopment expertise and began offering global clients software services. It was named to Wipro Limited from Wipro Products Limited. It also continued in consumer product domain during the same period.

Wipro went through organization structural changes time and again to incorporate industrial needs and improve its efficiency .

Below are the changes covered in the document describing the factors influencing the change. The company was organized to work in six verticals, with independent solutions, frameworks and strategies being created for each vertical.

The key was to leverage domain knowledge in each of the above verticals to offer a customized mix of products, services and solutions that meet vertical-specific requirements. In 2001, Wipro added a new vertical Wipro Healthcare and Life Science, the addition was done to leverage the upcoming market for bio- IT.

The market opportunity was growing at 20% annually.

The business of Wipro Biomed and the client base of Wipro Technologies in the Healthcare vertical was transferred to Wipro Healthcare and Life Science business unit. The change was done to provide solution in three core areas Healthcare Information Technology to Health Delivery system Discovery IT to Life Science companies Software Design and Engineering services to large Medical Device and Healthcare Information Technology companies Dual CEO In 2005, CEO Vivek Paul left to join a private equity firm. After his departure Azim Premji took role of both CEO and Chairman.

In mid-April Azim Premji announced appointment of two CEOs- Girish Paranjpe and Suresh Vaswani which baffled everyone. Wipro bifurcates its business as Wipro Infotech and Wipro Technologies. Wipro Infotech manages business in India, West Asia and Asia Pacific while Wipro Technologies in global business. The company has a matrix structure with three verticals and two horizontals. The vertical technology business comprises of product engineering and the telecom service provider space while enterprise business targeted at manufacturing, healthcare, retail, etc. and financial services business.

The two horizontals are global practices business (testing, package implementation and technology infrastructure services) and BPO (business process outsourcing) operation. After CEO Vivek Paul left each vertical head was supposed to function as CEO, however Premji was roped in lot of day today decision process making the process cumbersome. To enable the organization structure Premji appointed two CEOs. As per Paranjpe, considering the complexity of structure and enormous opportunity they had, it was an appropriate decision in company’s benefit.

But in January 2013, Premji dismantled the dual CEO structure and announced T K Kurien as CEO. There are lot of speculations around why Dual CEO Structure failed. There were multiple exogenous factors which influenced its performance. During this period NASDAQ listed cognizant came as a threat. Another factor to add is economic slowdown and supply side constraint. Wipro didn’t continue hiring for few quarters and lost people in few quarters. This resulted in churn in Wipro employees when market condition improved following attrition rate of 21 percent.

It is also said that dual CEO structure is difficult to implement as it makes the decision process more lengthy and contradictory. In case the individuals are not aligned then it can take toll on company’s growth. Revenue growth in 2009-2010 didn’t increase considerably Reorganizes IT business to simplify structure. With the change in business environment there was a need to reorganize the existing structure.

The realignment was done in 2011 to reduce complexities and focus on customer centricity and agility. The Strategy Business Units were aligned to keep proximity to Client Delivery, Sales and Profitability. The restructuring was done to ensure industries under same value chain are merged in same SBU. Following are the factors shared by Wipro for the change done in the organization structure.

Simplicity and Speed

The structural changes have been made with an aim to enable decision making and accountability of deliverables closer to clients. These structural changes have been driven with a goal to improve client centricity and responsiveness Horizontal realignment: integrating existing businesses and building services and competence for the future In order to further strengthen Wipro’s application services solutions, the existing service lines providing application development and testing services will be consolidated into a single service line.

The new service line ‘Business Application Services’ would include Packaged Implementation, Testing and Business Technology Services
Analytics as one of the fastest growing services and consistently a top investment area for clients. To seize this opportunity, Wipro consolidated its analytics businesses into a new service line focused on Analytics, Business Intelligence, Information Management, Performance Management, Data / Text Mining. Driving passion led employee performance and client centricity.

Wipro prides itself for an unparalleled record of producing IT leaders. In order to further foster its entrepreneurial culture, Wipro will also align all activities relating to solution delivery, talent management, build competency and talent acquisition under a single organization. This will enable better execution for our customers through better alignment, demand-supply interaction and accountability .This shift will also enable employees by making them more aligned to the customer and build personal responsibility, performance and rewards.

Change in revenue after the restructuring:

Change in Verticals

Foreseeing the changes in industry and agile business requirements changes in vertical were done as below 2014: IT Services segment is organized into six strategic business units by client industry as follows.

  1. Banking, Financial Services and Insurance (“BFSI”)
  2.  Healthcare and Life Sciences (“HLS”)
  3. Retail, Consumer, Transport and Government (“RCTG”)
  4.  Energy, Natural Resources and Utilities (“ENU”)
  5.  Manufacturing and High-Tech (“MFG”)
  6.  Global Media and Telecom (“GMT”)

Wipro has been offering end to end solutions to its communication service provider. With technological advancements such as 4G/LTE, cloud, social networking, and smart phones has connected the world in a different manner. To address the changes in digital world, it was important to change the perspective to from technological solution offered to value added services and superior customer experience.

As per the annual report effective April 1, 2016, in order to provide strategic focus and draw synergistic advantages among our sales, marketing and business development teams, realignment was done in industry verticals. The Communication Service Provider business unit was regrouped from the former GMT industry vertical into a new industry vertical named “Communications”.

The Media business unit from the former GMT industry vertical has been realigned with the former RCTG industry vertical which has been renamed as “Consumer Business Unit” industry vertical. Further, the Network Equipment Provider business unit of the former GMT industry vertical has been realigned with the Manufacturing industry vertical to form the “Manufacturing and Technology” industry vertical.

The revised industry verticals are as follows:

  1. Banking, Financial Services and Insurance (“BFSI”)
  2. Healthcare and Lifesciences (“HLS”)
  3. Consumer Business Unit (“CBU”)
  4. Energy, Natural Resources and Utilities (“ENU”)
  5. Manufacturing and Technology (“MNT”)
  6. Communications (“COMM”)

Magnifying Technology

Considering the emergence the new era of technology it is imperative that a company align its business strategies to incorporate changes. Technology is rising with autonomous systems, machine learning, and deep learning, industrial IoT, augmented/virtual/mixed reality, software defined infrastructure, 5G and LiFi.

Customer needs are required to be fulfilled with innovation and hi tech solutions across product design, validation and testing, enterprise operations, marketing and customer support. These advances cannot be overlooked hence create a need to capture and explore it with a new vertical. Wipro’s solutions built around cloud, blockchain, artificial intelligence, IOT, crowd sourcing and design thinking are driving new revenue streams and efficiencies in client organizations.

For the year ended March 31, 2018, our IT Services business was organized into six industry verticals. Effective April 1, 2018, in order to provide strategic focus, we are realigning our Manufacturing and Technology (MNT) industry vertical into two separate verticals: the Manufacturing industry vertical and the Technology industry vertical. The Healthcare and Lifesciences industry vertical is being renamed the Health Business Unit.

The revised industry verticals are as follows:

  1. Banking, Financial Services and Insurance (BFSI)
  2. Health Business Unit (Health BU)
  3. Consumer Business Unit (CBU)
  4. Energy, Natural Resources and Utilities (ENU)
  5. Manufacturing (MFG)
  6. Technology (TECH)
  7. Communications (COMM)

Business today is governed by forces such as Digital, Consumerization of technology, Industry platform disruptions, and competition. Company needs to foresee the new challenges and make strategic decisions accordingly. In today’s fast pacing and agile environment, leveraging technology is one of the fundamental prerequisite. Adaptability of a company creates path of its success.

Organization success is not only driven by methodologies used but also governed by its flexible organization structure. A company’s vision plays a key role in positioning the organization. To support its vision organization structure plays vital role. Organization structure leads to coordinated capabilities, coordinated activities, coordinated goals and coordinated boundaries.

Zappos

Zappos.com is an online shoe and clothing retailer based in Las Vegas, Nevada. It was founded by Nick Swinmurn in 1999. In 2004 it received first round of venture Capital. By 2007, the company expanded to include handbags, eyewear, clothing, watches, and kids’ merchandise. In 2009 it was listed at 23rd among the Fortune’s Top 100 Company to Work For. In November 2009, Amazon acquired Zappos for $ 1.2 billion.

Zappos CEO Tony Hsieh announced use of Holacracy in 2013. It officially started using it in January 2014. The inception of the new organization structure came with a thought that as companies grows it becomes less productive, while when a city grows it becomes productive. They are emulating the structure of the city in an organization. They have identified individual autonomy and resultant entrepreneurism as the heart of its performance success.

So, how it works?

Employees at Zappos are not monitored by any manager. There is transparency around. They have various tools to see what work is going in the organization. They can pick any work they are willing to do. You are not forced to do anything specific. They have tools like Role Marketplace that shows work available and what help is required on it. The tools shows the priority of the work and how successful are we doing the work.

In one of the interviews with HBR, John Bunch, Holacracy implementation lead at Zappos, mentioned that they are not following traditional ladder of promotions. He says they see the new culture as job jungle gym. You have all the transparency to choose whichever direction you want to go. There are clear directions on how the work chosen will impact your progress, your compensation and success. The move is towards is towards self-managed organization.

So what is Holacracy in terms of Organization structure? What is the difference in Traditional Companies and Holacracy?

Traditional Companies

  • Job descriptions

Job description are narrow and specific for one person without clear delineation

  • Delegated Authority

Employee is always led by a Manger, who is set responsible for the deliverables.

  • Big Re-Orgs

Org Structure is mostly static and rarely optimized

  • Office Politics

Promotions and team politics often play key role

Holacracy

  • Roles

Roles are defined around the work, not people, and are updated regularly. People decide the role they want.

  • Distributed Authority

People have ownership and decision making capacity with no hierarchy

  • Rapid Iterations

Iterations are done to improve or organize.

Zappos currently have no plan to change the structure as the current structure focuses on work than people. Other companies that are using Holacracy are WaTech and Springest. An organization endeavors to improve its efficiency and take growth trajectory. It needs to speculate possible measurements in various frame. Zappos has taken a path breaking step.

Organizations are hesitant to implement this structure, there are instances where the company has shown both ups and down in its revenue stream. It is important for the organization to be vigilant on the factors affecting its performance. As per news reports there are few instances of disruption in its performance in 2017, but the company is willing to continue the Holacracy structure. The organization structure needs to be flexible and resilient to overcome any disorder.

References

  1. https://www.process.st/organizational-structure/
  2. https://en.wikipedia.org/wiki/Zappos
  3. https://hbr.org/ideacast/2016/07/the-zappos-holacracy-experiment.html
  4. https://www.zapposinsights.com/about/holacracy
  5. https://www.holacracy.org/how-it-works/
  6. https://www.wipro.com/content/dam/nexus/en/investor/annual-reports/2015-2016/11051-annual-report-interactive.pdf
  7. https://www.wipro.com/content/dam/nexus/en/investor/annual-reports/2016-2017/Wipro-Annual-Report-for-FY-2016-17-interactive.pdf
  8. https://www.wipro.com/newsroom/press-releases/archives/wipro-reorganizes-it-business-to-simplify-structure/
  9. https://www.wipro.com/content/dam/nexus/en/investor/annual-reports/2017-2018/annual-report-interactive.pdf
  10. https://www.wipro.com/content/dam/nexus/en/investor/annual-reports/2014-2015/11060-Wipro-annual-report-2014-15.pdf
  11. https://www.wipro.com/content/dam/nexus/en/investor/annual-reports/2001-2002/11098-Wipro-Annual-Report-Non-Financials-2002.pdf
  12. https://www.wipro.com/content/dam/nexus/en/investor/annual-reports/2000-2001/11100-Wipro-Annual-Report-00-01-Corporate-Overview.pdf
  13. https://www.business-standard.com/article/companies/why-did-premji-s-dual-ceo-model-fail-111020200057_1.html
  14. https://www.wipro.com/content/dam/nexus/en/investor/annual-reports/2010-2011/11075-Wipro-Annual-Report-2010-11-Final.pdf
  15. https://www.wipro.com/content/dam/nexus/en/investor/annual-reports/2009-2010/11078-wipro-annual-report.pdf

Cite this essay

Wipro Limited and Zappos. (2020, Jun 02). Retrieved from https://studymoose.com/wipro-limited-and-zappos-22506-new-essay

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