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 decision-
making, 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 members, 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 O-
type 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 accountability 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 encompass 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.