Evolution of organizational structure at Zomato
Group member Roll no Contribution
Geetika Maskara ABM/13/030 Summary
Sahil Garg PGP/31/105 Conclusion and
recommendations
Prerna Chauhan PGP/32/258 Evolution of structure as
the organisation grew, its
merits and demerits
Vipul Goyal PGP/32/266 Zomato Business Strategy
Krishnakumar M PGP/32/274 Culture at Zomato
Upadhi Harit PGP/32/282 Acquisition by Zomato
and post- acquisition
changes
Karanvir Singh PGP/32/291 Objective and scope of
study, PPT presentation
Priyanshi Jain PGP/32/299 Qualitative analysis of
structure and technology
topology of Zomato
Foodie Bay was founded in 2008 in the cafeteria of Bain & Co. by its employee Deepinder
Goel. The project studied how the structure and culture of the organization evolves as it grows.
The company was formed as a flat structure with 3 employees, handling 3 different departments;
operating the website from homes on weekends. This promoted free flow of ideas and innovation
within the organization. As the company expanded, maintaining flat structure became difficult
day by day as the top management was involved only in solving day to day problems rather than
focusing on long term strategy.
Objectives of the study
The objective of the study is to understand the:
1. Transformations in organizational structure,
2. Changes in organizational culture, and
3. Role of leadership in organization growth
From the time an organization is started till it goes through the growth phase effectively
increasing the size and style of the organization.
Scope of the study
The project is restricted to study different king of organizational structures, organization culture
and the role that leadership played in the growth of this Indian Unicorn, during the different
phases that Zomato has gone through:
1. The beginning of the journey FoodieBay (2008-09)
2. Zomato In India (2009-12)
3. Acquisitions and expansion in various countries (2012-present)
From bootstrap years to an International success story, Zomato continues to evolve.
Methodology
This project required primary and secondary research to understand the company and its
organizational structure. Primary research included interview with one of the co-founders of the
company and employees who are currently associated with Zomato. Secondary research included
studying industry reports to understand the strategy of the company to maintain its lead position.
The Beginning of the Journey - FOODIEBAY
Deepinder Goyal realized that employees of Bain and Co. spent too much time in searching and
finalising hotels to order midday lunch from. He started FoodieBay in 2009 by scanning menus
of restaurants and placing them on a website. Pankaj Chaddah joined him and made the site
popular outside Bain and Co. When the site started expanding in other cities, Gunjan Patidar
joined as the technology expert and aided further expansion. FoodieBay technically did not have
any definite structure. Data collection was done manually. FoodieBay was named Zomato in
2010 and gathered enough business for the three to quit their jobs and work on Zomato full time.
ZOMATO: Zomato received its seed funding from
InfoEdge. New features such as rating the
restaurants, enabling the restaurants to scan and
upload their own menus and user contributions,
required more sophisticated technology were
added. Zomato now had an office in Gurgaon. To advertise in every city that Zomato was present
in, marketing employees were hired regionally. The structure at Zomato was not hierarchical yet.
Thus execution of ideas was swift and with least friction. As the company evolved, each of
founding members concentrated on their domains increasingly. The Product Development team
was 4 people strong; comprising of engineers, a web designer and developer, and a Quality
Analyst, all of whom reported to the CTO.
Moving to functional Structure
As the company expanded its presence from 6 to 10 cities across India by mid of 2011, the sales
team grew to 65 and the structure of the company was altered to facilitate better management.
The sales team was modified so as to provide quicker decision making at the regional level and
hierarchy emerged. The regional sales manager, formulated the marketing strategy and designed
advertising campaigns in association with the clients to have specific advertising strategies. Area
Sales Managers (ASMs) managed the sales teams, allocated targets and incentives and
formulated area reports. A position of City Sales head was created to handle the revenue of each
city. The CFO additionally handled Finance and HR functions. With the advance into mobile app
section, the product development team went up to 10.
Each team saw a measurable growth due to functional distinction and specialization. The site
improved and innovative ideas were worked upon. The mixture of flat and hierarchical structures
allowed the team members to interact freely with each other as well as the top management to
control each function and business development.
Merits: The flat structure facilitates opportunity to the people to interact with each other and
with the top management. The entrepreneurial spirit is maintained. The organisation can increase
its store of skills and abilities. The employees encouraged to take up diverse roles develop them
all-round. They understand the business better and develop into potential future decision makers.
In functional structure, peers in the same function can monitor and supervise one another and
keep work activities on track. This structure encourages commitment among employees.
Demerits: With an increasing organization size, the functional departments may face strain in
terms of control. Each function will develop its own hierarchy and will be distant from other
teams. This restricts communication and sharing best practices among functions. With extensive
geographical expansion, the structure will face problems in terms of identifying itself in
accordance to the culture of various countries. Zomato has acquired companies with different
core strengths such as technology or management platforms. The amalgamation of employees in
the existing culture without compromising the output is a change management challenge.
Culture at Zomato
The Organizational structure of Zomato is relatively flat which allows for flexibility.
Hard Work, Incredible Work Hours The Clan culture
The company boasts of having a desk-less culture which creates a sense of autonomy in the
employees. The idea is that employees must be flexible in terms of locations, reporting structures
and working hours at office. The culture demands the employees to go beyond the conventional
9-5 routine which in turn makes the employees reluctant referring their friends to Zomato
because they believed that their friends could not take the stress.
Being Upfront A symbol for interpreting Culture
Zomato by being upfront about its stressful work culture is creating a buzz around the workplace
giving it an aspirational, bigger-than-life feel. This paves way for the highly efficient and
competing Type-A talents to see the company as a prospective place to work.
Entrepreneurial Culture Flexible structure
The company offers flexibility to the employees to work their own way. Although this gives
them opportunities to explore strategies and nullifies hindrance there is no incentive system or
perks that are being offered to employees. The employees are motivated by the fear of getting
fired. The company is laying off even more people due to its many recent acquisitions.
Acquisitions by Zomato
YEAR 2014: 2014 was full of expansions and acquisitions at international level. In July, made
its first acquisition in New Zealand's Menu-mania. In August they acquired online restaurant
guides Lunchtime and Obedovat. In September, Zomato overtook Gastronauci and later Italian
Cibando.
YEAR 2015: Zomato acquired Seattle-based food portal Urbanspoon and marked Zomato's entry
into the United States, Canada and Australia, and brought it into competition with. In the same
month, Zomato acquired Mekanist, one of Turkey's largest restaurant search players.
YEAR 2016: Zomato bought Sparse Labs that develop an Android-based mobile application
which transmits delivery executives location to both the restaurant and the consumer in real time.
NEW ZOMATO LOGO: In October 2014, Zomato introduced a new logo the Zomato heart,
which in February 2015 was updated to the Urbanspoon's Spoon logo in Zomato red to ensure
that the transition for users was easier. Also, the logo has now changed again to Zomato written
in white on a red background. As per press reports, Zomato now attracts 90 million monthly
visits.
Post-Acquisition changes
Migration of users: Migration of users before Urbanspoon acquisition happened smoothly.
There was some short-term loss of 10% traffic, and but then quickly, it got back to normal levels.
Local teams: When it comes to local versus remote, Zomato has its presence over 10,000 cities
across 23 countries and having 2000 employees on board and it has got the same model
everywhere, and acquisition or an organic launch nothing is different from that point of view.
Cost advantages: Zomato has no advantage when it comes to the cost structure, except for the
fact that they have separate product and engineering team shared across all markets.
Integration of cultures: People working at Zomato refer to them as Zomans, but the integration
of the cultures was not an easy job, yet Zomato continues to promote the entrepreneurial culture.
Technology
According to Perrows technology typology, organizations can be classified based on two
dimensions - Task variability which is the number of exceptions encountered in a typical
workday and Task analyzability is the degree of search activity needed to solve a problem.
During its initial days, Zomato began by concentrating its business model around restaurant
search and discovery. It used a feet-on-the-street system and swept restaurants every 3 months
to ensure information recency. Zomato is characterized by its lack of exceptions and
unpredictable outcomes that are difficult to analyze due to changing requirements and addition of
new features. Therefore, exceptions and
analyzability are both low which makes
Zomato an example of applied craft
technology.
Zomato has evolved significantly in terms of
technical innovation since its genesis. It aims
at becoming a holistic food experience
provider by incorporating following products and services:
Whitelabel Apps: enables restaurants to create and launch custom-branded native mobile apps.
Cashless Payments & Zomato Base: Zomato acquired MapleGraph to own their cloud-based
PoS product MaplePOS, which was later named as Zomato Base. It offers features such as online
check-in, menu, inventory, recipe management, electronic receipts, real time analytics etc.
Table Reservations: Zomato Book is Zomatos table reservation system which is powered with
technology from Nextable, a US-based firm that provides a platform for restaurant reservations
and table management. It aims to maximize table occupancy and save time during shift rollovers.
Zomato Business Strategy
Environment
With little or no entry barriers, there is possibility of high competition given the opportunity
to make a profitable business.
Threat of data replication as all of the Zomatos data is available on site and can be easily
copied. Recent allegation by Zomato on Burrp strengthen this fact. Zomato alleged Burrp for
copy of listings, menu cars with Zomato watermark, internal Zomato numbers to contact
restaurant and location GPS data coordinates which lead to Zomato losing out on traffic.
Challenges:
Major source of revenue is advertisement sales. Therefore, Zomato business model is highly
dependent on online traffic.
Prevention of data copy by its competitors.
Strategy:
Three years of exclusivity agreements with top restaurants in any city which prevents listings
of these restaurants on any other restaurant search sites.
Zomato removed commission for orders and delivery in order to wipe out competition.
Masking of contact number of restaurants, and instead provided internal Zomato numbers in
order to prevent direct contact of competitors with restaurants.
Future Challenges:
Zomato has still not been able to establish a sustainable revenue stream and for most of the
part is dependent on online advertisement sales.
Zomato has been successful to create monopoly in restaurant search business to some extent.
Realizing threats, it has been successful in keeping them at bay by getting into exclusivity
agreements, reducing margins etc. However, in near future it would require to upscale its order
and delivery business to create a more sustainable business model.
Conclusions
In this extensive competitive world, Zomato has managed to enter mature markets with its
First strategies and even gain high market share
mover
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balancing
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culture. content markets. Zomato, with its strong ethics,
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changing its tactics and outlook to keep up with this dynamic world. Zomato, with its ability to
culturally adapt to market needs and be technologically innovative, has been able to be adept in
gaining the market share and maintain a competitive edge.
Future expansion plans- Zomato is looking to expand its presence to around 40 countries by the
end of 2016, as a part of its global growth plans. Company currently has presence in 22 countries
and provides in-depth information of over 1.4 million restaurants. They raised total funding to
$225 million from Info Edge, Sequoia India, Vy Capital and Temasek. Zomato's expansion plan
include target markets such as Europe, South East Asia and Latin America. To evaluate the
markets, Zomato follows a top down approach of in-depth ground level study. They segregate
and prefer the markets achievable on a macro-level (regulatory, demographics, culture,etc.)
Recommendations
As Zomato is a people oriented company, their main challenge rests in identifying and
hiring the right people who not only possess the necessary skills but also have a strong
understanding of the culture.
With the rapid change in technology, the company has to keep up with the technological
advancement to imbibe the latest change in trends which will affect the consumer demand.
Since the company is expanding rapidly, continuing with functional structure can lead to
difficulty in coordination among various functions. Some divisional structure is also
required on the basis of geographic or consumer/product based.
References:
1. Interview with Sourbhi Das, Zomato COO
2. Interview with Zomato employees from different functions:
3. [Link]
4. W. Jack Duncan, Organizational Culture: Getting a Fix on an Elusive Concept,
Academy of Management Executive 3 (1989), 229-236.
5. Why Zomato Is Publicizing Its Strenuous Work Culture September 3, 2015 Bart
Eshwar; [Link]
