Organizational Diagnostic Models
Falletta (2005) outlines several different organizational diagnostic models. The first such model is the Force Field model, developed by Kurt Lewin in 1951. In this model, an organization remains in as state of equilibrium until it is shifted out of that state by a driving force that overcomes the restraining forces. The current state then becomes a problem (Falletta, 2005). This model can be used to explain what situation an organization is in, and even how that situation came about. The downside is that it provides little in terms of information about how the company can move to its new equilibrium point. But Lewin's model explains how companies enter into an equilibrium state. The company's current equilibrium has still allowed for steady gains in revenue and profit based on growth, but stability in profit margin (MSN Moneycentral, 2014).
Leavitt's model is a somewhat different representation with the firm being comprised of structure, technology, actors and task (Falletta, 2005). This model is again quite simplistic, and does not necessary imply any sort of causal relationship. Like the Force Field analysis, it has the weakness of not being able to prescribe anything, and unlike the Force Field model this is because the Leavitt model does not describe a current state, and does not fully explain the role of external forces -- Leavitt's model is more a step back.
The Likert Systems Analysis is another older model, developed in 1967. This model "describes four different types of management systems within organizations," these being the participative group, consultative, benevolent-authoritative and exploitative-authoritative. Likert also wanted the employees to evaluate what the management style within the organization was. As with the earlier models, Likert's systems is descriptive but limited in its ability to explain causal factors. Having a sense of how an organization is run is valuable, but does little to help managers understand how a current state came to be or what it should do about it.
This brings us to open systems theory. Open systems theory has led to a number of different approaches in managerial thought. The overriding flaw in the Leavitt and Likert models is that they assumed closed systems -- Lewin had not -- so open systems theory brought external influences to the fore. The basic open systems model has input, then transformation bounded and guided by environment, and finally output. This is how the organization is envisioned, as an open system subject to influence from the outside, where inputs are transformed into outputs (Falletta, 2005). The basic open systems model is a very simplistic model, so of limited use, but it is accurate in terms of what the open system is. An organization is an entity that transforms, and this envisioning of the organization has been powerful, with open systems being a basic premise for many other diagnostic models.
In 1976, Weisbord's Six-Box Model conceptualized the organization, based on open systems theory, with boxes representing the different elements of the organization, these being helpful mechanisms, relationships, purposes, leadership, structure and rewards. This concept takes the feedback loop concept of open systems theory, and breaks down the organization into its constituent parts in order that they be evaluated distinctly (Falletta, 2005).
The Nadler-Tushman Congruence Model incorporates ideas from the other models, giving it the advantage of being perhaps the most comprehensive of these diagnostic models. The congruence model assumes open systems, and that organizations are dynamic entities. The congruence model is more sophisticated than the other models, assuming that organizational behavior occurs at the individual, group and systems levels. The model also incorporates such elements as past organizational behavior and its current strategies, thereby giving weight to some of the intangible influencing factors within an organization (Falletta, 2005). Nadler and Tushman have therefore developed an open systems model that more accurately reflects the complexity and subtlety in organizations. This makes it easier to diagnose the organization with more specificity than the other models, and with the more refined perspective the Nadler-Tushman Congruence Model also allows for some prescriptive thought as well.
There are other models as well, including the 7S model from the McKinsey Consulting Group. This model identifies seven elements of the organization -- skills, style, staff, systems, strategy, structure and shared values. While the alliteration is cornier than a dog on a stick at the county fair, the real drawback to this model is that is does not incorporate the external environment, and does not explain any processes. The open systems...
Organizations are not closed systems, and they are defined by what they do.
Right now, Whole Foods is in a state of equilibrium. The company's operations are stable, its financials are stable, its growth slow but steady and it has few serious competitors. Major supermarkets had become involved in the organic business and a few years ago this seemed a threat, but Whole Foods has demonstrated that it can withstand that threat. For any company, a happy, profitable equilibrium is not a bad thing. One issue, though calling it a problem might be a stretch, is that Whole Foods has embarked on international expansion in Canada and the UK, but has not moved very quickly on those markets. There is a lot of uncharted territory in both countries. Combined with relatively slow growth in the U.S., it is reasonable to think that growing these international markets will be important for Whole Foods going forward as twin sources of growth when the U.S. becomes completely saturated.
Another potential issue for Whole Foods is expansion out of its comfort zone, which the company has also made an issue of healthy eating for Americans. The company has opened stores in areas that do not fit its typical demographic -- areas with lower incomes. There are strategic elements to chain's arrival in Detroit, but the reality is that the city is underserved by grocery stores (McMillan, 2014). The chain has a store in New Orleans, too, another place where Walgreen's is as close to a grocery store as most people have in their neighborhoods. Both of these strategies -- moving into lower-income urban areas and internationally, Whole Foods is trying to find new avenues for growth without straying too far from their traditional business model.
Choice of Models
The best model to use is the Nadler-Tushman Congruence Model. That model is the most comprehensive, and based on the most realistic fundamental understanding of how organizations work, what they do. I see the earlier models as inchoate, without sufficient development to serve as effective diagnostic models that have a chance at helping organizations perform better. The Nadler-Tushman Model, its primary disadvantage being that it is somewhat unwieldy, should not actually be too complex for a CEO running a company the size of Whole Foods. Therefore, it should stand primarily on its positive merits, and that is its simultaneously recognition of complexity and ambiguity.
This model is the best one to use for Whole Foods because ultimately, Whole Foods is in a comfortable place. It will need to make subtle changes, or have those changes imposed upon it by external forces. The company may find that it needs to make changes to its culture, or its design, but it may also find that it is in exactly the right place at present. That is one of the beautiful things about the Congruence Model, is that it only seeks to establish that congruence. The model does not pre-suppose the need for change. The diagnosis analysis is apt -- if you see your doctor and you are healthy, all the doctor will say is that you're healthy. It should be the same for organizations. The Nadler-Tushman model looks at where the organization is, all the different elements that comprise the organization, and comes to a determination about what needs to change -- if anything -- to allow the organization to solve its problems, resolve its issues or to meet its objectives.
Thus, to analyze Whole Foods, I recommend that the Nadler-Tushman Congruence Model is adopted. An open systems model is mandatory, I feel, because organizations are open systems. The model can be complex and subtle, because organizations are those things as well. Therefore, it is entirely reasonable that the Nadler-Tushman model is used, and I feel that this will be the best way to understand the current situation of Whole Foods and how well equipped the company is to meet its objectives for the future.
Falletta, S.V. (2005) Organizational Diagnostic Models: A Review and Synthesis. Retrieved January 15, 2014, from http://www.iei.liu.se/fek/frist/723g16/files/1.120328/Orgmodels.pdf
McMillan, T. (2014). Can Whole Foods change the way poor people eat? Slate.com. Retrieved November 28, 2014 from http://www.slate.com/articles/life/food/2014/11/whole_foods_detroit_can_a_grocery_store_really_fight_elitism_racism_and.html
MSN Moneycentral. (2014). Whole Foods Market. Retrieved November 28, 2014 from http://www.msn.com/en-us/money/stockdetails/fi-126.1.WFM.NAS?symbol=WFM&form=PRFIEQ
National Defense University, Systems Thinking and Learning Organizations, Retrieved November 7, 2012 from http://www.au.af.mil/au/awc/awcgate/ndu/strat-ldr-dm/pt1ch4.html
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