System Feedback Loops of Whole Foods

System Feedback Loops of Whole Foods

Systems model use two basic feedback loops, so-called Balancing and Reinforcing loops, to illustrate the relationships between growth and goals. This paper identifies one Balancing Loop and one Reinforcing Loop that are critical to Whole Foods Market's performance and success. An explanation of each of these feedback loops, including the causal factors and how they affect each other, is followed by a discussion concerning an area of growth for the Reinforcing Loop and goal behavior for the Balancing Loop. An assessment concerning how Whole Foods Market has generated organizational learning and how this organization can go further and generate additional organizational learning is followed by a summary of the research and important findings in the conclusion.

Review and Discussion

Balancing and Reinforcing Loops at Whole Foods Markets

All systems thinking models use two basic feedback loops, Balancing and Reinforcing loops, to depict the relationships between the constituent elements (Baker, 2006). According to Baker, a reinforcing loop "describes systems where elements reinforce one another, creating either a virtuous or a vicious cycle" (p. 26). In reinforcing loops, there is exponential growth involved that is analogous to a "snowball rolling down a hill" (which is the symbol used) that gathers more and more snow and momentum in the process (Baker). Eventually though, reinforcing loops tend to decay because they "have inherent limits to growth, usually because one of the elements interacts with another loop to eventually slow growth" (Baker, p. 27). The second basic feedback loop, the "balancing loop," describes efforts to solve a problem or facilitate the achievement of desired state from an existing state (Baker, 2006). A balancing and reinforcing loop for Whole Foods are as follows:

A Balancing Loop at Whole Foods is the focus on marketing only wholesome, organically grown products that are superior in nutritional content.

A Reinforcing Loop at Whole Foods is the manner in which the company continues to educate its employees and customers concerning the superiority of its products in an effort to enlist them as advocates and sales representatives.

How Whole Foods Market has Generated Organizational Learning

A learning organization is defined by Goh (1999) as "an organization skilled at creating, acquiring and transferring knowledge, and at modifying its behavior to reflect new knowledge and insights" (p. 15). An important point made by Goh is that, "All organizations can learn. Some learn better than others and survive, while the more successful learners thrive. Those that fail to learn will eventually disappear" (1999, p.16). There are a number of significant benefits associated with becoming a learning organization. According to Giesecke and McNeil (2004), "Learning organizations can provide leaders, managers, and staff with the tools they need to develop organizations that can succeed in turbulent times. Learning organizations encourage their members to improve their skills so they can learn and develop. The staff become more flexible as they acquire knowledge and are more able to move around the organization" (p. 54). In addition, both managers and staff encourage work-related learning in a learning organization, including the exchange of information between employees to generate new concepts and knowledge, as well as continuous improvement (Giesecke and McNeil, 2004).

Although every organization is unique, the research to date suggests that learning organizations share some common features, including the following:

1. Mission and Vision: Clarity and employee support of the mission, strategy, and espoused values of the organization.

2. Leadership: Leadership that is perceived as empowering employees, encouraging an experimenting culture, and showing strong commitment to the organization.

3. Experimentation: A strong culture of experimentation that is rewarded and supported at all levels in the organization.

4. Transfer of Knowledge: The ability of an organization to transfer knowledge within and from outside the organization and to learn from failures.

5. Teamwork and Cooperation - An emphasis on teamwork and group problem-solving as the mode of operation and for developing innovative ideas (Goh, p. 16).

To date, Whole Foods has generated organizational learning in several ways, including empowering employees to made decisions and experimentation. For instance, Whole Foods team leaders and management have experimented with food product selections to provide the products the consumers wanted in each community where a Whole Foods Market was located. This product differentiation strategy attracted and maintained valuable customers thereby contributing to Whole Foods success (Whole Foods Internal analysis).

Learning Activities for Each Feedback Loop that Whole Foods' Management has Undertaken

Balancing Loop. The "Whole Foods" element of the company's emphasizes the learning nature of the enterprise. According to the internal analysis of the company, Whole Foods "search for the highest quality, least processed, most flavorful, and most natural foods available. They believe that food in its most natural state is the best tasting and most nutritious food" (p. 2). Therefore, the company's efforts in this area to date have contributed to the customer loyalty initiatives which are discussed further below.

Reinforcing Loop. To date, Whole Foods has been highly successful in reinforcing customer loyalty in a competitive environment. For instance, Anderson (2008) reports that, "Whole Foods Market sells organic foods and private labels and has been very profitable. The reinforcing loop is maintained through a variety of customer loyalty initiative. For example, in order to facilitate communication with its customers, Whole Foods stores provide so-called "take action" centers that allow customers to provide their feedback and comments (Whole Foods internal analysis). According to the internal analysis of the company, "Whole Foods wanted to turn highly satisfied customers into advocates for Whole Foods Markets. Customers could get personal attention in each store department and team members of Whole Foods were knowledgeable and enthusiastic with customers" (Internal analysis, p. 1).

Moreover, Berry (2007) also cites the company's ability to leverage its organizational learning in ways that contribute to customer loyalty. According to Berry, "To compete, smaller supermarket chains such as Whole Foods Market Inc. Of Austin have shifted gears. They are playing up differences to improve customer loyalty, particularly with those who shop often and generate the highest profits" (p. 4). Indeed, a visit to the local Whole Foods retail outlet can be a pleasurable experience compared to the nitty-gritty environments of larger retail grocers. In fact, Berry enthuses that, "When you go into a Whole Foods store, it's theater" (p. 4). This is marketing theater, though, with a pragmatic goal in mind. In this regard, Berry emphasizes that for Whole Foods, "The goal is to make each store a unique destination that spurs more frequent visits and keeps customers in stores longer, potentially raising sales" (p. 4).

Opportunities for Organizational Learning from the Balancing and Reinforcing Loops

Balancing Loop. Becoming a learning organization involves a thorough understanding of what factors comprise the strategic internal drivers that are required to build learning capabilities (Goh, 1999). Consequently the opportunity exists for the company to avoid the so-called "Icarus syndrome" wherein they continue to rely on their existing business model to the exclusion of other market segments (Nagl, 2011) as discussed further below.