Whole Foods Markets Is All About Congruence

Whole Foods Market Strategy

Whole Food Market Strategy

Congruence in a powerful measure of the overall health and functioning of an organization -- a key to understanding the organization in a static snapshot and to forecasting how well the organization can execute change strategy and adapt to a competitive landscape that is in a constant state of flux. Organizational congruence is pivotal to effective strategy implementation and to successful organizational change. The inputs at Whole Foods Market consisting of organization environment factors, internal resource factors, and historical tradition factors are highly congruent with the company's strategy.

Whole Foods Market competitive strategy.

Porter's three competitive strategies are cost leadership, differentiation, and focus. Whole Foods Market competitive market strategy is differentiation. Whole Foods differentiates across several important dimensions: differentiated product, superior quality, and customer service. Whole Foods Market capitalizes on its capability to verify that the store provides local organic foods according to the 2002 U.S.D.A. rule. Despite the common criticism -- presumably from consumers who do not shop at Whole Foods -- that another name for the company is "Whole Paycheck," customers do seem to perceive differentiation in the Whole Foods Market offering that is worth the price premium. Clearly, the Whole Foods Market strategy focuses on customers, who tend to be hip, upscale, urban dwellers interested in buying organic products and high quality products that meet their special dietary requirements or preferences. Customers who shop at Whole Foods Market signal a lifestyle choice that can be summed up as: Whole Foods, Whole People, and Whole Planet.

Categorical critical inputs.

Nadler and Tushman define inputs as "factors that, at any one point in time, make up the 'givens' facing the organization" (1980, p. 39). The critical inputs of an organization can be categorized by factors -- and the fluid relationships between and across these factors -- that are aspects of the organization environment, internal resources, and historical tradition.

Organization environment factors. The environment factors affect the organization through the imposition of demands and constraints, and the provision of opportunities. The environmental factors with high impact on Whole Foods Market stem primarily from food production regulations and media coverage of associated issues. The 2002 USDA organic rule created a platform for true differentiation of food production and sales. The organic and natural food industry is very active in consumer education, so Whole Foods Market customers come equipped to make discriminating choices when they shop. Moreover, media coverage has increased the saliency of Whole Foods Market differentiation strategy by reporting on the health benefits of organic and natural foods, and by reporting on the prevalence of suspicious "contaminants" in foods, such as hormones, antibiotics, and disease microorganisms.

The presenting organization environment factors are highly congruent with the Whole Foods Market competitive strategy as this is the core basis of differentiation in the minds of customers.

Internal resource factors. The internal resources of a company are part of the organizational structure. Gersick (1991) referred to these internal resource factors as the "deep structure" of the organization. The scaffolding of an organization's deep structure consists of the accumulation of choices that a company has made, the outputs of which are "1) the basic parts into which its units will be organized and 2) the basic activity patterns that will maintain its existence" (Gersick, 1991, p. 14). Nadler and Tushman (1980) locate accessible assets (capital, employees, information, technology) and less tangible assets (reputation, goodwill, climate and culture) within the internal resources category.

The culture at Whole Foods Market is a hallmark of transparency and teamwork. The company pushes for transparency in food production, and it puts its money where its mouth is by providing a wide-open system of financial disclosure (Fishman, 2014). In fact, in what may be a unique fiscal situation for a company today, all the employees of Whole Foods Market have so much knowledge about and access to company finances that the Securities and Exchange Commission (SEC) considers them all to be inside traders (Fishman, 2014).

Whole Foods Markets is a social and business experiment is democratic capitalism. Each store is an autonomous profit center with roughly 10 self-managed teams (Fishman, 2014). With strong capitalization, robust revenue growth, high returns on invested capital (ROIC), and low debt, Whole Foods Market is capable of entering the best new locations (Fishman, 2014).

With watchwords like autonomy, empowerment, and teamwork, the company has forged a highly profitable business model in which the internal resources are congruent with the strategy that is proving to far outpace the competition.