Essay on Diagnosing Organizations
The process of strategic decision-making involves several important steps one of which is the analysis of the situation and current issues along with the diagnostic of the issue in the organizational context. Such diagnosis is necessary for developing a strategy for achieving key organizational goals and eliminating the gaps between existing organizational state and the desired state. In general, the process of organizational diagnostic involves four key steps: the entry phase, the phase of diagnosis, intervention and evaluation phase (Burton, 2004). The purpose of this paper is to provide an overview of existing organizational diagnostic models for the diagnosis stage, to consider the strengths and weaknesses of the models, to discuss several issues which Whole Foods Market is currently facing and to determine the best organizational diagnostic model for Whole Foods Market.
- Organizational diagnosis models
There exist different models of organizational diagnosis. Each of these models has its own strengths and weaknesses, and can therefore be applied in specific setting. It is not possible to rely one particular organizational diagnostic model because strategic analysis involves a variety of factors and the assumptions of one model might not be appropriate for the considered situation. Therefore, for an efficient organizational diagnosis it is essential to consider different models and to choose the one which is optimal for the particular organization and for the particular situation. In this paper, seven organizational diagnosis models will be considered:
1.1. Force field model
Force field model was developed by Kurt Lewin (Cummings & Worley, 2009). This model describes organizational change as the result of the impact of driving and restraining forces. The driving forces enhance the change and push the organization towards the change, while the restraining forces hinder change and create barriers for change (Cummings & Worley, 2009). Lewin further offers a strategy for organizational change: identifying both types of forces, weakening the restraining forces, strengthening the driving forces (“refreezing” the organization), implementing the change and then enhancing the stabilizing influences (“freezing” the organization in the desired state) (Cummings & Worley, 2009).
The major strength of this model is its focus on action and change. However, the weakness of the model is its generic nature: the forces in the model are defined quite broadly and it is easy to miss important forces while analyzing an organization.
1.2. 7S model
One of widely used frameworks is McKinsey’s 7S model. It encompasses seven key organizational variables: shared values, skills, structure, style, staff, systems and strategy (Harrison, 2005). Shared values are viewed as a central component of the model, and the remaining factors are interrelated in a specific way. 7S model is shown on Fig. 1.
A valuable finding in this model is the division of organizational factors into “hard” – structure, systems and strategy, and “soft” – staff, skills, style and shared values (Harrison, 2005). However, the model does not account for external variables and factors, and therefore its use is limited.
1.3. Likert model
Likert model also considers seven key organizational variables: motivation, interaction, communication, decision-making, goal-setting, performance and control (Alderfer, 2010). Furthermore, according to Likert model, there are four types of management systems which have different characteristics in the context of seven organizational variables. These four types include exploitative-authoritative, benevolent-authoritative, consultative and participative group management systems (Alderfer, 2010). Furthermore, Likert developed a survey for assessing the type of the management system based on 43 questions (Alderfer, 2010).
This model is useful when it is necessary to assess the managerial aspects of organizational functioning, organizational culture, etc. The model also provides instruments for more precise identification of management system. However, this model does not address external factors, individual factors, etc., and can therefore be applied only for a limited range of situations.
1.4. Burke-Litwin model
The Burke-Litwin model encompasses the internal and external factors and the relationships between them in a systemic way. Internal factors included in this model can be divided into three layers. Layer 1 includes leadership, culture, mission and strategy; Layer 2 consists of such variables as structure, management practices, systems and work climate, and Layer 3 includes the match between skills and job, motivation, individual values and needs and performance (Burke, Lake & Paine, 2008).
The model illustrates how organizational outputs interact with the environment and eventually affect system inputs in the next feedback loop. Furthermore, the model shows the directions of relationships between factors. This model is very efficient for describing the dynamics of organizational functioning and can be used to assess complex cases of organizational diagnosis. Its possible disadvantage is the large volume of information required for organizational diagnosis.
1.5. Leavitt’s model
The model offered by Leavitt focuses on the structural elements of an organization and their interactions. Leavitt’s model includes four key types of organizational variables: task variables, structure variables, technology variables, people/actor variables (Espejo & Reyes, 2011). Each of these variable types, according to Leavitt, is interrelated with other variable types. Therefore, a change of one variable causes the relevant changes in other three variables.
This model is efficient for analyzing internal dynamics and for planning internal changes within an organization. At the same time, the relatedness between all four types of variables is a simplification of the reality, and this is a significant limitation of the model. Furthermore, Leavitt’s model does not take into account the impact of the external environment.
1.6. Weisbord’s six-box model
In Weisbord’s model, six internal categories are considered as the factors driving organizational development. These categories include purposes, structure, relationships, helpful mechanisms, rewards, structure and leadership (Grieves, 2010). The leadership is viewed as the central factor determining organizational change, and the other five factors are represented as interrelated pairs in Weisbord’s six-box model. Furthermore, this model considers the impact of the environment on the inputs of the organizational system and on its outputs.
Organizational inputs considered by Weisbord include finance, ideas, people and technology, while organizational outputs include products and services (Grieves, 2010). For each of the boxes represented in the internal part of the model, Weisbord lists a set of questions allowing to assess organizational efficiency. This model is highly useful since it takes into account both internal and external environment and categorizes internal factors into distinct and reasonable groups. At the same time, Weisbord disregards the fact that each of the boxes can be interrelated with other boxes, and therefore the relationships between internal factors in this model is simplistic.
1.7. Congruence model
Congruence model is also referred to as the Nadler-Tushman model. This model combines the benefits of Leavitt’s model in the sense that it considers internal variables; it is also similar to Weisbord’s model as it takes into account internal and external factors as well as formal and informal organizational components. The inputs considered in this model include resources, environment, history and organizational strategy; internal variables include formal and informal arrangements, individual factors and task factors (Falletta, 2005). According to congruence model, outputs are classified into individual, organizational and group outputs (Falletta, 2005).
Nadler and Tushman considered strategic fit (congruence) between variables as a measure of organizational effectiveness. There are six dimensions of congruence in the model based on the pairs of internal factors (Falletta, 2005). This model efficiently models organizational environment since it accounts for different types of factors and takes into account their interaction and the process of change. For some situations this model might have an excess number of factors and variables, so its strengths can turn into weaknesses in the cases when in-depth analysis of all organizational factors is not required.
- Current issues faced by Whole Foods Market
There are two major issues which Whole Foods Market should address in order to retain its market position. First of all, Whole Foods Market is pursuing an aggressive growth strategy which is efficient in the short-term perspective and leads to quick revenue growth, but might hinder growth in the middle-term perspective. Whole Foods Market is cannibalizing its sales due to opening new stores and engaging in horizontal market expansion (Carter, 2014). This issue is further aggravated by the increasing competition from private labels, from local farmers and small shops where organic foods can be purchased.
The second issue faced by Whole Foods Market is its premium brand image: while such image allows to achieve high profits, middle and low-income customers perceive Whole Foods Market as expensive and purchase organic foods from smaller competitors (Carter, 2014). Whole Foods Market should focus on offering natural and organic foods to middle and low-income categories of customers and at the same time avoid brand dilution.
- Choice of optimal model
Both issues described in the previous section relate to the interaction of the company with the external environment and the need for change for Whole Foods Market which emerges due to the changes in the inputs and external environment. Therefore, the chosen model should include both internal and external organizational variables and trace the relationships between them. Among the considered models, Weisbord’s six box model, Burke-Litwin model and Nadler-Tushman congruence model satisfy these requirements. However, Weisbord’s six box model simplifies the relationships between the internal factors, so it is not likely to be a viable choice.
In the case of Whole Foods Market, the chosen organizational diagnostic model should provide the guidance for organizational change and should also help eliminate the inconsistencies between the existing strategy and market position of Whole Foods Market and the desired market position of the company. Out of Burke-Litwin model and Nadler-Tushman model, the latter is more in line with the requirements since it allows to consider different types of organizational inputs and organizational outputs, allows to evaluate the strategic fit between internal factors and includes organizational strategy as an input. Since it is currently important for Whole Foods Market to adjust its strategy to match the changing environment and to achieve strategic fit with its previous decisions, Nadler-Tushman congruence model is the optimal choice.
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