Business Feedback Loops and Organizational Learning at Whole Foods Market

To remain competitive and responsive to internal and external pressures, firm need to observe and monitor the outcomes of their activities (Mintzberg et al., 2011). Feedback loops explain the way in which processes may be maintained, or change takes place. In line with other businesses, Whole Food Markets cannot avoid the presence of feedback loops. When the feedback loops are recognized, they can provide a useful source of data that a firm may use to maintain and improve performance. The aim of this report is to review the two different types of feedback loop which may exist, and then look at some of the feedback looks that are found in While Foods Market.

2.

Types of Feedback Loops

There are two types of feedback loop exist, the first type is a reinforcing loop and the second is a balancing loop, each operates in different ways with reference to cause and effect (Bellinger, 2004). Reinforcing feedback loops, as the name indicates is a loop which reinforces existing patterns of behavior, either amplifying, or magnifying the outcomes, by reinforcing attitudes and/or activity patterns, so the outcome is exacerbated as the loop repeats (Bellinger, 2004). Reinforcing loops may have positive or negative outcomes (Bellinger, 2004). For example, a lack of discipline in workplace may result in employee negative behavior, if the employees see their peers escape any form of discipline, they may also choose to indulge in negative behavior; a negative reinforcing cycle. If the situation were reversed, and employees were working hard, and peers saw employees gaining benefits and rewards for their hard work, there may also emulate that behavior, and it would become a positive reinforcing cycle. In each case the cause is the outcome of the first loop, and the effect is the way in which the pattern changes.

A balancing feedback loop is a loop where the same patterns are maintained as the loop is repeated (Bellinger, 2004). Just as with reinforcing loops, balancing loops may also be positive or negative (Bellinger, 2004). For example, balancing loops may provide resistance to change which has a negative outcome for an organization, alternatively they may provide support for the maintenance of high standards, which would be seen as a positive balancing loop.

With an understanding of the different types of loops,

Both types of loop may provide useful input for an organization that wishes to improve. There is no singular definition of organizational learning, the literature generally indicates organizational learning occurs when individuals within an organization learn and collectively apply knowledge which becomes creates an improvement. Organizational learning can include learning from mistakes, and will involve utilizing feedback as a source of information to review and improve operations or actions, and may be linked to double loop rather than single loop learning (Argyris and Schon, 1996). Vassalou, (2001) argues that the concept will incorporate the concepts of know-how, and know why. Senge (2006) takes the concept of organizational learning to a first stage, with the concept of the learning organization, which is seen where the learning takes place on an ongoing and continual basis, and forms part of the culture. With organizational learning the process may not be as ingrained in the culture, or as holistically applied.

3.

Reinforcing Feedback Loop

There are many reinforcing feedback loops at whole foods market. The reward strategy utilized by the firm is a good example of a positive reinforcing feedback loop. The organization has a rewards system referred to as "gainsharing," which is linked directly to employee remuneration (Whole Foods Market, 2015). The gainsharing program provides a basis for productivity related pay, allowing employees to benefit from good productivity performance. All employees participate in the scheme, and received a bonus every other month, with bonuses calculated on their own teams' productivity. Each employee receives a proportional amount of the bonus allocated to their team based on the hours they work (Whole Foods Market, 2015).

The program provides a significant potential for learning, as the loop itself is relatively short, with bonuses calculated and awarded every two months. Employees as individuals may notice ways in which they can increase productivity and team performance, and make suggestions which will benefit themselves and others. Likewise, management may pursue innovation and improvements in order to improve team performance. Just as strategies which may improve productivity may be pursued, learning may also take place with reference to practices that did not work, as they are unlikely to be repeated.

In the retail environment each store is a team, so teamwork is also encouraged, which come facilitate the potential for peer learning. The basis of the bonus allocation also creates the...

The outcome fits in with motivational theory, allowing for financial rewards which are on the lower order needs of Maslow's hierarchy of needs, as well as providing a basis for motivation in terms of expectancy theory (Buchanan & Huczynski, 2010). The tangible results of the positive benefits of the reinforcing loop for the employees is seen in their wages, but an employee working 40 hours a week benefiting from an additional $1,788 in their 2013 pay checks, and for the company it has resulted in lower labor costs with more self-managing teams (Whole Foods Market, 2015).
The reinforcing feedback loop is very positive, and it is accompanied by other reinforcing feedback loops that interact, such as performance appraisals. One additional learning opportunity which would support organizational learning may be implementation of an employee survey, to gain feedback regarding how the employees feel, as well as views and ideas on the organization and its operations. This could also become a positive feedback loop, as employees participate and see the input being utilized, they may be more encouraged to participate further in the future, providing more knowledge which may provide for further improvements.

4.

Balancing Feedback Loops

Balancing loops also present at Whole Foods Market. A useful example of a balancing loop is the inventory management. Careful inventory management is important for all grocery stores, but it may be argued as more important for Whole Foods Markets, as approximately 60% of their inventory is made up of products that are perishable (Whole Foods Market, 2015). The system of inventory management is based on computer forecasts, where input information such as existing stock, recent sales levels, and other influencing factors which may impact on sales, such as seasonal variations, weather, promotions, etc., in order to determine potential sales, and from that the level of ordering that would need to take place. The aim is to keep inventory at a balance level, only being adjusted when there is an expectation that demand levels will be changing. The process itself is based on the ability of the system, and those operating, to learn from the way customers behave, observing customer patterns, as well as gathering feedback regarding different products. It is known that even placing products in particular areas, such as a level, or at the end of aisles, may increase sales levels (Kotler & Keller, 2011). Therefore, learning is an ongoing process, which is not limited only to the supporting processes of computer algorithms, but also the observations and inputs from the employees who deal with the inventory system.

Improving this balancing loop is challenging, as it is always in a state of flux due to changing consumer tastes and fashions, as well as with availability. Increasing the level of customer feedback in stores, especially with reference to new products that are being trialed may help to provide an additional input to support the balancing system, to prevent over or under ordering. Feedback from employees regarding customer reactions may also be valued in this process.

5.

Conclusion

Whole Foods Market appears to take a proactive approach towards organizational learning, seeking up opportunities to not only learn, but provide support for ongoing learning processes at team as well as organizational level. The two examples of the reinforcing and balancing loops demonstrate some of the processes which are in place; gainsharing provides opportunity for ongoing opportunities to learn, while the inventory balancing loop may appear rather mundane, the processes are nonetheless essential for the efficient operation of the organization, and supporting a competitive advantage for fresh quality food. However, even with learning already taking place, there will still be additional opportunities for further improvement. In both of these examples of feedback loops, potential sources of improvement had been identified, which may help to support feedback loops the company designs.

References

Argyris. C, Schon. D, (1996), On Organization Learning: A Theory of Action Perspective, London, Addison-Wesley

Bellinger, G. (2004), theWay of systems, accessed at http://www.systems-thinking.org/theWay/theWay.htm

Buchanan, D; Huczynski, A, (2010) Organisational Behaviour, Harlow, FT/Prentice Hall

Kotler Philip; Keller Kevin, (2011), Marketing Management, Prentice Hall

Mintzberg H, Ahlstrand B, Lampel JB. (2011), Strategy Safari: The Complete Guide Through the Wilds of Strategic Management, Financial Times / Prentice Hall

Senge, P, (2006), The Fifth Discipline: The Art And Practice Of The Learning Organization, Random House Business

Vassalou, Leda, (2001), The learning organization in health-care services: Theory and practice, Journal…