Introduction
Change management is an inevitable practice in any dynamic business. It is aimed not only at reaping substantial profits from the business organisation but also at striving for a prospective broader market in the future. Several factors drive an organisation towards changing its prevailing objectives and activities in order to meet the defined organisational targets. Change in an organisation can emerge from external causes, for instance, political, socioeconomic, demographic, and advancing technology. It can also originate from within the organisation as a management reaction to a variety of issues such as performance goals, cost, employee turnover rates, market demand, and client needs. Regardless of the originality of the change, Bruch and Gerber show how the entire process of change management takes a systematic and well-strategised approach to help an organisation remain relevant to its targeted goals and objectives1.
Incorporation of organisational tools and the empowerment of human resources to ensure proper balancing of both the external and internal pressures are major steps in any successful change management process. This implies the need for an organisation to come up with and/or embrace particular theoretical models for the valuation of the organisational performance and its present relevance towards the achievement of the set objectives. There are numerous models and theories about change management. However, this paper proposes Nadler and Tushman’s model that can be coupled with organisational tools to address change in an organisation.
In an attempt to showcase how Nadler and Tushman’s model can be applied in the analysis of organisations, this paper further reviews the organisational structures of Dell Inc company, which is used as a case example of showing how the aforementioned model is applied. Since the company’s management strategies and organisational tools can be critiqued from the point of view of this model, the paper briefly outlines the background information of Dell Inc. and Nadler and Tushman’s change management model. It then gives an insight discussion on a breakdown of the various aspects that bring about change such as the formal system of the organisation, organisational environment and strategies, operations, and the human resources.
This categorisation is done in order to clearly define the desired outputs to determine whether they can be achieved by Dell Inc. Additionally, an effort is made to determine whether Dell Inc.’s objectives and the set development strategies, formal and informal organisation, primary tasks, and key personnel are consistent with the organisation’s environmental inputs and the transitional process. The purpose is to investigate how these elements can work together to produce desirable outputs. The report also helps to identify key issues to determine whether the evaluation of Dell Inc.’s outputs against this model at organisational, group, and individual levels is significant.
Lastly, the report answers to the question of whether the manner in which Dell Inc. carries out its operations brings about client fulfilment. This report gives an analysis of Dell Inc.’s production and distribution systems against Nadler and Tushman’s congruence plan. It is aimed at answering the question of whether this plan is appropriate in the conversion of inputs to outputs through the various processes involved in the company’s operational structures.
Background to Dell Inc. Company
Founded in 1984, as PC’s Limited and based in Round Rock, Texas in the United States, Dell Inc. is a privately-owned multinational information technology company that invents, develops, constructs, trades, revamps, and/or sustains a wide range of products, solutions, and services alongside various customer financial services to both commercial and customers. The company has since built its name through direct sales of reasonably priced products to its clients. According to Dell and Rollins, the company’s mission is “to be the most successful computer company in the world at delivering the best customer experience in the market”2. As a result, the company is expected to fulfil clients’ prospects in terms of “quality, leading technology, competitive pricing, individual and company accountability, best-in-class service and support, flexible customisation capability, superior corporate leadership, and financial stability”3.
The company aims at providing technology solutions that are more resourceful, reachable, and easier to manage while at the same time establishing and maintaining positive and lasting relations with its staff and clients. Being a conglomerate company, Dell Inc. conducts its business and operations in many countries in America, Europe, the Middle East, Asia, and many other geographic regions of the world. Through its direct relationships with customers, Magretta reveals how the company has continued to expand both its domestic and global markets since its establishment in the 1980s4.
However, like any other companies, Dell Inc. has face many hurdles over the past years following a variety of both organisational and management issues5. Focusing on its low-priced, well organised, and customer rewarding products, the company took the time to realise the changing market trends. The key driver of the company was to optimise the already established investments even with varying market shifts and demand on the improved and relevant products, which would provide solutions to these market changes. Dell learned much from its rivals marketing strategies such as IBM Technologies and Helwett-Packard among other related companies that had manufactured quite modernised, sleeker, and lightweight laptops, which had an integrated internet-enabled adapter.
These were marketed through retailing. It was not until 2007 that Michael Dell resumed his duty as the company’s CEO after three years away from operations6. As the CEO leading an organisation that was facing critical competition, he had to restructure the company’s senior management team in the effort to plan for new products and services by considering the prevailing customer needs. This strategy saw the need to break Dell’s tradition that products and services should only be sold directly to clients. Nevertheless, more challenges cropped up since the market was shifting so radically.
Competitor companies continued to produce more high-end products including Smartphones. Meanwhile, requirements for increasing processing power became inevitable and hence less critical, with consumers demanding products with special features integrated to be more attractive7. In response to these challenges, Michael Dell had to change the operations of the company to meet consumer needs and/or suit the company to market.
This led to an overhaul of almost the entire system, with Dell becoming the CEO and setting up suitable organisational instruments to get the customers’ input8. Coupled with a new machine and hardware design including Smartphones and Dell mini-notebooks, distribution of products and services also changed from direct sales to opening of retail outlets.
Background to Nadler and Tushman’s congruence Model
The purpose of any organisation is to achieve particular goals and objectives, which are seen as the yield of the organisation in the form of overhaul, merchandise, or both. The realisation of output is done through manipulation of various input resources such as raw materials, human resources and organisational tools. The capacity of an organisation to achieve its goals and objectives depends on its ability to put together input processes while factoring the time of scheme, capitalisation, and workload. Input factors here are seen as independent variables, which bring about either negative or positive impact on the outputs, which are seen as the dependent variables in the organisational operations.
Failure to realise the enviable outputs, an organisation is deemed fit to undergo change9. Ordinarily, change is imposed on the inputs in order to realise the targeted outputs. In an effort to explain the relationship between inputs and outputs of an organisational system, this papers cross-examines Nadler and Tushman’s congruence model against the environmental (external) factors that affect the day-to-day operations of Dell Inc.
According to Nadler and Tushman, the congruence between two components is defined as “the degree to which the needs, demands, goals and objectives, and/or structures of one component are consistent with the needs, demands, goals and objectives of another component”10. Thus, equivalence is a gauge of how fit the duo of a particular mechanism matches collectively11. Nadler and Tushman’s congruence model for the diagnosis of organisational behaviour serves as a pragmatic model that is based on the open system concepts’ paradigm12. The model examines the critical inputs, major outputs, and the transformational processes that influence the functioning of an organisation while putting its high emphasis on the interdependence of these variables together with how they interact with each other13. According to Seiler (1967), this model, as shown below, elaborates four key organisational components, which are work, people, formal organisation, and informal organisation14.
These four components of an organisation are affected either positively or negatively, by both interior and exterior setting in the organisational processes that are employed to convert inputs to outputs.
Labour describes the essential and intrinsic action done by the company, its elements, and its persons in advancing the company’s schemes. Thus, analysis using this model should begin with an understanding of the tasks to be performed, prospective work patterns, and other aspects of work such as knowledge and skills required, stress, and uncertainties. People refer to the outstanding characteristics of individual persons responsible for the variety of tasks to be performed in the process of implementing the change. This encompasses the aptitude, facts, and expertise they have.
The formal organisation describes the structures, systems, policies, and principles that are laid down to help carry out the business operations of any organisation. Finally, according to Nadler and Tushman’s model, the casual establishment involves unrecorded rules that influence individuals’ communal and personal conduct15. This consists of the procedures, rehearsal, arrangement, and opinionated attachments, which include the rules, principles, and attitude exhibited by the employees of the organisation that may gradually modify the operation of an organisation16. Proper integration of the above four components of this model can drive a relative change in an organisation.
Analysis of Dell Inc. Using Nadler and Tushman’s Congruence Model: Environment, Strategy, Tasks, Formal System, and Key Individuals
The congruence model shown above outlines three categories of organisation’s inputs, which are involved in the realisation of an output. The core resourcefulness of this replica is the transformative role attached to the company, which takes the contribution contained in the surroundings, capital, and the past to generate some yield17. Every organisation thrives in an environment from where it operates. Dell Inc.’s environment includes “consumers, suppliers, regulatory bodies, technological, political, social, and economic conditions, labour unions, competitors, financial institutions, and people with special interests in the organisation”18. Generally, it encompasses all the external factors, which influence the operation of the organisation. Secondly, Dell Inc. gets a variety of inputs from its own possessions such as workforce, knowledge, and assets.
This can as well encompass the interior business atmosphere, for instance, the standing of the business among other key interaction groups such as clientele, shareholders, supervisory bodies, and contestants. Thirdly, the history of the organisation also contributes immensely as an input towards its success. This entails understanding of the key developments that might have shaped the organisation over time, for instance, the strategic decisions and behaviour of key leaders, response to crisis, and the trend of evolution of values, norms, and beliefs19. Thus, the organisation operates under the forces of these basic organisational components, which form a strong operational ground for the four key organisational components namely work, people, formal, and informal organisation.
Organisational Components
Environment
Having the aforementioned elements as pillars, Dell Inc. operates in an environment, which corresponds to the strategy and environment demands discussed in Nadler and Tushman’s congruence model of organisational analysis. In line with the accomplishment of its mission, the company has a role to integrate the four components in a structured and systematic manner in order sustain its relevance in the ever-changing markets, both local and global markets.
As mentioned earlier, in its early years of growth, Dell Inc. focused on production and distribution of its discounted, efficient, and customer satisfying products. This approach led to a wide market gap over years due to a variety of factors. One of the issues was based on the design of its products, which gradually became less admirable as the competitor companies produced more attractive products and consequently more appealing than Dell’s models. However, the major challenge was Dell’s “Built on order” production model, which suited the local (internal) market, thus leaving no space for retail marketing, as it was evident in other similar companies. This situation worsened the company’s market base. In fact, by 2007, Dell Inc.’s computers were no longer corresponding to its external environment, hence reducing the profitability of the business.
Strategies
Faced with the above critical challenges, Dell Inc. had to put in place a number of strategies in response to the growing market need to increase its competitiveness. To address these issues, the distribution strategy had to be changed from “built to order” to retail outlets20. Creation of new product designs and diversification of these products became inevitable. As a result, the company strategised to design and manufacture Smartphones and mini-Dell notebooks in an attempt to capture the overseas markets. To enhance these changes, Dell Inc. had to restructure its production systems and processes.
These systems were nurtured through culture change, which was a move by the company to venture the market in more responsive tactics exhibiting a fully-fledged sense of flexibility21. Another major adjustment was to focus on the company’s external markets through putting into question the clients, conglomerates, small and mid-sized commercial bases, government, and educational consumers. Achievable financial targets were also set in line with the changes. Top company’s management was given clear responsibilities on how to achieve these targets. The manufacturing of new product designs with a taste of styles and appeal for the emerging technology became Dell Inc.’s major area of concern.
This kind of change is a clear resemblance of Nadler and Tushman’s congruent model of organisational analysis. Dell Inc. considered the critical components, work, people, and the environment, in its organisational system by matching them with the strategy and environmental demands. The environment, which encompasses both internal and external influences on the business, had mismatched with the product design and Dell Inc.’s organisation systems. According to Nadlar and Tushman’s model, Dell Inc. aligned each of the components in order to achieve congruence (or fit), which in turn reflected an increase in sales besides improving the relationship with employees and consumers.
Tasks
Task is one of the key components of any organisation. According to the congruence model, organisations develop strategies to influence performance of the key tasks22. Dell Inc. bears a major responsibility of providing a great value to customers and partners through direct relationships, despite its move to embrace retail marketing. Apparently, the company still has to focus on optimising its profitability and growth with respect to the interaction of both the internal and external pressures, which bring about changes in the organisation of the company. However, for the task factor to be completed, people will be needed to provide the workforce.
Individuals and Groups
Nadler and Tushman’s congruence model analyses the performance of an organisation through the examination of people’s behaviour, activities, and individual performance within the organisation. For an organisation to realise the desirable outputs, the workforce should exhibit a high self-discipline and commitment, which in turn will help it achieve a presumed level of individual and group performance within the organisation. This outcome should be reflected in the overall performance of the company. According to the Fiscal report 2008, Dell Inc. has “approximately 88,200 total employees – consisting of 82,700 regular employees and 5,500 temporary employees”23. This translates to approximately 90,000 employees across the globe. Dell Inc. hires its employees through the branch’s human resource managers who assume the role of the hiring managers. Selection is done to hire only those people who meet the requirements.
Formal and Informal Organisation
Nadler and Tushman’s model describes formal organisation as “the structures, systems, policies, and principles that are laid down to help carry out the business operations of any organisation”24. The company’s business is a function of the policies imposed by different US centralised and state bureaus. Being a global company and organised in varied geographical lines, Dell Inc. has an elaborate formal structure, which outlines the role of the human factors in line with the organisational goals and objectives within each operational region. Specialisation is the key to the firm’s strategic management since every employee is charged with specific tasks to perform to avoid organisational misalignments.
The company conducts training to new employees to achieve the development needs of the firm to sustain its relevance and profitability in the market. New and existing employees also undertake development programs offered through the company in order be updated with the touch for new technology and product designs. The company is also organised into informal structures. These refer to “the processes, practices, structures, and political affiliations”25. Faced with competitive and swift markets, Dell Inc. has to keep its structures and operational models under review in order to comply with market trends and the new governmental regulations such as policies and the changing taxation tariffs.
Outputs
The ultimate goal of any organisation is the realisation of an output through the processing of the input. According to Nadler and Tushman (1980), outputs are what the organisation produces, how it performs, and how effective it is in terms of achieving its goals and objectives26. The effectiveness of Dell Inc. is directly proportional to its inputs and the machinery involved in the production process. Through the adoption of this model, the company has expanded its production from mere computers and related machines to other hardware devices such as “printers, televisions, notebook accessories and other peripheral devices such as mice, keyboard, networking and wireless products among other products”27. The achievement of Dell Inc. in the realisation of products is seen in its relatively vast market share, performance, and market prices of its products. Nadler and Tushman’s congruence model describes goal attainment, resource utilisation, and adaptability as factors, which must be considered at the organisation level.
Competition
The current consumer trends exhibited in the purchase of goods and services are guided by the taste for a particular product with regard to its design, market pricing, and its performance. Although Dell Inc. is one of the world’s largest personal computer giants, it still faces undoubtedly competitive market for its products and services especially from other computer giants including Helwett Packard and IBM Technologies. However, Dell Inc. has shown significant change in its product design alongside keeping significant focus on the retail markets as well as enhancing strong relationships with individual consumers amongst the internal and external markets. This helps to regulate the competition gap between the company and its competitors. With continued advancement in technology, the company expects a corresponding intensity in its diversified competitive markets.
Upon using Nadler and Tushman’s congruence model, these competition gaps can be reduced by altering the production process by factoring the components of an organisation as a way of ensuring increased efficiency, which in turn ensures faster response to customer needs relative to any of its competitors28. Nadler and Tushman’s congruence model evidently shows its applicability in Dell Inc.’s organisational structure. The model presents simplicity of operations where the various elements of the organisation are matched together for the realisation of the desired outputs.
Conclusion
It is evident that Nadler and Tushman’s congruence model is relevant in the analysis of organisations. The model describes the internal and external factors that affect the operations of an organisation by explaining how different organisational components, for instance, individuals, environment, formal organisations, and informal organisation, can be aligned in the concept of fit to address changes in the operations of the organisation. Through strategic placement of these components in the case study of Dell Inc., a conclusion can be drawn that organisations embracing this model will exhibit increased efficiency in transforming inputs to outputs through their production models. Perhaps this model presents a reliable approach in the diagnosis of organisational processes.
Bibliography
Bruch, H & P Gerber, ‘Strategic change decisions: Doing the right change right’, Journal of Change Management, vol.11, no.5, 2005, pp.1-67. Web.
Dell, M & K Rollins, Get Closer to Dell. 2013. Web.
Nadler, D & M Tushman, Managing Organisations: Reading and Cases, Boston, Brown and Company, 1980. Web.
Magretta, J, ‘The Power of Virtual Integration: An Interview with Computer’s Michael Dell’, Harvard Business Review, vol. 76, no. 2, 1998, pp.72-85. Web.
Seiler, A, Systems Analysis in Organisational Behaviour, Homewood, Ill: Irwin-Dorsey, 1967. Web.
Footnotes
1 H Bruch & P Gerber, ‘Strategic change decisions: Doing the right change right’, Journal of Change Management, vol.11, no.5, 2005, p.11. Web.
2 M Dell & K Rollins, Get Closer to Dell. 2013. Web.
3 Dell & Rollins, p. 4. Web.
4 Magretta, J, ‘The Power of Virtual Integration: An Interview with Computer’s Michael Dell’, Harvard Business Review, vol. 76, no. 2, 1998, p.74. Web.
5 Magretta, p. 72. Web.
6 Magretta, p. 74. Web.
7 Magretta, p. 74. Web.
8 Magretta, p. 75. Web.
9 Bruch & Gerber, p. 17. Web.
10 D Nadler & M Tushman, Managing Organisations: Reading and Cases, Boston, Brown and Company, 1980, p. 42. Web.
11 Ibid, p. 42. Web.
12 Nadler & M Tushman, p. 37. Web.
13 Nadler & M Tushman, p. 38. Web.
14 Seiler, A, Systems Analysis in Organisational Behaviour, Homewood, Ill: Irwin-Dorsey, 1967. Web.
15 Seiler, p. 32. Web.
16 Nadler & M Tushman, p. 42. Web.
17 Seiler, p. 32. Web.
18 Nadler & M Tushman, p. 42. Web.
19 Seiler, p. 63. Web.
20 Magretta, p. 84. Web.
21 Magretta, p. 84. Web.
22 Nadler & M Tushman, p. 42. Web.
23 Dell & K Rollins, p. 7. Web.
24 Nadler & M Tushman, p. 42. Web.
25 Nadler & M Tushman, p. 42. Web.
26 Nadler & M Tushman, p. 42. Web.
27 Magretta, p. 86. Web.
28 Nadler & M Tushman, p. 45. Web.