A. Diagnosis in three steps
Nadler and Tushman use three steps for diagnosis:
Identify the system
Determine the nature of the key variables
Diagnose the state of fits
B. Model elements
Being an open-systems model there are three main sections:
Environment includes all factors outside the organization that have a potential impact on the organization. A thorough analysis requires not only looking at current state, but also making assumptions about the future state.
Resources are all the various assets to which the organization has access, including human resources, capital, information, as well as less tangible resources, such as recognition in the market.
The element of history is often overlooked in diagnosing organizations. Nadler and Tushman explicitly list the organization’s history as an input. Explore the history of patterns of employee behavior, policy, the types of people the organization attracts and recruits and how decisions get made in a crisis.
Strategy is the process of determining how the organization’s resources are best used within the environment, and within the historical context, in order to attain the desired goals. It is the act of identifying opportunities and creating a fit with the organization’s capabilities. Strategy is seen as an input, but has been put apart in the model.
Critical features for analysis of inputs
What demands does the environment make on the organization?
How does the environment put constraints on organizational action?
What is the relative quality of the different resources?
To what extent are resources fixed rather than flexible in their configuration(s)?
What have been the major stages or phases of the organizations development?
What is the current impact of such historical factors as strategic decisions, acts of key leaders, crises, and core values and norms?
How has the organization defined its core mission, including markets and customer segments it serves and products/services it provides?
On what basis does it compete?
What supporting strategies has the organization employed to achieve the core mission?
What specific objectives have been set for organizational output?
Transformation process elements
– Formal organizational arrangements
– Informal organization
Outputs are defined on a organizational, group and individual level.
The model contains various feedback loops to monitor the effects of changes made to the system.
C. Key questions on the fit of transformation process elements
The analysis concentrates on the degree to which key components are congruent with one another. Key questions are:
To what extent do the organizational arrangements fit with the requirements of the task?
To what extent do individual skills and needs fit with task requirements, with organizational arrangements, and with the informal organization?
To what extent do task requirements fit with both the formal and the informal organization?
D. Questions for assessing the effectiveness of the system as a whole
The main assumption is that a lack of fit between components produces poor organizational performance. Main questions for diagnosing the effectiveness of the systems functioning as a whole are:
How well is the organization attaining its desired goals of production, service, return on investment and so on?
How well is the organization utilizing its resources?
How well is the organization coping with (disruptive) changes in its environment over time?
E. Congruence: double-edged sword
With regards to the third element – fit with the environment over time – Nadler and Tushman recognize that too much congruence can harm the agility of organizations.
“While our model implies that congruence of organizational components is a desirable state, it is, in fact, a double-edged sword. In the short term, congruence seems to be related to effectiveness and performance. A system with high congruence, however, can be resistant to change. It develops ways of insulating itself from outside influences and may be unable to respond to new situations.”
The concept of congruence builds on views by George Homans in his pioneering work on social processes in organizations, emphasizing the need for consistency among key elements of organizational behavior. Leavitt identified four major components of organization: people, task, technology and structure. Other related authors are: James Seiler, Paul Lawrence, Jay Lorsch and Alan Sheldon.
A Model for Diagnosing Organizational Behavior, David A. Nadler, Michael L. Tushman, Organizational Dynamics, 1980
Organizational Framebending: Principles for Managing Reorientation, Nadler and Tushman, 1989
Understanding Organizations, The Process of Diagnosis, Warner Burke, 1992