Question 1: Hard Systems Method in the analysis of IKEA case
The hard systems approach is a traditional approach used in the analysis of businesses and opportunities available. The approach is used in the analysis of the IKEA case study as described by Burge (2015). The first stage in the application of this model involves problem definition. Problem/ opportunities identification involves the determination of existing challenges that need to be addressed or opportunities that can be explored for greater business advantage. In the case of IKEA, the problem definition phase began with the identification of an existing problem which offered an opportunity for business development. The idea of IKEA came about as a result of Ingvar Kamprad’s personal questioning of the rationale behind the low affordability of furniture. He questioned why only the rich could afford high quality furniture due to high prices. This helped the entrepreneur to identify an opportunity for developing affordable furniture for all people.
Following the problem identification, the hard system approach recommends a description of the situation as it presently is. From the perspective of IKEA’s founder, the key questions can lead to a vivid description of the market as it was prior to development of the company’s business vision and objectives. The situation was such that the available high quality furniture could only be afforded by the wealthy due to the high prices. The situation went contrary to Swedish culture which advocated for caring for all people regardless of their economic status. This set the company apart as it was founded on the principle that the ordinary people needed equal opportunities to afford furniture as the wealthy. The description of the present situation was followed by the development of the company objectives.
The objectives building stage of systems development follows the current situation analysis. IKEA objectives can be described in line with the founder and the organizational vision statement. According to Salhieh (2007), the development of organizational objectives is a critical step as it helps the business stakeholders to identify their ideal position as well as the constraints that may prevent them from achieving that position. In the case of IKEA, the vision of making a difference by creating something that can benefit everybody is what drives the company. It can be argued that from this vision, the company was capable of developing specific objectives through which the founder’s dream could be achieved. The process of defining the objectives takes consideration of the constraints that the entrepreneur may face in the process of trying to achieve the desired goals. IKEA was focused on creating an anti- brand that would be beneficial to many people yet also affordable without compromising on the quality of the product. This was bound to come with challenges especially in the selection of suppliers who would comply with the company objectives. Through the actions of the founder and the participation of the entire work force, IKEA could manage to achieve their objectives.
The company defines the available routes to achieving the company objectives. In this stage, the stakeholders are involved in a divergent – convergent thinking and analysis process in which their sole objective is to find a number of feasible business options (Burge 2015). The divergent stage incorporates a high level of brainstorming where different members give suggestions on what they consider to be plausible business options. The key features of the process include consideration of the feasibility of each of the presented options in a convergent phase of the analysis in which the stakeholders purpose to streamline their thoughts towards the most desirable alternatives. In this stage, the aim is to provide an outline of a solution that is sufficient in details to eliminate the weaker alternatives from the list of business options available. As such, it is not a conclusive process that results in an overall business decision but merely guides the though process in a particular direction in order to be able to carry out the subsequent stages of the hard systems method. At IKEA, this stage may have involved brainstorming over a multitude of options available for obtaining affordable furniture for all people. It may have resulted in the development of various alternatives such as minimizing the cost of raw materials, reducing the production costs and/ or eliminating middle men in the sale of IKEA products. It may also have included options to combine various alternatives for the most optimum production and marketing process.
The fifth stage in using the hard systems analysis method involves determination of the metrics that would be used to measure the goal achievement progress. From the vision of IKEA, it can be argued that the objective of providing affordable high quality furniture for all people was the key driver of the evaluation metrics. To determine whether the company was achieving its goals, it would be essential to use specific measures for evaluation of the development progress associated with the company. The IKEA acronym clearly defines the values that the company could use to evaluate its progress in the market. The company is built around the values of innovation, knowledge, experience and accessibility. As such, it can be said that these would be the basis upon which progress would be measured. Since the market conditions before the development of the company had highly priced quality furniture, a reduction in IKEA prices relative to the overall market prices for each of the products would be considered to be positive progress towards accessibility. On the other hand, innovation would be measured by the rate at which the company rolls new products into the market and/ or the rate at which new technologies for the development of cheaper and high quality products are realized. An increased development of cheap high quality products would indicate progress in innovativeness. Similarly, a building understanding of the concepts of the furniture market within the company would indicate progress towards knowledge while experience would be indicated by the ability of the people to be incorporated in their works without requiring information refreshing in any way. The level of expertise would thus be an effective indication of growing experience in the company.
After defining the metrics of goal achievement, Burge recommends that the next stage should involve evaluation of the progress made. This would allow the company to recognize the available options for the development of the intended products. From the options developed in the routes to objective stage, the founders of the company had to come up with detailed information regarding each of the technical options to be capable of making informed decisions. The stage involves analysis of each option including technical details, costs and benefits associated with each option and other details that may be relevant. The stage requires minimization of resources and time spent prior to coming up with the most relevant option hence it has to take the shortest time and the least amount of resources for accomplishment. The evaluation of the available options follows the process of defining the alternatives in full details.
The evaluation of the options is the last stage in decision making for the objective of initiating the actual business (Burge 2015). For IKEA, the process of evaluating the options would involve consideration of all the details associated with each of the available options in terms of their capability to help the company in achieving its objectives. The evaluation would be focused on identifying the investment options that would enable the company to satisfy three key aspects of furniture provision while also giving profitable business. The chosen option had to be feasible enough to provide every item in its desirable for, for the accomplishment of the desired function and at low cost. This was probably difficult to achieve as highlighted in the case study in that the company could get products that satisfy both form and function but could not meet the low price requirement. The option selected had to be technically, organizationally and financially feasible in order to be selected by the company. This process led to the realization of a business model that incorporated reduction of the costs of production into the business process. To best achieve the desirable actions, the model further outlined how reductions could be achieved in various aspects of production. For instance, the supply costs were reduced through DIY processes, the location/ lease costs were reduced through building in town outskirts where the costs were low, the costs of warehousing were reduced through production of flat parts that could be assembled and which occupied less storage space.
The final stage in the hard systems methodology involves the implementation of the selected option. This was the realization of the IKEA business. The implementation process is an iterative process involving continued evaluation and change making. This is similar to the six sigma approach where there is constant control of operations to ensure that the business is always growing and satisfying customer needs. At IKEA, one of the values of the company is innovation. It is therefore critical that the company operates with constant changes in their operations. The spray diagram below clearly defines the various stages of the hard systems analysis of IKEA.
Question 2: Insights gained from the IKEA case study
Following the analysis of the IKEA case from the Hard Systems Perspective, there are various issues that come to clarity concerning both the case itself and the method used in general. First, it brings out the need for identifying a problem or opportunity prior to making efforts to begin a business. In the case of IKEA, the vision and objectives of the business were derived from the identified problem. This brings to mind the idea that no progress is possible in business where there is no problem being solved or opportunity being explored. In cases where problems persist, there are always opportunities to be taken advantage of. On the other hand, there may be opportunities not worth pursuing as a result of infeasibility of the business ideas they represent. It is therefore essential to recognize the opportunities and to evaluate them for their worth prior to engaging in them.
Secondly, the case also created insight into the role played by vision in business development. Despite the existence of a problem and opportunity to be explored, the lack of a particular vision can result in failure in a business trial. This is because it is vision that helps to direct a company, to set it apart from others and to formulate its specific objectives. Without a clear vision, any company can fail due to the lack of clarity in the direction it intends to take. For instance, the case of IKEA clearly brings out this perception in that from the inception of the idea in the mind of the founder, there was general information about what he desired, yet this information was not sufficient to direct the company or to help it develop its strategy for gaining competitive advantage. It is therefore crucial for any organization to develop its vision before initiating the operational plans of an organization.
Another important lesson learnt from the case of IKEA is that involving the people in one’s vision can help an organization to achieve its vision. From the onset, the company helped the employees to be part of its vision by clearly aligning their personal goals to the company vision. As such, the employees of the company were at will to give their best to the company. Similarly, IKEA engages its customers in the production process hence making them a part of the progress. It is only through this that the company has managed to maintain the interest of the people it serves.
Question 3: Criticisms of the Hard Systems Method
Various studies have been carried out concerning the effectiveness of the hard systems method in the analysis of businesses. Some of those studies are criticisms for the method. For instance, the hard systems approach is said to be linked to organizational goals and objectives. The method assumes that all systems are capable of being disintegrated into sub systems. As such, it may be difficult to use it for systems that cannot be disintegrated into different parts. Apart from this, the disintegration may also be existent but then in a manner that does not resonate with the requirements of the method of analysis. This criticism may be misplaced because of two main reasons. First, a system is a combination of parts hence no system can work without the capacity of being disintegrated. Secondly, the systems that can be disintegrated must also have parts that function independently yet need each other to be complete. This implies that the hard systems method can be applied in all systems regardless of their nature, either as whole or independent parts of it.
As in other system dynamics, the hard systems method is criticized for its generality. This is because the hard systems method is formulated in a manner that suggests that it should be applicable to all systems regardless of the system characteristics (Featherston and Doolan no date). According to the critics who hold this belief, there may be other systems that do not fit into the generalized idea or staged method. On a personal note, I consider this criticism to be more or less well articulated. This is based on the argument that some systems are so complex that their understanding requires much more than the stage wise application used in the hard systems method. The systems may also find relevance to the hard systems method only during the initiation phase of the project. The subsequent developmental stages may find the hard systems method irrelevant.
According to Featherston and Doolan (no date), criticism for the systems method also comes from the argument that the models cannot mimic real systems. While this is true, it is also clear that models only mimic ideal situations and any deviation from the ideal situations as are prevalent in reality cannot be mimicked by the hard or even soft systems methods. As such, it is an acceptable shortcoming of the method as it is within expectations.
Question 4: CATWOE and its applications at IKEA
Besides the Hard Systems analysis Method that can be used in businesses, there is also the option of using the soft systems method in analysis. One of the oldest tools usable in the Soft Systems method is referred to as CATWOE. The acronym stands for Customers, Actors, Transformation process, World view, Ownership and Environmental constraints (Checkland and Poulter 2006). From the perspective of IKEA, each of these aspects can be described as the factors that have led to the actual performance of the business. The customers are the key stakeholders of a business. As such, most companies in the present days are using customer oriented approaches to enhance performance in terms of profits. At IKEA, the customers are considered to be essential for business growth as well as for maintaining the low price of the goods through DIY processes.
The actors for IKEA in this process include the stakeholders associated with the business. For instance, IKEA has to handle various suppliers, customers and employees. All these actors contribute to the success of the business and are crucial for its profitability. The company takes care of the employees by incorporating them in the company objectives. Similarly, the company ensures that the suppliers work together for the benefit of the company through selection of suppliers that were not initially in mainstream production processes. The transformation process used by the company is aimed at providing affordable yet high quality furniture pieces for all people. To achieve this, a process that involves reduction of production costs and use of innovation, knowledge, experience and accessibility was chosen by the company.
Furthermore, IKEA also works based on a world view. From the culture of Sweden that encourages equal opportunities for all people, IKEA has managed to develop operational practices that focus on accessing the least cost suppliers from across the world. Because of this, the company has continued to expand over the years to several other locations besides Sweden. The ownership of the company also plays an essential role in the determination of the success of the business. In this company, the founder and the owners developed a strong vision for the company, which made it capable of surviving through the most difficult times. The commitment of the company owners has thus played a crucial role in ensuring business success. Environmental constraints faced by the company have also influenced its operations over the years. The continuing demand for environmentally friendly procedures has driven the company to opt for procedures that result in environmental conservation, consumption of low amounts of natural products and reduced wastage.
Burge, S 2015. An Overview of the Hard Systems Methodology. Burge Hughe Walsh.
Checkland, PB and Poulter, J 2006. Learning for Action: A short definitive account of Soft Systems Methodology and its use for Practitioners, Teachers and Students. John Wiley, Chichester.
Featherston, CR and Doolan, M no date. A Critical review of the Criticisms of System Dynamics. The 30th International Conference of the System Dynamics Society.
Salhieh, SM 2007. A Systematic approach for the selection of business processes for the purpose of enablement. International Journal of Information Technology & Decision Making, 6, 649- 669.