Chapter 5

The Diagnostic Process

Learning Objectives
Identify system parameters and recognize the
symptoms, problems, and causes of
organizational ineffectiveness.
Recognize the various techniques for gathering
information from client systems.
Describe the major diagnostic models and techniques
used in OD programs.
Apply a systematic diagnosis to organizational
situations.

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• Pages not included (134-135– Other types of
instruments) & (139-141 diagnostic models)
• Student Premeeting Preparation
• Read Chapter 5.
• Opening case page 126
• Prepare for OD Skills Simulation 5.1. Complete
Step 1. Form groups of six and select roles.
• Read and analyze Case: The Old Family Bank.

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• Opening Case page 125
• Data Mining at McDonald’s?McDonald’s has changed
to a new method of gathering data from its customers.In
the past the data was largely anecdotal/unreliable. The
people gathering the data were not consistent from one
customer to another.Sales data was used but it did not
explain customer opinion or motivation for purchase.As
an alternative to questioning customers, McD started
sending mystery-diners to restaurants.The purpose was
to collect data that would be useful to the individual store
so that it could improve.The stores throughout McD were
evaluated on the same standards and the mystery-diners
were trained so there was consistency in the
grading.The stores are evaluated every six months.Six-
month and year-to-date averages on McD internal web
site along with averages for other stores in the
region.McD simultaneously conducted in-depth
interviews with repeat customers.This provided more
useful information that it could use to improve
operations. 3
• Diagnosing problem areas.

– Identification of areas for improvement and

problems is an important element in
developing a high-performance
organization.

– Effective change must be based on a

specific diagnosis of the problem.

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 What is diagnosis?

– Diagnosis is a systematic approach to

understanding and describing the present
state of an organization.

• The purpose is to specify the nature of

the problem requiring solution, to identify
the underlying causal forces, and to
provide a basis for selecting effective
change strategies and techniques.
•

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Critical issues in diagnosis.
– Simplicity.
– Visibility.
– Involvement.
– Primary factors.
– Measure what’s important.
– Sense of urgency.

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 – The process.
• Diagnosis is a cyclical process involving data
gathering, interpretation, identification of
problem areas, and potential action programs.
(See Figure 5.1)
– Step 1: Tentative problem areas identified.
– Step 2: Collect data.
– Step 3: Analyze data.
– Step 4: Feedback data.
– Step 5: Is more data needed?
– Step 6: Problems areas are identified.
– Step 7: Is the client motivated to work on the
problem?
– Step 8: Diagnosis and work on the problem.
– Step 9: Monitor and assess results.
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Figure 5.1 The Diagnostic Process

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 • The performance gap.

• The difference between what the organization

could do and what the organization is actually
doing. (See Figure 5.2)
• Self-assessment gap analysis of four key areas.
– Organization’s strengths.
– What can be done to take advantage of
strengths.
– Organization’s weaknesses.
– What can be done to alleviate weaknesses.
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Figure 5.2 The Performance Gap

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• Page 130
• OD In PracticeDiagnosis For Kodak: The Digital RevolutionSince the
late 1990s Kodak has cut its workforce by as much as 45,000 jobs.Kodak
is attempting to transform itself from a slow-changing company into one
operating on the cutting edge of the digital revolution.Kodak began in the
film business and had little competition until Fuji in the 1980s.The digital
photography business is highly competitive with some major world wide
companies like Sony, HP, and Canon.Data collection and analysis.Kodak
surveyed a large number of its managers and called in outside
consultants.It rearranged its core photo business in the late 1990s.The
restructuring was very limited in its scope and of little benefit.Kodak has a
history of dragging its feet while competitors ran away with new
markets.It has tried for over a decade to transitions to digital.Ironic,
considering that Kodak invented the digital camera technology but failed
to capitalize on its inventions.Diagnosis and changeIn the past, Kodak
was known to favor caution over risk-taking.Change was not required in
an industry that Kodak controlled for over 100 years.The job of making
Kodak is difficult.Kodak is a chemical company that must transform itself
into an electronics company.Electronics is highly competitive; something
Kodak has little experience with.New products and change.Kodak has
been moving away from consumer electronics to focus its attention on
nonconsumer applications of electronics.In the business and medical
communities Kodak is experiencing strong growth.New managers have
proven tack records in bringing new products to market.Questions:What
data or information would be necessary to develop a change program at
Kodak?What kind of performance gaps can you identify at Kodak?Why is
it so important to use diagnosis before implementing a change
program?11 11
• The data-collection process.
– OD is a data-based change activity.
– Data is an aggregation of all signs, signals, clues,
facts, statistics, opinions, assumptions, and
speculations, including items that are accurate and
inaccurate, relevant and irrelevant
– Information is data that have form and structure.
– Data collection consists of three stages:
• Definition of objectives.
• Selection of factors.
• Selection of data-gathering method.
•

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 – The definition of objectives.
• Define the objectives of the change
program.
• Identify preliminary diagnosis and
what further information is required.
– The selection of key factors.
• Identify the central variables
involved in the situation.
• May be necessary to increase the
range of depth of data beyond what
is readily available.
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•
 – The selection of data-gathering method.
• Selection of one or more methods of gathering
data.
– Because there is no one best method, a
variety of methods may be used.
– The nature of the problem helps to
determine the method.
• Types of methods include:
– Secondary sources.
» Organization and industry data already
available.
– Employee surveys or questionnaires.
» Especially useful when a large number
of people are involved.
» However, the data may lack “richness.”
•
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 – Direct observation.
» Observing how people go about their
tasks, norms, behaviors.
– Interviews.
» Is one of the most widely used methods
of gathering data.
» It is direct, personal and flexible.
» Directed interview.
» Open-ended questions.
» Closed questions.
•

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• The implementation of data collection.
– Decide from whom data will be obtained.
– Select an appropriate technique to gather data.
– Implement data-collection program. The use of an
outside collection agent is recommended so the
respondents will feel more secure that candid
answers will not be used again them.
•

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 – The analysis of data.
• The techniques used to analyze the data will
be dictated by the method used to gather the
data.
– Guidelines for evaluating the effectiveness
of data collection.
• The validity of the data.
• The time to collect data.
• The cost of data collection.
• The organization culture and norms.
• The Hawthorne effect in data collecting.
•
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• Our Changing WorldeBay, Center for Global CommerceeBay has
become the marketplace of the world. At least 30 million people buy
and sell more than $20 billion in merchandise.Commonly spoken
languages are English German, French, Spanish, and Chinese.With
no inventory, it had profits of $430 million for the most recent year.The
CEO is Meg Whitman.She has had six corporate and consulting
jobs.Her consulting experience was at Bain & Co., a consulting firm
well known for its reliance upon data collection and problem
identification.Whitman has brought in ex-consultants to fill senior
management positions.eBay is driven by understanding the data.As
an internet company, data is one thing eBay has plenty of.eBay
believes that if you understand the data, you can decide where to
spend money, where people are needed, and which projects are
working and failing.Whitman says, “If you can’t measure it, you can’t
control it.”Understanding the data is the way eBay learns its
customers.Changes at eBay are like needle-moving.Managers are
limited about what they can control.They make small changes to try to
make small gains.The danger is that eBay becomes obsessed with
data and measurements to the point that it becomes too
bureaucratic.“You have to be careful because you could measure too
much,” Whitman says.Questions:What are some advantages and
disadvantages of gathering large quantities of data?Visit the eBay
Web site to further your understanding of its business model.

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• Red flags in the diagnosis.
– Confidentiality of the data is paramount.
– The overdiagnosis.
• The diagnosis drags on and so many problems are
identified that the diagnosis becomes a ritual of continual
analysis.
– The crisis diagnosis.
• Attending only to the immediate, short-term crisis.
• Important but less visible problems are missed.
•

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 – The threatening or overwhelming diagnosis.
• The client is confronted by problems to the extent that
the relationship with the practitioner is damaged.
• It is difficult for the client to accept so much information
and deal with it in any meaningful way.

– The practitioner’s favorite diagnosis.

• The practitioner imposes a special or favorite diagnosis
regardless of the problem.
• The diagnosis may be made to fit the practitioner ‘s
own special skill areas.

– The diagnosis of symptom.

• Focuses on symptoms of the problems rather than on
the underlying problems.
•

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• Review Questions
• Describe the use of performance-gap analysis.
• Answer: A method in the diagnostic process to
determine the difference between what the
organization could do by virtue of its opportunities
and what it actually does. Data are collected on the
actual state of the organization on a varying set of
dimensions and also on the ideal or desired state.
The difference is the gap which may be the result of
ineffective performance from within the organization
or because of competitive changes. A performance
gap may also occur when the organization fails to
adapt to changes in its external environment.

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• Q. Compare and contrast the interview and
survey methods of data collection.

• Answer: Interviews are more personal, surveys are

less so; interviews allow for more feedback, surveys
more objective. Surveys are used to gather a large
number of quantitative responses. The data
generated from surveys tend to be impersonal and
anonymous and often lack feeling and richness, but
this method easily lends itself to quantitative
analysis. The survey may lead the practitioner to
problem areas which can be investigated more
deeply through an interview. Interviews are more
direct, personal, and flexible than surveys and are
very well suited for studies of interaction and
behavior. Interviews are flexible and can be used in
many different situations. Interviewing also provides
two-way communication.
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Q. List some possible types of organization data that
you might find in your own organization or college
that could be used in planning an OD program.
Answer: Pay policies, promotion possibilities, work
environment, group interactions. There are many
possible correct answers depending on the
organization.

Q. Explain the difference between symptoms and

causes.
Answer: The symptom is the manifestation of some
underlying problem. Cause is the reason for the
problem. The client is often aware of the evidence of
the symptoms of a problem, such as declining sales or
high turnover. Through data collection and analysis the
practitioner tries to identify what factors are causing
the problem, and therefore what needs to be changed
to fix it.
•
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• CASE TEACHING NOTES

• The Old Family Bank

• I. Problems
• A. Macro
• 1. The lack of loyalty to the entire bank could affect the
effectiveness (and profitability) of the bank.
• 2. The bank may have a poor process for setting pay
policies.
• B. Micro
• 1. Though the personnel in the data-processing
department have a strong team, they are not loyal to the
larger organization.
• 2. Data-processing personnel believes that
management does not appreciate them, their skills, and
contributions.
• 3. Data-processing personnel may be underpaid when
compared to similar workers in other companies.
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• II. Causes
• 1. The skilled workers in the data-processing
department do not recognize all of the factors
that may affect pay and rewards.
• 2. The data-processing personnel possibly
has access to more company-wide information
by virtue of the type of work their department
does than do personnel in other departments.
Consequently, they get a portion of the data
without understanding how managers make
decisions based upon that data.
• III. Systems affected
• The attitude of the data-processing personnel
to the bank likely affects the entire bank’s
operations.
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• IV. Alternatives
• 1. H. Day gathers more data to confirm/disprove
initial diagnosis.
• 2. Use a diagnosis model such as force-field analysis
to better understand the problem. Working through the
model may bring to light ways to change the situation
in the data-processing department.
• 3. Day checks on regional employment data to
determine if data-processing personnel are being paid
competitively with similar workers in other companies.
Adjust pay if warranted by the data.
• 4. Meet with the department and explain the bank’s
procedures and rationale for how pay levels are set.
• V. Recommendations
• All of the alternatives listed above can be undertaken by
Day.

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