McKinsey 7S Model

The McKinsey 7S Framework

How do you go about analyzing how well your organization is positioned to achieve its intended objective?

Developed in the early 1980s by Tom Peters and Robert Waterman, two consultants working at the McKinsey & Company consulting firm, the basic premise of the model is that there are seven internal aspects of an organization that need to be aligned if it is to be successful.

The 7-S model can be used in a wide variety of ways:To help spot what you need to do to improve the performance of

your company.Very useful when planning for change in the organizationIdentify what’s not working in your organization

You need to ask yourself where you are now and where you want to be in the

future

The model will help you assess these elements with searching questions

1.StructureA successful organization may make temporary structural changes to cope with specific strategic tasks without abandoning basic structural divisions throughout the organization

What it really means: Organizational structure is your hierarchy or your organizational chart

Ask yourself this

How should an organization be organized?

Functional Structure Divisional Structure Matrix Structure

Functional structure is set up so that each portion of the organization is grouped according to its purpose.

Divisional structure typically is used in larger companies that operate in a wide geographic area or that have separate smaller organizations within the umbrella group to cover different types of products or market areas.

Hybrid of divisional and functional structure. This is used in large multinational companies, the matrix structure allows for the benefits of functional and divisional structures to exist in one organization

2. StrategyStrategy determines how you’re gonna beat your competitors and succeed in your mission

What will the company do?Market Penetration Product Development Market Development Diversification

This strategy involves an attempt to increase market share within existing industries, either by selling more product to established customers or by finding new customers within these markets – typically by adapting the ‘Promotion’ element of the Marketing Mix.

This involves developing new products for existing markets by thinking about how new products can meet customer needs more closely and outperform competitors.

Finding a new group of buyers for an existing product.

Related Diversification involves the production of a new category of goods that complements the existing portfolio, in order to penetrate a new but related market.Unrelated diversification entails entry into a new industry that lacks important similarities with the company’s existing markets

Coca-Cola

Market Penetration Product Development Market Development Diversification

Due to the incredible strength of Coca-Cola’s brand, the company has been able to utilise market penetration on an annual basis by creating an association between Coca-Cola and Christmas

The launch of Cherry Coke in 1985 – Coca-Cola’s first extension beyond its original recipe

The launch of Coke Zero in 2005– its concept being identical to Diet Coke; the great taste of Coca-Cola but with zero sugar and low calories.

In 2007, Coca-Cola spent $4.1 billion to acquire Glaceau, including its health drink brand Vitaminwater. –Adapting to the growing health drink sectorUnrelated: Coca-Cola offers official merchandise from pens and glasses to fridges, therefore exploiting its strong brand advocacy through this strategy

https://themarketingagenda.com/2015/03/28/coca-cola-ansoff-matrix/

Device Type: Desktop (July 2016)

Source:Netmarketshare.com

3.SystemsSystems are the resources and procedures that your people use to do their work

Question

What procedures need to be in place (few or many)?

4. StyleRepresents the style of leadership adopted in the organization

What management style works best?Autocratic Democratic Paternalistic Budget Constraint Profit Conscious

An autocratic management style is one where the manager makes decisions unilaterally, and without much regard for subordinates.Eg: The New York Times(2001-2003), Trump Organization

The manager allows the employees to take part in decision-making: therefore everything is agreed upon by the majority. The communication is extensive in both directions (from employees to leaders and vice versa).

Is a type of fatherly managerial style typically employed by dominant males where their organizational power is used to control and protect subordinate staff that are expected to be loyal and obedient

Manager evaluated on ability to achieve budget in the short term.

Manager evaluated on ability to reduce costs and increase profit in the long term.

5. StaffSuccessful organizations view people as resources who should be carefully nurtured, developed, guarded, and allocated• In other words, represents your employees and

their capabilities

What staff are required?

6. SkillsRefer to those activities organizations do best and for which they are known.Eg. Du Pont is known for research. P&G for product management. ITT for financial controls. HP for innovation and quality.

What skills will our staff and company need?

•What skill does a company have?•What skills is the company short of?

7. Subordinate GoalsGuiding concepts, values and aspirations that unite an organization in some common purpose• Your shared values determine the way you work

and the way you solve problems

What culture or attitudes will be most suitable?

•The McKinsey 7S Model can be applied to almost any issue at work. If there are inconsistencies maybe the team or company are not working effectively enough.•The model can help reveal such inconsistencies, and we can ensure that they’re matched up to help you share values and objectives with teams that are responsible for making it happen