Mckinseys 7S Framework

Strategy Implementation the 7S framework

From the book – “The Art of Japanese Management” ( a study of Matshushita and ITT Corporations) by Prof. Richard Pascale (Stanford Univ) and Anthony Athos (Harvard Univ).

Chapter 10 : Business Policy and Strategic Management by Dr. S. Senthilkumar and others

McKinsey 7- S Model Premise: For an organization to perform well, seven elements need to be aligned for mutual reinforcement. It identifies the areas needing realignment in order to improve performance during change processes. (Tom Peters & Robert Waterman, 1980)

structure

staff

sharedvalues

systemsstrategy

skills styles

Hard Ss

Soft Ss

McKinsey 7- S Model

staff

sharedvalues

skills styles

strategy

structure

systems

Premise: For an organization to perform well, seven elements need to be aligned for mutual reinforcement. It identifies the areas needing realignment in order to improve performance during change processes. (Tom Peters & Robert Waterman, 1980)

HARD SsHARD Ss Structure, Strategy, Systems are derived from soft S’s Can be changed through Administrative decisions

SOFT SsSOFT Ss Skills, Staff, Styles are influenced by Shared Values

Placing Shared Values in the middle of the model emphasizes that the values are central to the development of all other critical elements. As the values change, so do all the other elements.

Are (relatively) more difficult to change

Soft Ss normally affect decisions on the Hard Ss

What if -

Style is “Autocratic”.Structure – Majority of decisions will be taken by the Top. Systems – Rigid: not built to tolerate deviations.Strategy – Derived from aspirations of Top Management / entrepreneur.

Skills are low.Structure – High supervision (normally a tall structure). Strong Training function.Systems – Elaborate Job Descriptions and Role Templates. Dos and don’ts specified -

high security levels for accessing data.Strategy – Organization attunes itself to market opportunities. “Go for” mind set and close monitoring for implementation of strategy.

Values are not shared.Structure – Ethnocentric structure with high level of standardization.Systems – High component of incentives. SOPs reinforced by Extrinsic rewards. Strong

ERP systems. Strategy – is not designed on the basis of “Employee Stretch”. Policies to integrate Staff

with Organizational beliefs.

Staff is inappropriate.Structure – Large component of outsourced activities. Many contractual employees.Systems – Focus on Staff acquisition and Training. Centralized decision making. Strong

ERP systems. Strategy – Focus on holding current market position.

The 7S model is used in a wide variety of situations, where alignment is imperative.

1. Improvement areas of a company.

2. Likely effects of future changes within a company.Whatever the type of change – restructuring, new processes, organizational merger, new systems, change of leadership, and so on – the model can be used to understand how the organizational elements are interrelated, and so ensure that the wider impact of changes made in one area is taken into consideration

3. Alignment of functions and processes while implementing a new strategy.

4. The best ways to implement a proposed strategy.Used to help analyze the current situation (Point A), a proposed future situation (Point B) and to identify gaps and inconsistencies between them. It's then a question of adjusting and tuning the elements of the 7S model to ensure that your organization works effectively and well once you reach the desired endpoint.

McKinsey 7- S Model - Uses

The model helps to understand:

Infinite Vision – 35m

McKinsey 7- S as applied toAravind Eye Hospital

Identify the Hard S’s: Strategy Systems Structures

What are the Soft S’s: Shared Value Skills Staff Styles

Strategy is a plan or course of action in allocating resources to achieve identified goals over time. Unlike tactic, strategy is well thought and often rehearsed. It transforms the organization from the present position to the new position described in the objectives, subject to constraints of the capabilities (Ansoff, 1965).

1. What is the strategy?2. How does the Company intend to achieve its strategic objectives?3. How does the Company deal with competitive pressures?4. How are changes in customer demands dealt with?5. How is strategy adjusted for environmental issues?6. Do Staff understand the Strategy well?  

HARD SsHARD Ss

Structure is the skeleton, the form of shape, of organizations. It dictates the way it operates and performs (Waterman et al., 1980). Traditionally, businesses are structured with divisions, departments and layers, in which the lower layers answer to upper layers. Today, the flat structure, where the work is done in teams of specialists, are more common. The idea is to make the organization more flexible and devolve the power by empowering the employees and eliminate the middle management layers (Boyle, 2007).

HARD SsHARD Ss

1. How is the company/team divided? 2. What is the hierarchy?3. How do the various departments coordinate activities? 4. How do the team members organize and align themselves?5. Is decision making and controlling centralized or decentralized? 6. Where are the lines of communication? Explicit and implicit? 

HARD SsHARD Ss

Systems are routine processes and procedures followed within an organization to implement the strategy and to run day-to-day affairs. These processes are mainly designed to achieve maximum effectiveness. Traditionally, the higher management makes the most decisions. Increasingly, the organization are using innovation and new technology to make decision-making process quicker

1. What are the basic systems that run the organization? Consider both financial and HR systems – communications and document storage.

2. Where are the controls and how are they monitored and evaluated?

3. What internal rules and processes does the team use to keep on track?

4. What are the main intentions in adopting the existing system? 

Staff are personnel categories within the organization, such as engineers, sales persons, etc. Unlike traditional organizations, new leading organizations put more emphasis on hiring the best staff and and with rigorous training and monitoring support shape the basic values. This forms the basis of these organizations’ strategy and competitive advantage over their competitors (Purcell and Boxal, 2003).

SOFT Ss

1. What positions or specializations are represented within the team?

2. What positions need to be filled?3. How motivated are the employees towards the Strategic

directions?4. Are there gaps in required competencies? 

SOFT Ss

Skills are the capabilities of the staff within the organization as a whole.

1. What are the strongest skills represented within the company/team?

2. Are there any skills gaps?3. What is the company/team known for doing well? What

are the core competencies?4. Do the current employees/team members have the ability

to achieve the strategy?5. How are skills monitored and assessed? 

Style is the way in which key managers behave in achieving organizational goals, that is the management style. It includes the dominant values, beliefs and norms which develop over time and become relatively enduring features of the organizational life. Different from the traditional businesses in which strict adherence to the upper management and procedures was expected from the lower-rank employees, the recent businesses have been more open, innovative and friendly with fewer hierarchies and a smaller chain of command.

SOFT Ss

1. How participative is the management / leadership style? 2. How effective is the leadership – does the strategy suit the

leadership style?3. Do employees / team members tend to be competitive or

cooperative?4. Are there real teams functioning within the organization or

are they just nominal groups? 

SOFT Ss

Shared Value refers to the significant meanings or guiding concepts that organizational members share (Peters and Waterman, 1982). These values and common goals keep the employees working towards a common destination as a coherent team. The organizations with weak values and common goals often find their employees following their own personal goals that may be conflicting with others.

1. What are the core values?2. What is the corporate/team culture?3. How strong are the values?4. What are the fundamental values that the company/team

was built on? 

Questions