McKinsey 7-S Approach

A question often has been asked for many years from managers as to how do you go about analyzing how well your organization is positioned to achieve its intended objective? They have many different answers. Some says, we have to look at internal factors, others look at external ones, some combine these perspectives, and others look for congruence between various aspects of the organization being studied.

Ultimately, the issue comes down to which factors to study. While some models of organizational effectiveness go in and out of fashion, one that has persisted is the McKinsey 7-S framework developed in the early 1980s by Tom Peters and Robert Waterman, two consultants working at the McKinsey & Company consulting firm. They identified seven interdependent organizational factors that need to be managed harmoniously. Thus, It can be used for any of the following purposes:

• Organizational alignment or performance improvement
  
  
• Understanding the core and most influential factors in an organization’s strategy
  
  
• Determining how best to realign an organization to a new strategy or other organization design
  
  
• Examining the current workings and relations within an organization.

The uses of the 7-S framework can be as a static picture to determine how effectively the organization is implementing its strategy . Also, it can be used two-fold with a current state and an intended future state. By comparing the current and future states, gaps can be assessed, which lead to improvement and action plans. That latter case enables the model to be used for large scale changes.

The 7-S model involves seven interdependent factors. It can be divided in two categories first is “hard” factors, which include Strategy, Structure and Systems. On the other hand, second one is soft factors, which include Shared values, Skills, Style and Staff.

If we differentiate between these two, we find that hard elements are easier to define and management can directly influence them. On the other hand, soft elements can be more difficult to describe, and are less tangible and more influenced by culture. However, these soft elements are as important as the hard elements if the organization is going to be successful. The way the model is presented in Figure below depicts the interdependency of the elements and indicates how a change in one affects all the others.

McKinsey 7-S Approach

As you see the of an organization. one:

Strategy

This is the organization’s alignment of resources and capabilities to “win” in its market. It is the plan devised to maintain and build competitive advantage over the competitors.

Structure

This describes how the organization is organized. It is the way the organization is structured and who reports to whom. This includes roles, responsibilities, and levels of hierarchy, location of its authority and accountability relationships.

Systems

The procedures, processes and routines that characterize how important work is to be done: financial systems; hiring, promotion and performance appraisal systems; information systems.

Shared Values

This is a set of traits, behaviors, and characteristics that the organization believes in. This would include the organization’s mission and vision.

Style

Style refers to the cultural style of the organization, how key managers behave in achieving the organization’s goals, how managers collectively spend their time and attention, and how they use symbolic behavior. How management acts is more important than what management says.

Staff

This is the employee base, staffing plans, their general capabilities and talent management.

Skills

Skill refer to the dominant distinctive capabilities and competencies of the personnel or of the organization as a whole.This is the ability to do the organization’s work. It reflects in the performance of the organization.

The model is based on the theory that, for an organization to perform well, these seven elements need to be aligned and mutually reinforcing. The 7-S framework suggests that changes in any one of the aforesaid factors may lead to the need to abolish all other six factors.

So, the model can be used to help identify what needs to be realigned to improve performance, or to maintain alignment (and performance) during other types of change. 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.

The 7-S model is one that can be applied to almost any organizational or team effectiveness issue. If something within your organization or team isn’t working, chances are there is inconsistency between some of the elements identified by this classic model. Once these inconsistencies are revealed, you can work to align the internal elements to make sure they are all contributing to the shared goals and values.