McKinsey 7S Framework

McKinsey 7S Framework

The McKinsey 7s model was created in the 1980s by McKinsey consultants Julien Philips, Richard Pascale, and Tom Peters with assistance from Anthony G. Athos and Richard Waterman. The model has been utilised extensively by academics and professionals since its inception and is still one of the most regularly used strategic planning tools today. Instead of the conventional mass-production tangibles of capital, infrastructure, and equipment, it aimed to emphasise people resources (Soft S) as the key to improved organisational performance.

The model’s objective was to demonstrate how the alignment of seven corporate components—Structure, Strategy, Skills, Staff, Style, Systems, and Shared Values—can result in effectiveness in a corporation. The core idea of the concept is that all seven areas are interrelated, and that for a corporation to operate efficiently, changes in one area necessitate changes in the others.

The McKinsey model, which splits links across seven domains into “Soft Ss” and “Hard Ss,” is seen below. The model’s form highlights the interdependence of the components.

The model can be applied to many situations and is a valuable tool when organizational design is at question. The most common uses of the framework are:

• To facilitate organizational change
• To help implement new strategy
• To identify how each area may change in a future
• To facilitate the merger of organizations

In McKinsey model, the seven areas of organization are divided into the ‘soft’ and ‘hard’ areas. Strategy, structure and systems are hard elements that are much easier to identify and manage when compared to soft elements. On the other hand, soft areas, although harder to manage, are the foundation of the organization and are more likely to create the sustained competitive advantage.

1. Strategy

A company’s strategy is a plan created to obtain long-term competitive advantage and effectively compete in the market. What does the 7s McKinsey model mean by a well-aligned strategy? A sound strategy is typically one that is well-articulated, long-term, contributes to the creation of competitive advantage, and is supported by a solid vision, mission, and set of values.

When analysed in isolation, it’s difficult to determine whether a given strategy is well-aligned with other factors. Therefore, the key to the 7s model is to check whether each component is in alignment with the others rather than looking at your organisation to find the best strategy, structure, processes, etc. For instance, a company’s short-term plan is typically a bad decision, but if it is in line with the other 6 elements, it may produce excellent outcomes.

Structure represents the way business divisions and units are organized and includes the information of who is accountable to whom. In other words, structure is the organizational chart of the firm. It is also one of the most visible and easy to change elements of the framework.

3. Systems

Systems are the processes and procedures of the company, which reveal business’ daily activities and how decisions are made. Systems are the area of the firm that determines how business is done and it should be the main focus for managers during organizational change.

4. Skills

Skills are the abilities that firm’s employees perform very well. They also include capabilities and competences. During organizational change, the question often arises of what skills the company will really need to reinforce its new strategy or new structure.

5. Staff

Staff element is concerned with what type and how many employees an organization will need and how they will be recruited, trained, motivated and rewarded.

Style represents the way the company is managed by top-level managers, how they interact, what actions do they take and their symbolic value. In other words, it is the management style of company’s leaders.

7. Shared Values

Shared Values are at the core of McKinsey 7s model. They are the norms and standards that guide employee behavior and company actions and thus, are the foundation of every organization.

Using the McKinsey 7s framework

As we pointed out earlier, the McKinsey 7s framework is often used when organizational design and effectiveness are at question. It is easy to understand the model but much harder to apply it for your organization due to a common misunderstanding of what should a well-aligned elements be like.

We provide the following steps that should help you to apply this tool:

Step 1. Identify the areas that are not effectively aligned

Step 2. Determine the optimal organization design

Your second stage is to determine what you want to accomplish with an effective organisational design with the assistance of senior management. Knowing the ideal alignment makes it much simpler to define objectives and create action plans. For a few reasons, this stage is more challenging than just figuring out how your organization’s seven strategic areas are presently linked.

It needs more than just providing answers to the questions or gathering data since you first need to determine the greatest ideal alignment, which you are now unaware of. Second, you won’t be able to utilise any templates or established organisational designs; instead, you’ll need to do extensive study or benchmarking to see how other businesses with comparable missions handled organisational transformation or what organisational models they used.

Step 3. Decide where and what changes should be made

This is basically your action plan, which will detail the areas you want to realign and how would you like to do that. If you find that your firm’s structure and management style are not aligned with company’s values, you should decide how to reorganize the reporting relationships and which top managers should the company let go or how to influence them to change their management style so the company could work more effectively.

Step 4. Make the necessary changes

The implementation is the most important stage in any process, change or analysis and only the well-implemented changes have positive effects. Therefore, you should find the people in your company or hire consultants that are the best suited to implement the changes.

Step 5. Continuously review the 7s

The seven elements: strategy, structure, systems, skills, staff, style and values are dynamic and change constantly. A change in one element always has effects on the other elements and requires implementing new organizational design. Thus, continuous review of each area is very important.