McKinsey 7-S

Framework
Prof. P.V.S.SAI
SSIM
HYDERABAD
 Introduction
 The 7-S framework was developed by the
McKinsey Consultancy firm of USA towards
the end of 70s.
 The purpose is to diagnose the causes of
organizational problems and to formulate
programs for improvement.
 McKinsey 7-S Framework
 According to Waterman effective
organizational change may be understood
to be a complex relationship between
strategy, structure, systems, style,
skills, staff and super ordinate goals.
MCKINSEY 7-S FRAMEWORK
 The framework suggests that there is a multiplicity of
factors that influence an organization's ability to
change.
 Because of the interconnectedness of the variables it
would be difficult to make significant progress in one
area without making progress in the others as well.
 There is no starting point or implied hierarchy in the
diagram. It is not obvious which of the seven factors
would be the driving force in changing a particular
organisation at a certain point of time.
 The critical variables could be different across
organizations and in the same organisation at different
points of time.
Strategy and Super Ordinate Goals
 In this framework the concept of strategy
includes mission, objectives, goals, major action
plans and policies.
 The term Super ordinate goals may be
considered as equal to the Basic Purpose of the
organisation.
 According to McKinsey, super ordinate goals are
“set of values and aspirations that go beyond
the conventional statement of objectives”
 They are the fundamental ideas around which a
business is built.
 They are the broad notions of the future direction.
 They are the main values.
 Ex: HLL super ordinate goals is “To gain respect
from India, by providing the best possible products
to cater to the daily needs of Indians”.
 Super ordinate goals are expressed at high levels
of abstraction and may not mean very much to
outsiders who are not very familiar with the
organisation.
 Structure
 Refers to relatively more durable organizational
arrangements and relationships.
 These include, reporting relationships, communication
practices, rules and procedures.
 The major functions of organisation structure are
1. Reduces external uncertainty through forecasting
2. Reduces internal uncertainty through control
mechanisms
3. Undertakes a wide variety of activities through
departmentalization, specialization and division of
work.
4. Enables organisation to keep its activities coordinated
and to have a focus on the midst of diversity.
 Super structure and Infrastructure
 Division of organizational tasks, allocation
of responsibilities, relationship between
various departments, specialization of
activities, integration of activities denote
super structure of an organisation.
 Network of information, values, traditions,
customs and culture of the organisation
denotes infrastructure.
 Systems
 Refers to all rules, regulations and procedures
both formal and informal that complement the
organisational structure.
 Production planning and control, recruitment
and selection, training and development,
performance evaluation system are some of the
examples of systems in the organisation.
 Often changes in the strategy may be
implemented with some changes in the
system rather than some changes in the
structure.
 Style
 The style of an organisation becomes evident
through the patterns of actions taken by top
management over a period of time.
 Reporting relations also convey style.
 The framework considers style more than the
style of top management.
 It focuses on the style of management after a
new strategy is implemented. Ex: Acquisition of
a new company.
 In the framework aspects of organisational
culture also include “style”
 Staff
 This includes the competencies of human
resources in the organisation. It is also
concerned with availability, acquisition,
maintenance and retention of talent.
 It also includes the way new recruits are
introduced in the organisation, how they
are nurtured, developed and molded
according to organisational culture.
 Skills
 Core competencies of staff and
organisation include skills. These skills are
developed over a period of time for the
organisation.
 Ex: HLL for marketing, L&T for
Engineering, Toyota for quality, Sony for
innovation.
 Conclusion
 Because of the interconnectedness of the
variables it would be difficult to make significant
progress in one area without making progress in
the others as well.
 There is no starting point or implied hierarchy in
the diagram. It is not obvious which of the
seven factors would be the driving force in
changing a particular organization at a certain
point of time.
 The critical variables could be different across
organizations and in the same organization at
different points of time.
 This frame work is used in different
contexts in Strategic Management.
It is used to analyze the internal
environment, to implement a
strategy and to evaluate a strategy.