You are on page 1of 6

McKinsey 7S Framework

Introduction

This paper discusses McKinsey's 7S Model that was created by the consulting
company McKinsey and Company in the early 1980s. Since then it has been widely
used by practitioners and academics alike in analysing hundreds of organisations.
The paper explains each of the seven components of the model and the links
between them. It also includes practical guidance and advice for the students to
analyse organisations using this model. At the end, some sources for further
information on the model and case studies available on this website are mentioned.

The McKinsey 7S model was named after a consulting company, McKinsey and
Company, which has conducted applied research in business and industry (Pascale
& Athos, 1981; Peters & Waterman, 1982). All of the authors worked as consultants
at McKinsey and Company; in the 1980s, they used the model to analyse over 70
large organisations. The McKinsey 7S Framework was created as a recognisable and
easily remembered model in business. The seven variables, which the authors term
"levers", all begin with the letter "S":

These seven variables include structure, strategy, systems, skills, style, staff and
shared values. Structure is defined as the skeleton of the organisation or the
organisational chart. The authors describe strategy as the plan or course of action in
allocating resources to achieve identified goals over time. The systems are the
routine processes and procedures followed within the organisation. Staff are
described in terms of personnel categories within the organisation (e.g. engineers),
whereas the skills variable refers to the capabilities of the staff within the
organisation as a whole. The way in which key managers behave in achieving
organisational goals is considered to be the style variable; this variable is thought to
encompass the cultural style of the organisation. The shared values variable,
originally termed superordinate goals, refers to the significant meanings or guiding
concepts that organisational members share (Peters and Waterman, 1982).
The shape of the model (as shown in figure 1) was also designed to illustrate the
interdependency of the variables. This is illustrated by the model also being termed
as the "Managerial Molecule". While the authors thought that other variables existed
within complex organisations, the variables represented in the model were
considered to be of crucial importance to managers and practitioners (Peters and
Waterman, 1982).
The analysis of several organisations using the model revealed that American

g. 1980). Description of 7 Ss Strategy: Strategy is the plan of action an organisation prepares in response to. Although this is still the most widely used organisational structure. 2) where the organisation wants to be in a particular length of time and 3) how to get there. or anticipation of. While alluded to in their discussion of the model. 1965). they feel that the variables should be changed to become more congruent as a system. strategy and systems) while neglecting the other variables. the recent trend is increasingly towards a flat structure where the work is done in teams of specialists rather than fixed departments. the businesses have been structured in a hierarchical way with several divisions and departments. style.g. with each answerable to the upper layer of management. Thus. Organisations are structured in a variety of ways. skills. The idea is to make the organisation more flexible and devolve the power by empowering the employees and eliminate the middle management layers (Boyle. 2007). subject to constraints of the capabilities or the potential (Ansoff. Strategy is differentiated by tactics or operational actions by its nature of being premeditated. staff and shared values) are considered to be "soft" variables. structure. Japanese and a few excellent American companies are reportedly successful at linking their structure. each responsible for a specific task such as human resources management.. The structure of the company often dictates the way it operates and performs (Waterman et al. dependent on their objectives and culture. . It deals with essentially three questions (as shown in figure 2): 1) where the organisation is at this moment in time. the notion of performance or effectiveness is not made explicit in the model.companies tend to focus on those variables which they feel they can change (e. The external environment is not mentioned in the McKinsey 7S Framework. The authors have concluded that a company cannot merely change one or two variables to change the whole organisation. strategy is designed to transform the firm from the present position to the new position described by objectives. Structure: Business needs to be organised in a specific form of shape that is generally referred to as organisational structure. strategy and systems with the soft variables. changes in its external environment. Traditionally. For long-term benefit. well thought through and often practically rehearsed. These other variables (e. although the authors do acknowledge that other variables exist and that they depict only the most crucial variables in the model. production or marketing. Many layers of management controlled the operations.

2005). innovative and friendly environment with fewer hierarchies and smaller chain of command. Style/Culture: All organisations have their own distinct culture and management style. Traditionally the organisations have been following a bureaucratic-style process model where most decisions are taken at the higher management level and there are various and sometimes unnecessary requirements for a specific decision (e. However. The importance of human resources has thus got the central position in the strategy of the organisation. These . For example. This may be to make money or to achieve excellence in a particular field. 2003). beliefs and norms which develop over time and become relatively enduring features of the organisational life. procurement of daily use goods) to be taken. the organisations are simplifying and modernising their process by innovation and use of new technology to make the decision-making process quicker. Culture remains an important consideration in the implementation of any strategy in the organisation (Martins and Terblanche. Cisco. there have been extensive efforts in the past couple of decades to change to culture to a more open. a company may follow a particular process for recruitment. Increasingly. All leading organisations such as IBM. Staff: Organisations are made up of humans and it's the people who make the real difference to the success of the organisation in the increasingly knowledge-based society. away from the traditional model of capital and land.g. and pushing their staff to limits in achieving professional excellence. These processes are normally strictly followed and are designed to achieve maximum effectiveness. Special emphasis is on the customers with the intention to make the processes that involve customers as user friendly as possible (Lynch. It is also important for the organisation to instil confidence among the employees about their future in the organisation and future career growth as an incentive for hard work (Purcell and Boxal. providing them with rigorous training and mentoring support.Systems: Every organisation has some systems or internal processes to support and implement the strategy and run day-to-day affairs. etc put extraordinary emphasis on hiring the best staff. 2003). The businesses have traditionally been influenced by the military style of management and culture where strict adherence to the upper management and procedures was expected from the lower-rank employees. Microsoft. It also entails the way managers interact with the employees and the way they spend their time. It includes the dominant values. Shared Values/Superordinate Goals: All members of the organisation share some common fundamental ideas or guiding concepts around which the business is built. and this forms the basis of these organisations' strategy and competitive advantage over their competitors.

especially the one that alters the power structure in the organisation and the inherent values of the organisation. e. However. news and press releases although primary research. Using the 7S Model to Analyse an Organisation A detailed case study or comprehensive material on the organisation under study is required to analyse it using the 7S model. are continuously developing and are altered by the people at work in the organisation. structure and systems which are normally feasible and easy to identify in an organisation as they are normally well documented and seen in the form of tangible objects or reports such as strategy statements. using interviews along with literature review is more suited. however. however.g. Changing the culture and overcoming the staff resistance to changes. This is because the model covers almost all aspects of the business and all major parts of the organisation. if these factors are altered. hierarchical organisational structure normally leads to a bureaucratic organisational culture where the power is centralised at the higher management level. 2003). strategies and the systems of the organisation.values and common goals keep the employees working towards a common destination as a coherent team and are important to keep the team spirit alive. they can have a great impact on the structure. for example. The hard components are the strategy. Over the last few years. flexible and dynamic culture in the organisation where the employees are valued . values and elements of corporate culture. It is therefore only possible to understand these aspects by studying the organisation very closely. The remaining four Ss. it is seen that a rigid. is generally difficult to manage. can be made between the hard and soft components. The capabilities. The seven components described above are normally categorised as soft and hard components. The organisations with weak values and common goals often find their employees following their own personal goals that may be different or even in conflict with those of the organisation or their fellow colleagues (Martins and Terblanche. normally through observations and/or through conducting interviews. The researcher also needs to consider a variety of facts about the 7S model. there has been a trend to have a more open. corporate plans. It is therefore highly important to gather as much information about the organisation as possible from all available sources such as organisational reports. Some linkages. Some of these are detailed in the paragraphs to follow. It is also noted that the softer components of the model are difficult to change and are the most challenging elements of any change-management strategy. organisational charts and other documents. For example. are more difficult to comprehend.

it has been used by hundreds of organisations and academics for analytical purposes. students must analyse in depth the cultural dimension of the structure. Especially the "cause and effect" analyses of soft and hard components often yield a very interesting analysis and provides readers with an in-depth understanding of what caused the change. processes and decision made in an organisation. and Pascale and Athos (1981) who came up with the idea and applied it to analyse over 70 large organisations. Prentice Hall. McGraw-Hill. are also available at this website. Sources for Data on McKinsey's 7S Model The main source of academic work on the 7S model has to be the writings of Waterman et al. however. References Ansoff. the student should not just write about these components individually but also highlight how they interact and affect each other. Since then. This is.64–74. (2007) "Impact of Changes in Organisational Structure on Selected Key Performance Indicators for Cultural Organisations". (1980. I. Martins. when analysing an organisation using the 7S model. Or in other words. and Terblanche. 13 (3). not easy to achieve where the traditional culture is been dominant for decades and therefore many organisations are in a state of flux in managing this change. E. It is too easy to fall into the trap of only concentrating on the hard factors as they are readily available from organisations' reports etc. pp. R. to achieve higher marks. For even advanced analysis. Many such case studies can be obtained from the academic journals and the books written on the topic. What compounds their problems is their focus on only the hard components and neglecting the softer issues identified in the model which is without doubt a recipe for failure. how one component is affected by changes in the other. Vol. International Journal of Cultural Policy. pp. 1982). (2003) "Building Organisational Culture that Stimulates Creativity and Innovation". it is important for the researcher to give more time and effort to understanding the real dynamics of the organisation's soft aspects as these underlying values in reality drive the organisations by affecting the decision-making at all levels. Similarly. Vol. However. (2005) "Corporate Strategy" (4th edition).319–334. A few case studies. London Boyle. F. for example the analyses of Coca-Cola and energy giant Centrica (Owner of British Gas). S. European Journal of Innovation Management. UK. . Lynch. (1965) Corporate Strategy.and innovation encouraged. 6 (1).

R. London: Harper & Row. Price. UK. T. J.14–26. P.Pascale.237–251. and Phillips. Purcell. R. Construction Management and Economics. R. and Chahal. A.R. (1980) "Structure Is Not Organisation" in Business Horizons. 24 (3). T. (1982) "In Search of Excellence". (2003) "Strategy and Human Resource Management (Management. Peters. Work and Organisations)". (2006) "A Strategic Framework for Change Management". London: Penguin Books. and Waterman. K. Palgrave Macmillan. Peters. Copyright 2002-2007 Papers4You. New York. (1981) "The Art of Japanese Management". and Boxal. A. Vol. and Athos. pp. J. Waterman. 23(3).. Jr. pp.Com All Rights Reserved . Vol.