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McKinsey 7S Model

Introduction:
It is a model of organizational effectiveness that postulates that there are seven internal
factors of an organization that need to be aligned and reinforced in order for it to be
successful. The 7S Model was developed at McKinsey & Co. consulting firm in the early
1980s. It was created as a recognizable and easily remembered model in business.
The model specifies 7 variables, which the authors term "levers" and classified them
into "hard" and "soft" elements. The Hard elements are easily identified and influenced
by management, while soft elements are fuzzier, more intangible and are influenced by
the corporate culture. The 7 elements are as follows:

• Strategy
• Structure
• Systems,
• Skills
• Style
• Staff
• Shared values

The hard elements include strategy, structure and systems while the soft elements are
shared values, skills, style and staff.

Structure is defined as the skeleton of the organization or the organizational chart and
strategy can be described 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 organization. Staff is described in terms of personnel
categories within the organization, whereas the skills variable refers to the capabilities
of the staff within the organization as a whole. The way in which key managers behave
in achieving organizational goals is considered to be the style variable; this variable is
thought to encompass the cultural style of the organization. The shared values variable,
originally termed super ordinate goals, refers to the significant meanings or guiding
concepts that organizational members share.
The shape of the model is designed to illustrate the interdependency of the variables
(figure 1).

This is illustrated by the model also being termed as the "Managerial Molecule". While
the authors of the model thought that other variables existed within complex
organizations, the variables represented in the model were considered to be of crucial
importance to managers and practitioners

The analysis of several organizations using the model revealed that American
companies tend to focus on those variables which they feel they can change (e.g.
structure, strategy and systems) while neglecting the other variables. These other
variables (e.g. skills, style, staff and shared values) are considered to be "soft"
variables. Japanese and a few excellent American companies are reportedly successful
at linking their structure, strategy and systems with the soft variables. The authors have
concluded that a company cannot merely change one or two variables to change the
whole organization.
For long-term benefit, they feel that the variables should be changed to become more
congruent as a system. The external environment is not mentioned in the McKinsey 7S
Framework, although the authors do acknowledge that other variables exist and that
they depict only the most crucial variables in the model. While alluded to in their
discussion of the model, the notion of performance or effectiveness is not made explicit
in the model.
Description of 7Ss:
Strategy:
It is the plan of action an organization prepares in response to, or anticipation of,
changes in its external environment. Strategy is differentiated by tactics or operational
actions by its nature of being premeditated, well thought through and often practically
rehearsed. It deals with essentially three questions:
• Where the organization is at this moment in time,
• Where the organization wants to be in a particular length of time and
• How to get there.

Thus, strategy is designed to transform the firm from the present position to the new
position described by objectives, subject to constraints of the capabilities or the
potential.

Structure:
Business needs to be organized in a specific form of shape that is generally referred to
as organizational structure. Organizations are structured in a variety of ways, dependent
on their objectives and culture. The structure of the company often dictates the way it
operates and performs.
Traditionally, the businesses have been structured in a hierarchical way with several
divisions and departments, each responsible for a specific task such as human
resources management, production or marketing. Many layers of management
controlled the operations, with each answerable to the upper layer of management.
Although this is still the most widely used organizational structure, the recent trend is
increasingly towards a flat structure where the work is done in teams of specialists
rather than fixed departments. The idea is to make the organization more flexible and
devolve the power by empowering the employees and eliminate the middle
management layers.

Systems:
Every organisation has some systems or internal processes to support and implement
the strategy and run day-to-day affairs. For example, a company may follow a particular
process for recruitment. These processes are normally strictly followed and are
designed to achieve maximum effectiveness. Traditionally the organizations 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.g. procurement of daily use goods) to be taken.
Increasingly, the organisations are simplifying and modernizing their process by
innovation and use of new technology to make the decision-making process quicker.
Special emphasis is on the customers with the intention to make the processes that
involve customers as user friendly as possible.
Skills:
"Skills" refer to the dominant distinctive capabilities and competencies of the personnel
or of the organization as a whole

Style/Culture:
All organizations have their own distinct culture and management style. It includes the
dominant values, beliefs and norms which develop over time and become relatively
enduring features of the organizational life. It also entails the way managers interact
with the employees and the way they spend their time. 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. However, there have been extensive efforts in the past couple of
decades to change to culture to a more open, innovative and friendly environment with
fewer hierarchies and smaller chain of command. Culture remains an important
consideration in the implementation of any strategy in the organization

Staff:
Organizations are made up of humans and it's the people who make the real difference
to the success of the organization in the increasingly knowledge-based society. The
importance of human resources has thus got the central position in the strategy of the
organization, away from the traditional model of capital and land. All leading
organizations such as IBM, Microsoft, Cisco, etc put extraordinary emphasis on hiring
the best staff, providing them with rigorous training and mentoring support, and pushing
their staff to limits in achieving professional excellence, and this forms the basis of these
organizations’ strategy and competitive advantage over their competitors. It is also
important for the organization to instill confidence among the employees about their
future in the organization and future career growth as an incentive for hard work.

Shared Values/Super ordinate Goals:


All members of the organization share some common fundamental ideas or guiding
concepts around which the business is built. This may be to make money or to achieve
excellence in a particular field. These 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. The organizations 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 organization or their fellow colleagues.
7S Checklist Questions
Here are some of the questions that need to explored in order to help and understand
an organizations situation in terms of the 7S framework. Use them to analyze their
current situation first, and then repeat the exercise for their proposed situation.
Strategy:
What is our strategy?
How do we intend to achieve our objectives?
How do we deal with competitive pressure?
How are changes in customer demands dealt with?
How is strategy adjusted for environmental issues?
Structure:
How is the company/team divided?
What is the hierarchy?
How do the various departments coordinate activities?
How do the team members organize and align themselves?
Is decision making and controlling centralized or decentralized? Is this as it should be,
given what we're doing?
Where are the lines of communication? Explicit or implicit?
Systems:
What are the main systems that run the organization? Consider financial and HR
systems as well as communications and document storage.
Where are the controls and how are they monitored and evaluated?
What internal rules and processes does the team use to keep on track?
Shared Values:
What are the core values?
What is the corporate/team culture?
How strong are the values?
What are the fundamental values that the company/team was built on?
Style:
How participative is the management/leadership style?
How effective is that leadership?
Do employees/team members tend to be competitive or cooperative?
Are there real teams functioning within the organization or are they just nominal groups?
Staff:
What positions or specializations are represented within the team?
What positions need to be filled?
Are there gaps in required competencies?
Skills:
What are the strongest skills represented within the company/team?
Are there any skills gaps?
What is the company/team known for doing well?
Do the current employees/team members have the ability to do the job?
How are skills monitored and assessed?
Using the 7S Model to Analyze an Organization

A detailed case study or comprehensive material on the organization under study is


required to analyze it using the 7S model. This is because the model covers almost all
aspects of the business and all major parts of the organization. It is therefore highly
important to gather as much information about the organization as possible from all
available sources such as organizational reports, news and press releases although
primary research, e.g. using interviews along with literature review is more suited. The
researcher also needs to consider a variety of facts about the 7S model. Some of these
are detailed in the paragraphs to follow.

The seven components described above are normally categorized as soft and hard
components. The hard components are the strategy, structure and systems which are
normally feasible and easy to identify in an organization as they are normally well
documented and seen in the form of tangible objects or reports such as strategy
statements, corporate plans, organizational charts and other documents.
The remaining four Ss, however, are more difficult to comprehend. The capabilities,
values and elements of corporate culture, for example, are continuously developing and
are altered by the people at work in the organization. It is therefore only possible to
understand these aspects by studying the organization very closely, normally through
observations and/or through conducting interviews. Some linkages, however, can be
made between the hard and soft components. For example, it is seen that a rigid,
hierarchical organizational structure normally leads to a bureaucratic organizational
culture where the power is centralized at the higher management level.

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. Changing the
culture and overcoming the staff resistance to changes, especially the one that alters
the power structure in the organization and the inherent values of the organization, is
generally difficult to manage. However, if these factors are altered, they can have a
great impact on the structure, strategies and the systems of the organization. Over the
last few years, there has been a trend to have a more open, flexible and dynamic
culture in the organization where the employees are valued and innovation encouraged.
This is, however, not easy to achieve where the traditional culture is been dominant for
decades and therefore many organizations are in a state of flux in managing this
change. 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.

Similarly, when analyzing an organization using the 7S model, it is important for the
researcher to give more time and effort to understanding the real dynamics of the
organization’s soft aspects as these underlying values in reality drive the organizations
by affecting the decision-making at all levels. It is too easy to fall into the trap of only
concentrating on the hard factors as they are readily available from organizations’
reports etc.