7 S Model

Manjunath VS
Assistant Professor
NSOM
 7 S Model
 The 7 S framework of Mckinsey is a model
that describes how one can holistically and
effectively organize a company.
 Together the 7 factors determine how a
corporation operates.
 7 S Model
 Managers should take into account all
seven of these factors, to be sure of
successful implementation of a strategy.
Large or small.
 They are all interdependent, so if you fail
to pay proper attention to one of them, this
may effect all others as well. On top of
that, the relative importance of each factor
may vary over time
 7 S Model
 The Seven-Ss is a framework for
analyzing organizations and their
effectiveness.
 It looks at the seven key elements that
make the organizations successful, or not:
Origin of the 7-S Framework.

 The 7-S Framework was first mentioned in "The

Art Of Japanese Management" by Richard
Pascale and Anthony Athos in 1981.
 They had been investigating how Japanese
industry had been so successful.
 At around the same time that Tom Peters and
Robert Waterman were exploring what made a
company excellent.
 Origin of the 7-S Framework
 The Seven S model was born at a meeting
of these four authors in 1978.
 It appeared also in "In Search of
Excellence" by Peters and Waterman, and
was taken up as a basic tool by the global
management consultancy company
McKinsey.
 Since then it is known as their 7-S model.
7 S Model
 McKinsey 7-S Model
 Strategy
 Structure
 Systems
 Style
 Staff
 Skills
 Shared values
 McKinsey 7-S Model
 Staff: The number of staff, How people are
hired, integrated, developed, socialized into the
organization.
 Skills: Distinctive skills, capabilities, and
competencies that reside in the organization.
 Strategies: The initiatives that the organization
has chosen to gain sustainable advantage and
reach its vision.
 McKinsey 7-S Model
 Structure: The organizational structure, roles,
and other framework the organization uses to
guide its activities.
 Systems: The formal and informal processes
and procedures that support and govern
activities.
 Style: The leadership approach of top
management.
 Shared values: The guiding concepts and
principles used to guide behavior in the
organization.
 McKinsey 7-S Model
 Strategy
The Hard S’s
 Structure The hard elements are factual
 Systems and easy to identify. They can
be found in strategy statements,
 Style corporate plans, organization
 Staff charts, and other documentation
 Skills
 Shared values
 McKinsey 7-S Model
 Strategy The Soft S’s
 Structure The soft elements
are difficult to
 Systems
describe since they
 Style are continuously
 Staff developing and
changing. They are
 Skills highly determined by
 Shared values the people at work in
the organization.
 7-S Model – The Hard S’s
 Strategy
 Actions a company plans in response to or in
anticipation of changes in its external environment
 It is determination of the mission or purpose and
long-term objectives of an enterprise, followed by
adoption of courses of action and allocation of
resources necessary to achieve these aims.
 Mission
 Major objectives
 Strategic intent
 Strategy
 Strategic intent-The commitment to win in the
competitive environment
 The company's chosen strategic direction has a
large influence on how the organization will be
structured and how it will behave in the future.
 Marketing Strategy-Diversification, Expansion,
Product mix, Pricing strategy
 Production-Outsource or In-house
 HR strategies
 Joint ventures, Alliances, Collaborations
 Structure
 Structure
 Basis for specialization and coordination,
influenced primarily by strategy and by
organization size and diversity
 Organizational structure should follow
logically from its intended strategy.
 It also suggest that the two components,
structure and strategy, are interactive and
will influence each other
 Organizational Structure
 Organization Chart
 formal reporting relationships
 levels in hierarchy
 spans of control
 departmentalization
 Systems to facilitate:
 coordination
 communication
 integration
 Structural Designs
 Functional Structure
 Can adapt functional structure
with horizontal linkages
 Divisional Structure
 Geographical Structure
 Matrix Structure
 Horizontal Structure / CEO
Product Line Structure
Vic e Presid ent Vice Presid ent Director
 Hybrid Structure Fianance Manufacturin g Human Resources

Chief Budget Plant Main tenance Train ing Benefits

Accountant Analyst Superin tendent Superintendent Specialist Admin istrator
 Other Organizational Forms
 Joint Ventures
 Licensing agreements
 Strategic Alliances
 Virtual organizations
 Global (transnational) Work Teams
 Virtual Teams
 Virtual Teams are characterized by:
 Distributed locations of team members
 Use of information technology to accomplish tasks
 Effective when:
 Communication & collaboration skills are high.
 Trust among team members is high

 Organizations are increasing their use of

virtual teams
 Potential for improvement in virtual team
management is huge
 Strategy and structure
 Structure is a means of attaining goals of
an organization
 Any work on structure, therefore start with
objectives and strategy
 To be effective the structure must follow
the strategy
 Chandler’s study
 Studied nearly 100 large American
organizations-DuPont, Ford, General motors
 Start with high centralization
 Initially limited product lines
 As expand they increase product lines
 More vertical integration
 Creation of separate groups
 More autonomous multidivisional structure
 Miles and Snow’s four strategic
types
 Miles and Snow viewed successful strategy
implementation as a process of establishing
internal organizational mechanisms which would
complement the organization’s marketing
strategy.
 They identified three basic problems which
organizations must identify in order to
successfully adapt to the environment
 Miles and Snow’s four strategic
types
 1. Entrepreneurial problem-Defining domain of
operation
 2. Engineering problem- Operationalizing the
entrepreneurial solution- choosing technology
 3. Administrative problem-Designing appropriate
organizational structures, and creating
mechanisms which would allow the organization
to continue to adapt and innovate in response to
changing environment.
 Miles and Snow’s four strategic
types
 1. Defenders-Seek stability by producing only
limited set of products directed at a narrow
segment of potential market
 Competitive pricing and high quality products
 Little scanning about new opportunities
 High horizontal differentiation, centralized
control, formal hierarchy
 Miles and Snow’s four strategic
types
 2. Prospectors-Exploit new product and
new markets
 Innovation rather than high profitability
 Multiple technologies
 Flexible structure, low formalization,
decentralization, lateral communication
 Miles and Snow’s four strategic
types
 3. Analyzers- Best of both
 Minimize risk and maximize opportunity
 Move to new products only after viability
has been proved
 Both flexibility and stability
 Part of organization has high formalization
and centralization and part high flexibility
 Miles and Snow’s four strategic
types
 4. Reactors-Improper strategies
 Lack of responsive mechanisms
 Miles and Snow’s four strategic
types
Adaptation Defender Analyzer Prospector
problem
Entrepreneurial How to seal off a How to locate and How to locate and
portion of market to exploit new exploit new
create stable products/markets products/markets
demand and also maintain
stable base
Engineering How to produce and How to be efficient How to avoid long
distribute goods and in stable portion of term commitment to
services efficiently domain and flexible single technological
in changing domain process
Administrative How to achieve strict How to differentiate How to facilitate
control of the the organization’s rather than control
organization in order structure to
to ensure efficiency accommodate both
stable and dynamic
areas
 Systems
 Systems
 Systems refer to the internal procedures and routines
that the company uses in its every day business.
 The processes and procedures through which things get
done from day to day (a very powerful S)
 The systems can be formal or informal systems and are
really what makes the business function.
 Examples are capital budgeting systems, recruitment
procedures and informal networking. 
 Systems – various elements
 Communications practice and system
 Management reporting system
 Approval process
 Planning/budgeting system
 Rewards system including appraisal
 “Rules”
 Simple structures
 Entrepreneurial company run by autocratic
or charismatic leader
 Loosely formed but tightly run
 Flat and organic structures
 No specialization and formalization
 Few middle level managers
 Simple structures
 Merits
 Easy control
 Rapid decision making
 High innovation
 Informality and flexibility
 Demerits
 Very demanding on owner
 Inadequate as volume increases
 Cannot develop future managers
 CEO may not get time to focus on strategic decisions
 Machine bureaucracy

Strategic Apex

Middle Line
Supporting
Staff
Techno structure

Operating Core
 Machine bureaucracy
 Most popular
 High degree of standardization of work
 Low skilled but highly specialized jobs
 Extensive formalization
 Functional groups
 Technostructure is key element
 Large middle management cadre
 Need stable environments
 Machine bureaucracy
 Strengths
 Efficiency through high specialization
 Develop functional expertise
 Low cost
 Centralize strategic decisions
 Standardization promotes stability
 Weaknesses
 Functional rivalry
 Inter functional coordination
 High cost of supporting staff
 Less innovation
Professional bureaucracy
 Professional bureaucracy
 Similar to machine bureaucracy in terms of work
processes and high standardization
 Machine bureaucracy coordinates through
standardization of work, but the professional
bureaucracy achieves the same aim by
standardizing skills.
 Reliability and performance is achieved by
employing trained professionals to manage the
operating core
 More decentralization
 Professional bureaucracy
 Strengths
 Can accomplish complex, known tasks
efficiently
 Professional work environment
 Democratic structure
 Weaknesses
 Difficult to innovate
 Professional may supersede internal authority
 Internal politics and rivalry
 Professional bureaucracy
 Strengths
 Decentralization and rapid response
 Strategy specific environment
 Accountability of each division
 CEO’s can focus on broader strategies
 Good training
 Weaknesses
 Dysfunctional competition
 Ambiguity about sharing of power
 Inconsistencies in policies across divisions
 Adhocracy
 Used when collective organized efforts are
needed to achieve complex and innovative
goals
 High amount of complexity, non
standardization and fluidity of processes
 Highly specialized and trained experts
 Highly organic
 Multidisciplinary teams
 Adhocracy
 Strengths
 Innovation and initiative
 Flexible and highly responsive
 No empire building
 Good training
 Weaknesses
 Inefficient in utilization of resources
 Role ambiguity
 Political behavior
 Low personal accountability
 Divisionalized form
 As machine bureaucracies grow they are
broken onto small independent
autonomous units
 New products/ markets/ new locations
 Decentralized units
 Each unit is an organization itself with
some form coordination and cotrol by
strategic core
 7-S Model – The Soft S’s
 Style :Management style: what managers do rather than what
they say (where they spend their time and attention, what they
allow, what they reward, etc)
 Management style is a key element in the behavior of organizations
but this is a rather tricky concept when it comes to measuring it
objectively.
 The way managers collectively behave with respect to use of time,
attention and symbolic actions (a very powerful S)

 Leadership Styles
 Autocratic
 Democratic
 Participative
 Management vs. Leadership
 Some managers (but not all) are leaders
 Some leaders (but not all) are good managers
 A manager gets work done through the efforts
of other people
 Includes planning, organizing, motivating, and
controlling
 A leader creates and realizes a vision
 Communicates that vision and moves the
organization toward that vision
 Staff
 The staff component is central to the organization and it
overall performance of course - the model recognizes
this and tries to chart the main influences on staff
systems and development
 The organization's human resources; refers to how
people are developed, trained, socialized, integrated,
motivated, and how their carriers are managed.
 Recruitment
 Selection
 Placement
 Training and Development
 Staff

 Numbers and types of personnel within the

organization
 Technical
 Non-Technical
 Managerial
 Skills
 Skills refers to what are the key skills and
capabilities within the company. What is
the company good at?
 Peters and Waterman recognized IBM for
its ability in the area of customer services
and product innovation
 Distinctive capabilities of personnel or of
the organization as a whole
 Skills
 Core competencies- CK Prahlad
 Can not be imitated
 Developed through continuous
improvement
 Strength of the organization
 Shared values
 originally called super ordinate goals; the
guiding concepts and principles of the
organization - values and aspirations,
often unwritten - that go beyond the
conventional statements of corporate
objectives; the fundamental ideas around
which a business is built; the things that
influence a group to work together for a
common aim.
 Shared values
 What does the organization stands for and
what it believes in.
 Central beliefs and attitudes.
 Guiding concepts, fundamental ideas
around which a business is built
 Values define what is and isn't acceptable
– they become organization's code of
behavior
Shared values
 McKinsey 7-S Model
 Strategy
 Structure Effective organizations
 Systems achieve a harmony
 Style between these seven
elements; if one
 Staff
element changes, then
 Skills this will affect all the
 Superordinate goals others
 McKinsey 7-S Model
 Strategy
The 7-S Model can be a
 Structure
valuable tool to initiate
 Systems change processes and
 Style to give them direction;
i.e. determine current
 Staff
state and ideal state of
 Skills each element, and
 Super ordinate goals develop action plans to
close the gaps
 McKinsey 7-S Model
 Strategy In change processes,
 Structure many organizations
 Systems focus their efforts on
 Style the hard S’s; however,
the soft factors can
 Staff
make or break a
 Skills successful change
 Super ordinate goals process. All factors
must be accounted for.
 McKinsey 7-S Model
 Strategy
 Structure  Interrelated
 Systems  Foundation of
 Style corporate culture
 Staff  Levers available to
 Skills management
 Super ordinate goals
 Strengths of the 7-S Model.
Benefits

 Diagnostic tool for understanding

organizations that are ineffective.
 Guides organizational change.
 Combines rational and hard elements with
emotional and soft elements.
 Managers must act on all Ss in parallel
and all Ss are interrelated.
 Questions: Strategies
 What are the organization’s strategic
initiatives?
 Are strategies aligned with and supportive
of vision?
 Is there sufficient clarity of the strategy for
people in the organization to plan and
implement?
 Is there shared understanding and
agreement on the set of strategies?
 Questions: Strategies
 Are there sufficient resources in the
organization to fully address strategies?
 Is there fully accountability/ownership for
each strategy?
 Is the outcome for accomplishing the
strategy clear? (reward)?
 Questions: Structure
 Is the organizational structure appropriate given
the strategies and objectives?
 Are the roles clear and defined well enough to
ensure accountability?
 Are the reporting structures realistic, practical,
and clear?
 Where is the connection to customers?
 Does the floor plan/physical layout facilitate
communication and interaction?
 Are the job descriptions and levels structured to
support career development?
 Questions: Systems
 What information systems are in place? Are they
effective and being used?
 What communication systems and tools are
needed? Do people have access to
communication channels? Do they have enough
information to make good decisions?
 Are the rewards and recognition systems aligned
with the vision, strategies and objectives? Do
employees have clear work objectives? Are they
receiving regular performance feedback? Are
there sanctions for those who do not reach their
goals?
 Questions: Systems
 Does business have effective planning
systems? Do the plans effectively support
in reaching strategies and objectives?
 What measurements systems are in place
to make progress and problem areas
visible to top management?
 Questions: Style
 How effective are the leaders and leadership
style?
 What is the predominant model for decision
making? Is it aligned with organization’s values?
Is it effective given the nature of the decisions
and needs of the organization?
 How do leaders react under crisis? Does the
leadership style vary depending on situation? Is
leadership style effective in each situation?
 Are the leaders effective role models for the rest
of the organization?
 Questions: Staff
 Is the number of people appropriate for the amount of
work?
 What is the process of integrating new people into the
organization? Do the people feel part of the team?
 Where are the people located geographically? Are they
close to customers? Close to the work?
 What is the social network in the organization? Is it
strong or week? Do the employees see other employees
as partners or adversaries?
 What are the mechanisms to create a sense of team
work? Is the work of an individual effort or team work
that requires strong partnering?
 Questions: Skills
 What technical skills are needed in the organization?
Where do these skills gets developed?
 What type of communication skills are needed? Oral,
written, both etc. Are these skill requirements built into
the selection process?
 What management skills are required for a manger to be
successful? Is it expected that a person learn these
elsewhere or within the organization?
 What are the rewards for effective people management?
 What incentives are provided for building new skills?
 How is the skill development managed within the
organization? Is that individual driven or does the
organization (or manager) drive?
 Questions: Shared Values
 How clear are the organization values? Are they stated
or unstated?
 How does organization gain alignment or organization
value with individual values? Are these disconnects?
How are these reconciled?
 Do the values align with the organization’s mission and
objectives?
 Are there rewards for behaviors that align with values?
How are the situations handled where there has been
breach of values?
 How are the values communicated? Are the values
universal or do they work best for certain groups and
geographies?
 SWOT analysis
 A scan of internal and external environment is
an important part of strategic planning process.
 Environmental factors internal to the firm are
classified as Strengths or weaknesses, and
those external to the firm are called opportunities
and threats.
 SWOT analysis provides information that is
helpful in matching the firm’s resources and
capabilities to the competitive environment in
which operates.
 Strengths
Strength is something a company is good at
doing or any attribute of the firm that enhances
its competitiveness.

It is the distinct competencies or unique

competencies a firm possesses compared to
tits rivals.

Some of the examples of strengths include

technological skills, strong brand image, best
distribution channels, best human resources,
management competencies, etc.
 SWOT analysis
 Strengths
 Patents
 Strong brand names
 Good reputation among customers
 Cost advantage
 Resources
 Distribution networks
 Weaknesses
A weakness or deficiency is something a
company lacks or does poorly or the
disadvantage the company is facing in
the market.

The examples include weak distribution

network poor quality products,
inappropriate location, outdated
technology, labour unrest, etc.
 SWOT analysis
 Weakness
 Week brand name
 High cost
 Low reputation
 Resource constraints
 Opportunities
An opportunity is any major favourable
situation for an organization which arises
due to conditions prevailing in the
external environment.

It may in the form unnerved or poorly

served markets, changes in market
conditions, increasing demand,
government polices etc.
 SWOT analysis
 Opportunities
 Increasing customer demand
 Emerging markets
 Removal of trade barriers
 Better technology
 Growing industry
 Threats
A threat is any major unfavourable
situation for the firm resulting from the
external environmental scenario.

Threat can come form new competitors,

entry barriers, new products, natural
calamities, economic downturns,
changing customer needs etc
 SWOT analysis
 Threats
 Shift in consumer tastes
 Substitute products
 New regulations
 New players
 Trade barriers