McKinsey’s 7s is an useful tool for analysing the company’s organisational design and to see how organisational effectiveness can be achieved through seven elements – structure, strategy, skill, system, shared values, style and staff.
The model is split into Hard and Soft elements, eg. Hard “s” and Soft “s”.
Hard S are structure, strategy and systems and the others are soft “s”.
Structure – this is the way that company is organised,
Strategy – the business plan to achieve sustainable competitive advantage,
Systems – business and technical infrastructure -workflows and chain of decision-making,
Skills – capabilities and competencies of the company that enables employees to achieve objectives,
Style – attitude of senior employees to establish code of conduct,
Staff – talent management and HR policies,
Shared valued – mission, objectives and values.
To apply McKinsey 7s model:
Step 1 – identify areas that are not effectively aligned eg consistency in values, structure and systems?
Step 2 – Determine the optimal organisation design – create an optimal design that allows company to set goals and achieve objectives.
Step 3 – Decide where and what changes should be made – create plan and concrete changes to hierarchy, communication flow and reporting relationships.
Step 4 – Make necessary changes – implement the strategy through well thought out implementation plan.
The McKinsey 7S model is a management framework developed by a consulting firm McKinsey & Company. It provides a holistic approach to analysing and improving organisational effectiveness by examining seven interdependent elements. This model helps to identify areas of alignment or misalignment within an organisation and provides a structured framework for making improvements. It consists of several integrated elements that need to be aligned and integrated for organisation to be successful. Let's explore them in more detail.
Strategy. This element refers to the plan or course of action that an organisation adopts to achieve its goals and objectives. It includes decisions about the organisation's competitive positioning, target markets and value proposition. For example, a company that decides to enter a new market segment and differentiate itself through product innovation is demonstrating a strategic choice.
Structure. The structure represents the organisational design, including the division of tasks, responsibilities and reporting lines within the company. It defines how the various functions and departments are organised and interact with each other. For instance, a company may have a functional structure where different departments (such as marketing, finance and operations) operate independently but report to a centralised executive team.
Systems. Systems refer to the processes and procedures that guide the daily operations of the organisation. This includes the formal and informal processes, workflows and information systems that support the execution of tasks and activities. For example, an organisation may have a customer relationship management (CRM) system to manage its interactions with customers and track sales leads.
Skills. Skills represent the capabilities and competencies of the employees within the organisation. It encompasses the knowledge, expertise and specialised skills required to perform specific tasks and roles. For instance, a technology company may require its employees to possess skills in programming languages, data analysis and software development.
Staff. Staff refers to the people within the organisation and their roles, responsibilities and relationships. It includes the recruitment, training, and development of employees. An example of staff alignment would be ensuring that the right people with necessary skills and experience are assigned to key positions in the organisation.
Style. Style relates to the leadership style and overall culture and values within the organisation. It reflects the behaviour, attitudes and values of top management and how they influence the organisation's culture. For instance, an organisation with participative leadership style encourages employees empowerment and involvement in decision-making.
Shared-values. Shared values represent the fundamental beliefs and guiding principles that shape the organisations culture and behaviour. These values define what is important to the organisation and serve as a common foundation for decision-making. For example, a company may prioritise customer satisfaction, innovation and ethical conduct as its core values.
The McKinsey 7S Model emphasises the interdependence and alignment of these seven elements. It suggests that when all the seven elements are aligned and integrated effectively, organisations can achieve higher performance and success. Changes in one element may necessitate adjustments in other elements to maintain alignment and coherence within the organisation.
To conduct McKinsey 7S analysis on an organisation, we can follow these steps.
Identify the seven elements. Begin with understanding the seven elements and its significance in an organisation.
Gather information. Collect relevant data and information about each of the seven elements. This can be done through interviews, surveys, observations, document analysis and discussions with key stakeholders within the organisation. The goal is to gain insights into how each element is currently functioning and how they interact with each other.
Assess alignment. Evaluate the alignment and interaction among the seven elements. Determine if they are any inconsistencies or gaps that may hinder the organisational performance. Look for areas where elements are misaligned or working against each other. For example, if the strategy emphasises innovation and market expansion but the structure is hierarchical and bureaucratic, there may be a misalignment.
Identify strengths and weaknesses. Analyse the strengths and weaknesses of each element individually and their impact on the overall organisation. Identify areas where the organisation excel and areas that need improvements. For instance, the organisation may have strong technical skills among its staff, but its decision-making process may be slow and bureaucratic, hindering agility.
Consider external factors. Take into account external factors such as industry trends, market conditions and competitive landscape. Assess how these elements factors influence the organisation's alignment and effectiveness. For example, if there are rapid technological advancements in the industry, the organisation's skills and systems may need to be updated to stay competitive.
Define desired future state. Based on the analysis define the desired future state of the organisational alignment. Identify the changes and improvements needed in each element to achieve the desired state. This could involve modifying the strategy restructuring the organisation, implementing new systems or developing specific skills among the employees.
Develop Action Plans. Create action plans for each element to address identified gaps and improve alignment. Define specific steps, timelines, responsibilities and resources required for implementation. Ensure that the action plans are realistic and feasible within the business context.
Monitor progress and adjust. Implement the action plans and continuously monitor the progress. Regularly adjust the alignment as the organisation evolves and external factors change. This may require revisiting the action plan, gathering feedback and making necessary adjustments to keep the organisation aligned and effective.
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