Understanding McKinsey 7S Framework

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Introduction

Business owners need to analyze how well the organization is positioned to achieve its objectives. There are a number of answers to this question and every business owner has his own perspective. Some people look at the internal aspects, where as some consider the external factors. Some organizations combine both internal and external factors and focus on the factors that are essential to know about the position of the organization.

There are a number of models that help organizations to analyze their position. McKinsey 7S Framework developed by Tom Peters and Robert Waterman that defines 7 internal aspects of an organization that needs to be aligned, if it want to succeed.

Characteristics of 7S Framework

This model can be used in a broad array of situations where the alignment is essential. It helps to enhance a company’s performance and assess the possible effects of changes within a company. Organizations can align the departments and processes at the time of merger by using the 7S framework. Moreover, it helps to determine how best the proposed strategy can be implemented. One can apply this model to the elements of a project or team. There are 7 aspects of the organization that need to be aligned are – strategy, structure, systems, shared values, skills, staff and style.

The 7 interdependent factors can be categorized into 'hard' and 'soft' elements. Hard elements can be easily identified and have a great impact on the management. These are different strategies, statements and systems that form the processes and systems. On the contrary, soft elements are difficult to describe and are more influenced by the culture. They are less tangible and are very important as hard elements.

Below is the detailed description of the 7 elements of The McKinsey 7S Framework.

  • Strategy – Strategy refers to the sequence of actions that are taken by the company to achieve its objectives. It deals with allocation of resources and includes the competition, customers and the environment.
  • Structure – Structure refers to the way different units of the business are structured and communicate with each other. The structure of any company may be centralized or decentralized, and may take other forms depending on the culture and values of the company.
  • Systems – This factor includes a number of systems within an organization that define the day to day activities, routines and processes. It can include performance, financial system, It systems etc.
  • Skills – The core competences of the employees come under this category.
  • Style – The norms, beliefs and values of the organization come under this category. Every company has its own style and culture. It includes the dominant values that are developed over time and become enduring features of the organization.
  • Staff – This refers to the type and number of employees in the organization and is very important for the organization to manage its capital. The company staff helps the organizations to create a competitive advantage.
  • Shared values - These can be said as the core values that connect all the other 6 factors. These are numerous fundamental ideas that lay a string foundation of the businesses.

How to Use 7S Framework

The McKinsey 7S Framework is based on the above 7 elements that should be lined up and reinforced mutually. This model helps you identify the factors that need to be realigned to enhance the performance of your organization under various circumstances. Whatever is the circumstance or situation, this model help you understand how the organizational elements are interrelated. It considers the changes made in one area. Apart from this, the 7S model can help you analyze the current situation to identify the existing gaps and inconsistencies. It's is then the process of adjusting the elements of 7S model to make sure that the organization is working effectively once the desired endpoint is reached.

The process of using 7S framework seems to be very simple, but it will not probably be so simple. The 7S framework helps you ask the right questions, but you need to find answers themselves. All you need to do is bring the right set of skills, experience and knowledge to get answers to those questions. When it come to figure out the right questions, the below checklist will help you keep track of how the 7 elements can be aligned with each other. Below are some questions that you need to explore to understand your situation in terms of 7S framework.

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Strategy

  • What is the company’s strategy?
  • How do we achieve our objectives?
  • How is the strategy adjusted?

Structure

  • What is the hierarchy?
  • How are the different departments coordinated?
  • How the team members align themselves?

Style & Systems

  • How are the controls monitored and evaluated?
  • What rules does the team use?
  • What systems run the organization?
  • How participative is the leadership style and how effective it is?
  • Do the team members tend to be competitive?
  • Are any real teams are functioning within the organization?

Staff and skills

  • What positions are represented in the team?
  • What are the strongest skills represented by the team?
  • Is there any gap between the competencies?

Shared Values

  • What are the core values?
  • What is the culture of your team?
  • What are the fundamental values and how string they are?

Once you have identified the questions, you need to find out answers to those questions.

Summary

The McKinsey 7S Framework can be applied to an organizational team. If you find something in your organization or team that is not working properly, then you should consider that there are some inconsistencies between the elements. You can work and realign the internal elements to ensure that they are contributing to the goals and shared values of the organization. You can easily move your organization forward, by taking this analysis to the next level.

The analysis of different organizations using this framework revealed the fact that most of the companies tend to focus on the variable that can be changed. A few companies have successfully linked their structure, strategies and systems to change the entire organization.

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