Models of organizational effectiveness go in and out of fashion, but the McKinsey 7-S framework has stood the test of time.
The model was developed in the late 1970s by Tom Peters and Robert Waterman, former consultants at McKinsey & Company. They identified seven internal elements of an organization that need to align for it to be successful.
Let’s explore the seven elements in detail.
When to Use the McKinsey 7-S Framework
You can use the 7-S framework in a wide variety of situations where it’s useful to examine how the various parts of your organization work together.
For example, it can help you to improve the performance of your organization, or to determine the best way to implement a proposed strategy.
The framework can be used to examine the likely effects of future changes in the organization, or to align departments and processes during a merger or acquisition. You can also apply the McKinsey 7-S framework to elements of a team or a project.
The Seven Elements of the McKinsey 7-S Framework
The model categorises the seven elements as either “hard” or “soft”:
- Shared Values
The three “hard” elements are strategy, structures (such as organization charts and reporting lines), and systems (such as formal processes and IT systems.) These are relatively easy to identify, and management can influence them directly.
The four “soft” elements, on the other hand, can be harder to describe, less tangible, and more influenced by your company culture. But they’re just as important as the hard elements if the organization is going to be successful.
Figure 1, below, shows how the elements depend on each other, and how a change in one affects all the others.
Figure 1: The McKinsey 7-S Framework
Let’s look at each of the elements individually:
- Strategy: this is your organization’s plan for building and maintaining a competitive advantage over its competitors.
- Structure: this how your company is organised (that is, how departments and teams are structured, including who reports to whom).
- Systems: the daily activities and procedures that staff use to get the job done.
- Shared values: these are the core values of the organization.
- Style: the style of leadership adopted.
- Staff: the employees and their general capabilities.
- Skills: the actual skills and competencies of the organization’s employees.
Placing shared values in the centre of the model emphasises that these values are central to the development of all the other critical elements.
The model states that the seven elements need to balance and reinforce each other for an organization to perform well.
Using the McKinsey 7-S Framework
You can use it to identify which elements you need to realign to improve performance, or to maintain alignment and performance during other changes. These changes could include restructuring, new processes, an organizational merger, new systems, and change of leadership.
Follow these steps:
- Start with your shared values: are they consistent with your structure, strategy, and systems? If not, what needs to change?
- Then look at the hard elements. How well does each one support the others? Identify where changes need to be made.
- Next, look at the soft elements. Do they support the desired hard elements? Do they support one another? If not, what needs to change?
- As you adjust and align the elements, you’ll need to use an iterative process of making adjustments, and then re-analysing how that impacts other elements and their alignment.
Figure 2, below, shows a matrix that you can use to help with your analysis. You can click on the image below to download it as an excel worksheet. There’s also a checklist of the right questions to ask (see further down).
Supplement the questions in the checklist with your own questions, based on your organization’s specific circumstances and your own knowledge and experience.
You can use the 7-S framework to help analyse your current situation (Point A in the worksheet), your proposed future situation (Point B in the worksheet), and to identify gaps and inconsistencies between them.
To examine your Point A, use the data that you’ve learned from your checklist questions to fill in the worksheet grid, putting a tick in any box where the two cross-referenced elements work together well. If the two elements aren’t working well together, put a cross.
Point B is an agreed endpoint in the future (in six months or a year, for example). When you reach Point B, revisit the worksheet and fill it in again. If your changes have worked, you’ll have a grid full of ticks. If not, you may need to make further adjustments.
The following questions are a starting point for exploring your situation in terms of the 7-S framework. Use them to analyse your current situation (Point A) first, and then repeat the exercise for your proposed situation (Point B).
- 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?
- How is the company/team divided?
- What is the hierarchy?
- How do the various departments coordinate activities?
- How do the team members organise and align themselves?
- Is decision making and controlling centralised or decentralised? Is this as it should be, given what we’re doing?
- Where are the lines of communication? Explicit and implicit?
- 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?
- 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?
- 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?
- What positions or specialisations are represented within the team?
- What positions need to be filled?
- Are there gaps in required competencies?
- 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?