McKinsey’s 7S model

Have you ever wondered how management concepts become so popular?

They’re plain insights, that everyone knows but someone takes the efforts to present them in a manner that makes us exclaim ‘Ah! I knew this all along but never thought about it in this manner’.

That Aha moment is the crux of all management concepts.

Companies have, for long, struggled to piece together teams that align with the organization’s vision and produce results. Organizational effectiveness is something all leaders strive to achieve and few manage.

The Mckinsey’s 7S framework is a model that helps companies to understand the elements that go into achieving organizational efficiency and implement desired changes. The model is also used to assess organizational effectiveness for internal purposes.

Two Mckinsey and Co. consultants, Tom Peters and Robert Waterman are credited to have developed this model while they worked there in the ‘70s. This model first appeared in the hugely successful book ‘In search of excellence’. The model has stayed relevant till date because it puts the focus back on the most important thing in a company’s success- which is coordination, rather than just structure and processes. When aligned properly, it gives rise to what management professionals refer to as Optimum Operational Management.

Understanding the applicability of McKinsey’s 7s Model

One can bank on the McKinsey model when you need to implement a change or a specific strategy, when you want to enhance organizational performance or even to boost a team or a project independently. When a major change is slated to impact the company (ex. A merger or acquisition), applying this model helps understand how the company would respond to it.

Understanding 7S of the McKinsey’s 7S Model

The seven elements that define the 7S of this model can be divided into the hard and the soft components.

The Hard ones include:

1. Startegy
2. Systems
3. Structure

While the soft ones are:

4. Shared values
5. Skills
6. Style
7. Staff

All the 7 components or elements are linked to one another and that is how they deliver the desired outcome.

1. STRUCTURE: It is what frames an organization. Structure gives it a shape, but neither form nor strength and agility. Big need not be strong in this case. The organization chart allows a glimpse into the hierarchy and tells who reports to whom. It shows whether there is a centralized or decentralized command and control system within the organization (which has a bearing on overall effectiveness when taken into context).
2. SYSTEM: This is the operations part. How things move within the organization. In today’s context, it is the Management Information System (MIS), the IT Systems, the information flow, its tracking and documentation that determines its strength because information and data is king.
3. STRATEGY: A lot of people feel that strategy is at the heart of an organization and that everything revolves around it. But this model showed that it’s just a part of the whole and that change happens when all work in tandem. Strategy is the plan for the future and the focus areas (priorities) to maintain competitive advantage.

The soft components have been difficult to foster and grasp but crucial nonetheless because they are derived out of the organization culture.

4. SHARED VALUES: It’s what an organization stands for. Having a strong vision and mission which every employee knows, works for and in whose fulfilment the whole company exists, are the strongest. When every stakeholder understands and takes pride in what the company stands for, the company can freely focus on what it does best.
5. STAFF: The wheels that drive an organization. A company’s hiring and retention strategy, ways of employee engagement as also the competencies and attributes of the people working there decides the competitive advantage in the market. Today, several other factors like gender equality and inclusiveness also play a major role.
6. SKILLS: it is what separates the good from the best. Skills that the people possess and those that the company identifies to be crucial to gain competitive advantage and invests in, play in favour of success. These skills need to be polished and updated regularly to stay ahead of competition. Companies that invest in skills stay the course longer and stronger.
7. STYLE: Ah! That management thing which is either good or bad and nothing in between. Management styles have come to play out in matters of attrition to a large extent. Good companies with bad managers still face the heat. How is the leadership style- formal or informal, how is the company driven- top down or down up? What kind of relationship do the leaders share with the employees, all determine the passion with which they work.

How does McKinsey’s 7S framework or model help

When companies need to implement change or assess internal effectiveness, they perform a thorough analysis. One would say, it ought to be a Gap Analysis which shows the management where the company stands today vis-à-vis where it ought to be in order to effectively implement the change or achieve competitive edge. Ex. If a mass clothing  brand wishes to launch a new prêt line and is anxious about how it can carry it through given the way the company has been functioning up until now, it can use this model and understand whether such a drastic change can be borne well by all stakeholders and how.

Looking back and introspecting has been an integral part of a company’s way of moving ahead. It is only when the management is brutally honest about all factors that make an impact and determine its effect on the overall business, that it can arrive at a realistic outcome. Several companies that indulge in wishful thinking and ignore tell tale signs of fault lines within the organization, pay a heavy price in terms of failed business decisions. Business needs a sharp focus on reality and not just planning and paper work. McKinsey and the creators of this model have been credited for aiding many a new venture and preventing more from crashing under their own weights.

I would love to hear your experience if you have used this model. Take a moment and comment below.

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