Tuesday, September 28, 2010
7-S framework of McKinsey
Posted on 6:03 PM by Logu's Web Page
The 7-S is a framework for analyzing organizations and their effectiveness. It looks at the seven key elements that make the organizations successful, or not: Strategy, Structure, Systems, Style, Skills, Staff and Shared values.
7S model in the late 1970s to help managers address the difficulties of organizational change. The model shows that organizational immune systems and the many interconnected variables involved make change complex, and that an effective change effort must address many of these issues simultaneously.
1) Strategy
Plans for the allocation of firms scarce resources, over time, to reach identified goals. Environment, competition, customers.
- 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?
2) Structure
The way the organization's units relate to each other: centralized, functional divisions (top-down); decentralized (the trend in larger organizations); matrix, network, holding, etc.
- How is the company/team divided?
- What is the hierarchy?
- How do the various departments coordinate activities?
- How do the team members organize and align themselves?
- Is decision making and controlling centralized or decentralized? Is this as it should be, given what we're doing?
- Where are the lines of communication? Explicit and implicit?
3) System
The procedures, processes and routines that characterize how important work is to be done: financial systems; hiring, promotion and performance appraisal systems; information systems.
- 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?
4) Staff
Wherever possible and feasible, opinions should be gathered from all levels of staff. Whether this is done formally through staff surveys and focus groups, or more informally will depend on many factors. It is always worth doing, as it avoids the pitfalls of making too many assumptions. However, sometimes factors such as commercial confidentiality or proposed lay offs make it very difficult to sample opinion. In this case, it might be possible to review previous surveys for clues.
- What positions or specializations are represented within the team?
- What positions need to be filled?
- Are there gaps in required competencies?
5) Style
Sometimes a change is necessary for organizational survival even if this is contrary to the management style and culture. If the proposal is counter cultural, then there will be significant resistance. A change in culture will be required. If so, then you will need to deploy a wide range of Change Management techniques.
- 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?
6) Shared Value
The same applies to Shared Values or guiding principles. If the proposed change is counter to the Shared Values then you may actually be talking about a change initiative that needs to change the Shared Values or at the very least reinterpret them. If that is so, then it will be a large and potentially difficult change.
- 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?
7) Skill
Dominant attributes or capabilities that exist in the organization.
- 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?
How to Use the 7S Framework Model
The model is based on the theory that, for an organization to perform well, these seven elements need to be aligned and mutually reinforcing. So, the model can be used to help identify what needs to be realigned to improve performance, or to maintain alignment (and performance) during other types of change.
Whatever the type of change - restructuring, new processes, organizational merger, new systems, change of leadership, and so on - the model can be used to understand how the organizational elements are interrelated, and so ensure that the wider impact of changes made in one area is taken into consideration.
You can use the 7S model to help analyze the current situation (Point A), a proposed future situation (Point B) and to identify gaps and inconsistencies between them. It's then a question of adjusting and tuning the elements of the 7S model to ensure that your organization works effectively and well once you reach the desired endpoint.
Sounds simple? Well, of course not: Changing your organization probably will not be simple at all! Whole books and methodologies are dedicated to analyzing organizational strategy, improving performance and managing change. The 7S model is a good framework to help you ask the right questions - but it won't give you all the answers. For that you'll need to bring together the right knowledge, skills and experience.
When it comes to asking the right questions, we've developed a Mind Tools checklist and a matrix to keep track of how the seven elements align with each other. Supplement these with your own questions, based on your organization's specific circumstances and accumulated wisdom.
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