McKINSEY 7s MODEL

The McKinsey 7 S  model

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The McKinsey 7 S  model was developed from applied research in business and industry  . All of the authors worked as consultants at McKinsey and Company; and they used the model to analyse over 70 large organisations  focusing on the Internal environment

The seven variables, which the authors term “levers”, all begin with the letter “S”:

Figure 1
McKinsey’s 7S Model

These seven variables include structure, strategy, systems, skills, style, staff and shared values.

Structure is defined as the skeleton of the organisation or the organisational chart/design.

Strategy is the plan or course of action in allocating resources to achieve identified goals over time.

 Systems are the routine processes and procedures followed within the organisation.

Staff are described in terms of personnel categories within the organisation (e.g. engineers),

Skills  refers to the capabilities of the staff within the organisation as a whole.

Style : The way in which key managers behave in achieving organisational goals is considered to be the style variable; this variable is thought to encompass the cultural style of the organisation.

Shared values refers to the significant values,meanings or guiding concepts that organisational members share

The shape of the model was also designed to illustrate the interdependency of the variables. This is illustrated by the model also being termed as the “Managerial Molecule”. While the authors thought that other variables existed within complex organisations, the variables represented in the model were considered to be of crucial importance to managers and practitioners

The analysis of several organisations using the model revealed that American companies tend to focus on those variables which they feel they can change (e.g. structure, strategy and systems) while neglecting the other variables. 

These other variables (e.g. skills, style, staff and shared values) are considered to be “soft” variables.  Excellent companies are reportedly successful at linking their structure, strategy and systems with the soft variables. The authors have concluded that a company cannot merely change one or two variables to change the whole organisation.

The model implies the variables should be changed to become more congruent as a system. The external environment is not mentioned in the McKinsey 7S Framework, although it is clearly acknowledged that other variables exist .

Description of the 7Ss

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Strategy: Strategy is the plan of action an organisation prepares in response to, or anticipation of, changes in its external environment. Strategy is differentiated by tactics or operational actions by its nature of being premeditated, well thought through and often practically rehearsed. It deals with essentially three questions :

1) Where the organisation is now,

2) Where the organisation wants to be in a particular length of time and

3) How to get there.

Thus, strategy is designed to transform and renew  the firm from the current state to a new position described by clear objectives

Structure:. Organisations are structured in a variety of ways, dependent on their objectives and culture. The structure of the company often dictates the way it operates and performs . Traditionally, businesses have been structured in a hierarchical way with several divisions and departments, each responsible for a specific task such as human resources management, production or marketing. Many layers of management controlled the operations, with each answerable to the upper layer  of management. Although this is still the most widely used organisational structure, the recent trend is increasingly towards a flat structure where the work is done in teams of specialists rather than fixed departments. The idea is to make the organisation more flexible and devolve the power by empowering the employees and eliminate the middle management layers

SystemsEvery organisation has some systems or internal processes to support and implement the strategy and run day-to-day affairs. For example, a company may follow a particular process for recruitment. These processes are normally strictly followed and are designed to achieve maximum effectiveness. Traditionally the organisations have been following a bureaucratic-style process model where most decisions are taken at the higher management level and there are various and sometimes unnecessary requirements for a specific decision (e.g. procurement of daily use goods) to be taken. Increasingly, the organisations are simplifying and modernising their process by innovation and use of new technology to make the decision-making process quicker. Special emphasis is on the customers with the intention to make the processes that involve customers as user friendly as possible

Style/CultureAll organisations have their own distinct culture and management style. It includes the dominant values, beliefs and norms which develop over time and become relatively enduring features of the organisational life. It also entails the way managers interact with their teams and the way they spend their time.  Culture remains a critical consideration in the implementation of any strategy in the organisation

Staff: Organisations are made up of humans and it’s the people who make the real difference to the success of the organisation in the increasingly knowledge-based society. The importance of human resources has thus got the central position in the strategy of the organisation, away from the traditional model of capital and land. All leading organisations put extraordinary emphasis on hiring the best staff, providing them with development, training and mentoring support, and engaging their people in achieving professional excellence – this forms the basis of these organisations’ strategy  and competitive advantage .

Shared Values: All members of the organisation share some common fundamental ideas or guiding concepts around which the business is built. This may be to make money or to achieve excellence in a particular field. These values and common goals keep people working towards a common destination as a coherent team and are important to keep the team spirit alive.

 

Figure 1

 

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