7/7/2019 The McKinsey 7-S Framework - Strategy Skills From MindTools.

com

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.

In this article, you can explore the seven elements in detail, and learn how to improve
performance or manage change in your organization by ensuring that they all work in
harmony.

Also, we provide a worked example and a downloadable template that you can use to
apply the model.

When to Use the McKinsey 7-S Model

You can use the 7-S model 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 model to elements of a team or a project.

The Seven Elements of the McKinsey 7-S Framework

The model categorizes the seven elements as either "hard" or "soft":

Hard Soft
Elements Elements

Strategy Shared Values

Structure Skills

Systems Style

Staff

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.

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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 Model

Figure reproduced with permission from McKinsey & Company,

www.mckinsey.com. Copyright © 2016. All rights reserved.

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 organized (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, as shown in its
corporate culture and general work ethic. They were called "superordinate goals" when
the model was first developed.

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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 center of the model emphasizes 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 Model

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:

1. Start with your shared values: are they consistent with your structure, strategy, and
systems? If not, what needs to change?

2. Then look at the hard elements. How well does each one support the others? Identify
where changes need to be made.

3. Next, look at the soft elements. Do they support the desired hard elements? Do they
support one another? If not, what needs to change?

4. As you adjust and align the elements, you'll need to use an iterative (and often time-
consuming) process of making adjustments, and then re-analyzing how that impacts
other elements and their alignment. The end result of better performance will be worth
it.

Figure 2 shows a matrix that you can use to help with your analysis. You can click on the
image below to download it as a PDF worksheet. We've also developed a checklist of the
right questions to ask (see below).

Supplement the questions in our checklist with your own questions, based on your
organization's specific circumstances and your own knowledge and experience.

Figure 2: The McKinsey 7-S Matrix

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You can use the 7-S model to help analyze 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 where you are now (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.

Note:
The 7-S 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 people with

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the right knowledge, skills and experience. Our article, Setting up a Cross-
Functional Team , can help you to do this.

Checklist Questions for the McKinsey 7-S Framework

The following questions are a starting point for exploring your situation in terms of the 7-S
framework. Use them to analyze your current (Point A) situation first, and then repeat the
exercise for your proposed situation (Point B).

Strategy:

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?

Structure:

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?

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?

Shared Values:

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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?

Style:

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?

Staff:

What positions or specializations are represented within the team?

What positions need to be filled?

Are there gaps in required competencies?

Skills:

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?

An Example of McKinsey 7-S Framework in Action

Let's imagine that Whitehawk Electronics is a startup with five staff. As a new venture, it is
still based firmly on the vision and values of its founder, Alix, and its elements all align. It
sells into one market, and uses off-the-shelf IT and accounting systems.

As time goes on, the business grows, employing 30 staff, and diversifying into different
markets. New customer requirements demand new skills in marketing, technology, product
development, and financial management.

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Alix carries out a 7-S analysis. She finds that Whitehawk's developing sales strategy no
longer aligns with its small-business skill set.

The rapid influx of new staff members, along with changes in technology, means that some
staff don't have the necessary systems skills. Worse still, they're unclear on the
organization's values and sense of purpose.

Alix uses the analysis to introduce onboarding and learning programs, bringing all
Whitehawk's key elements back into alignment.

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