McKinseys 7S Model

Chapter 10 : Business Policy and Strategic Manage

by Dr. S. Senthilkumar and others

From the book The Art of Japanese Management ( a study of Matshushita and ITT
Corporations) by Prof. Richard Pascale (Stanford Univ) and Anthony Athos (Harvard Univ).

McKinsey 7- S Model
Premise: For an organization to perform well, seven elements need to be
aligned for mutual reinforcement. It identifies the areas needing realignment
in order to improve performance during change processes.
(Tom Peters & Robert Waterman, 1980)

structure
Hard Ss

strategy

systems

shared
values

Soft Ss

skills

styles
staff

HARD Ss

Structure, Strategy, Systems are derived from soft Ss

Can be changed through Administrative decisions

SOFT Ss

Skills, Staff, Styles are influenced by Shared Values

Placing Shared Values in the middle of the model
emphasizes that the values are central to the
development of all other critical elements. As the
values change, so do all the other elements.

Are (relatively) more difficult to change

Soft Ss normally affect decisions on the Hard Ss

What if Style is Autocratic.

Structure Majority of decisions will be taken by the Top.
Systems Rigid: not built to tolerate deviations.
Strategy Derived from aspirations of Top Management / entrepreneur.

Skills are low.

Structure High supervision (normally a tall structure). Strong Training function.
Systems Elaborate Job Descriptions and Role Templates. Dos and donts specified high security levels for accessing data.
Strategy Organization attunes itself to market opportunities. Go for mind set and close
monitoring for implementation of strategy.

Values are not shared.

Structure Ethnocentric structure with high level of standardization.
Systems High component of incentives. SOPs reinforced by Extrinsic rewards. Strong
ERP systems.
Strategy is not designed on the basis of Employee Stretch. Policies to integrate Staff
with Organizational beliefs.

Staff is inappropriate.
Structure Large component of outsourced activities. Many contractual employees.
Systems Focus on Staff acquisition and Training. Centralized decision making. Strong
ERP systems.
Strategy Focus on holding current market position.

McKinsey 7- S Model - Uses

The 7S model is used in a wide variety of situations, where
alignment is imperative.
The model helps to understand:

1.

Improvement areas of a company.

2. Likely effects of future changes within a company.

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

3. Alignment of functions and processes while implementing a new

strategy.
4. The best ways to implement a proposed strategy.
Used 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 the desired endpoint is
reached.

HARD Ss
Strategy is a plan or course of action in allocating resources to achieve
identified goals over time. Unlike tactic, strategy is well thought and often
rehearsed. It transforms the organization from the present position to the
new position described in the objectives, subject to constraints of the
capabilities (Ansoff, 1965).

1. What is the strategy?

2. How does the Company intend to achieve its strategic objectives?
3. How does the Company deal with competitive pressures?
4. How are changes in customer demands dealt with?
5. How is strategy adjusted for environmental issues?
6. Do Staff understand the Strategy well?

HARD Ss
Structure is the skeleton, the form of shape, of organizations. It dictates the
way it operates and performs (Waterman et al., 1980). Traditionally,
businesses are structured with divisions, departments and layers, in which
the lower layers answer to upper layers. Today, the flat structure, where the
work is done in teams of specialists, are more common. The idea is to make
the organization more flexible and devolve the power by empowering the
employees and eliminate the middle management layers (Boyle, 2007).

1. How is the company/team divided?

2. What is the hierarchy?
3. How do the various departments coordinate activities?
4. How do the team members organize and align
themselves?
5. Is decision making and controlling centralized or
decentralized?
6. Where are the lines of communication? Explicit and
implicit?

HARD Ss
Systems are routine processes and procedures followed within an
organization to implement the strategy and to run day-to-day affairs. These
processes are mainly designed to achieve maximum effectiveness.
Traditionally, the higher management makes the most decisions.
Increasingly, the organization are using innovation and new technology to
make decision-making process quicker

1.
2.
3.
4.

What are the basic systems that run the organization?

Consider both financial and HR systems 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 main intentions in adopting the existing
system?

SOFT Ss
Staff are personnel categories within the organization, such as
engineers, sales persons, etc. Unlike traditional organizations, new
leading organizations put more emphasis on hiring the best staff and
and with rigorous training and monitoring support shape the basic
values. This forms the basis of these organizations strategy and competitive
advantage over their competitors (Purcell and Boxal, 2003).

1. What positions or specializations are represented within

the team?
2. What positions need to be filled?
3. How motivated are the employees towards the Strategic
directions?
4. Are there gaps in required competencies?

SOFT Ss
Skills are the capabilities of the staff within the organization as a whole.
1.
2.
3.
4.
5.

What are the strongest skills represented within the

company/team?
Are there any skills gaps?
What is the company/team known for doing well? What
are the core competencies?
Do the current employees/team members have the ability
to achieve the strategy?
How are skills monitored and assessed?

SOFT Ss
Style is the way in which key managers behave in achieving organizational
goals, that is the management style. It includes the dominant values, beliefs
and norms which develop over time and become relatively enduring features
of the organizational life. Different from the traditional businesses in which
strict adherence to the upper management and procedures was expected
from the lower-rank employees, the recent businesses have been more open,
innovative and friendly with fewer hierarchies and a smaller chain of
command.

1.
2.
3.
4.

How participative is the management / leadership style?

How effective is the leadership does the strategy suit the
leadership style?
Do employees / team members tend to be competitive or
cooperative?
Are there real teams functioning within the organization or
are they just nominal groups?

SOFT Ss
Shared Value refers to the significant meanings or guiding concepts that
organizational members share (Peters and Waterman, 1982). These values
and common goals keep the employees working towards a common
destination as a coherent team. The organizations with weak values and
common goals often find their employees following their own personal goals
that may be conflicting with others.

1.
2.
3.
4.

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?

End