Aug 02, 2018 · 2 min read
What is it?
The McKinsey 7-S framework was developed by Tom Peters and Robert Waterman at McKinsey & Company. It argues that organisational effectiveness involves more than simply putting in place the right command and control structure to coordinate the delivery of an organisation’s strategy. Instead, the framework maps a constellation of seven interacting factors that are key to helping people function effectively together, in order to achieve a high performance organisation.
What each element means:
Style
Also referred to as culture, this represents the way things are done and, particularly, the way the leadership team conducts itself in the organisation. The leadership’s style will influence how the rest of the employees behave. Therefore, if the leadership visibly embraces, champions and demonstrates cost transformation and management, then people around the organisation will typically follow.
Skills
Refers to the skills needed to deliver the cost transformation and management strategy. Having the right skills to deliver the strategy is vital and skills gaps can pose a risk to achieving cost competitiveness objectives.
Systems
These are the activities, processes and procedures that people engage in to do their work. It also includes software systems, which are increasingly automating activities, processes and procedures.
Structure
The hierarchy of control exercised through delegated responsibility. The structure should be as simple as possible to help people understand who is accountable for specific results.
Staff
This includes the inherent talents of the organisation’s people, the number of staff and the diversity needed in each area to optimise organisational capability and capacity.
Strategy
Organisations need to compete in volatile, uncertain, complex and ambiguous environments. So, strategy needs to respond to this with agility. Organisations must constantly adapt to strategies to succeed.
Shared values
These encapsulate the organisation’s purpose or its societal mandate. The organisation’s purpose tends to remain a fundamental constant over time and this purpose shapes the organisation’s values.
Having shared values at the centre of the constellation emphasises that it is the core values of the organisation, aligned to the organisation’s purpose, that shape the remaining elements.
What benefits does McKinsey 7-S provide?
Perhaps strategy is changing and execution requires new delivery platforms. McKinsey’s 7-S framework provides a useful approach to organisational design, specifically for:
Facilitating organisational change
Aligning the organisation to new strategy
Aiding the merger or acquisition of organisations
Improving the performance of a company
Modelling the likely effects of future changes within a company.
Implementing McKinsey 7-S? Questions to consider:
Is there senior support to review the organisation’s design?
Are the seven elements of the framework aligned with each other?
What is the best organisational design to support the objectives?
What needs to change to achieve the best organisational design?
Do you have the necessary resources to bring about the changes identified?
Template
The example questions above aim to illustrate how the elements of the McKinsey 7-S model’s interact with one another. In doing so, they are designed to help you with deploying the 7-S framework.
The framework consists of two main sets of factors: first, the ‘hard’ elements (strategy, structure and systems) that management can directly control; and second, the 'soft' elements (shared values, style, staff and skills) which managers need to influence indirectly.
The questions included in this template are examples designed to help users better understand the framework. They could also be used as starter questions for their businesses. We encourage you to modify or supplement them to better suit your own situations or, if you prefer, to change them to open-style questions.
FAQs
All the factors in the McKinsey 7S model are equally important, however, these seven factors are further divided into two categories: hard elements and soft elements. The first three elements, which are 'strategy', 'structure', and 'systems', are hard elements because they influence the management in a company.
What are the 5 stages of transformation McKinsey? ›
The answer is to follow a structured process that we characterize as the “5As”: aspire, assess, architect, act, and advance. For each of these stages there are clear frameworks for performance and health that enable leaders to manage both with the same rigor and discipline (Exhibit 2).
What are the limitations of the McKinsey 7S Model? ›
The McKinsey 7S framework, while powerful, does have some limitations. It does not prioritize among the elements, making it difficult to know where to start when implementing changes. It also assumes that organizations must be in alignment to be successful, which may not always be the case.
How to use McKinsey 7S framework? ›
How to Use the McKinsey 7S Model? (In 7 Steps)
- Analyze each component of the 7S Model. ...
- Identify areas that are misaligned with your vision and strategy. ...
- Define the desired state. ...
- Prepare your change management plan. ...
- Execute your plan. ...
- Review your progress against set targets. ...
- Adapt your plans and strategy if needed.
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.
What is the McKinsey 3 rule? ›
McKinsey Consulting
The Rule of 3 is a rule of thumb for executive communication. Whenever you're trying to persuade a senior person to do something, always present 3 reasons. Not 2, not 4, but exactly 3.
What is the success rate of transformation in McKinsey? ›
Just how risky is such change? McKinsey famously noted 70 per cent of transformation projects fail. Technology sector industry analyst, Gartner, says it's worse in digital transformation: Its estimate show 80 per cent of organisations seeking to scale digital business will fail through to 2025.
Why do transformation efforts fail at McKinsey? ›
Why do most transformations fail? Seventy percent of transformations fail. Contributing factors include insufficiently high aspirations, a lack of engagement within the organization, and insufficient investment in building capabilities across the organization to sustain the change, among others.
Is McKinsey 7S still relevant today? ›
Some 30 years later, 7-S remains an important tool to understand the complexity of organizations. Today, more than ever, structure alone isn't organization.
What is the criticism of McKinsey 7S? ›
The critique on the McKinsey 7S model is that it addresses the lack of a cohesive definition of organizations, highlighting the misconception that structure alone defines an organization.
In Conclusion
The McKinsey 7-S framework helps you increase the efficiency of your organization, and how your PMO supports it. By determining what your business does well in these seven elements, you can change your business practices to address commonly overlooked aspects of your organization.
What are the hard elements of McKinsey 7S theory? ›
The hard elements in the 7S Framework are Strategy, Structure and Systems; the soft elements are Style, Shared Values, Skills and Staff. In order to understand the 7S Framework better a brief explanation is given below.
Which company uses the McKinsey 7S Model? ›
PepsiCo is the company that manufactures the carbonated soft drink, Pepsi. The company was originally created and developed in 1983 and has grown to become the second most valuable soft drink globally after Coca-Cola. The McKinsey 7S Model for Pepsi reveals its unique business structure.
What is the hard S as per McKinsey model? ›
Structure, Strategy, and Systems collectively account for the “Hard Ss” elements, whereas the remaining are considered “Soft Ss.”
What element of the McKinsey 7S framework is concerned with organization? ›
McKinsey 7S model is a tool that analyzes company's organizational design by looking at 7 key internal elements: strategy, structure, systems, shared values, style, staff and skills, in order to identify if they are effectively aligned and allow the organization to achieve its objectives.
What are the soft skills and hard skills under McKinsey's 7S framework? ›
Understanding McKinsey 7S Model
The 7S Model specifies seven factors that are classified as "hard" and "soft" elements. Hard elements are easily identified and influenced by management, while soft elements are fuzzier, more intangible, and influenced by corporate culture. The hard elements are as follows: Strategy.
What is the difference between hard and soft elements? ›
Hard elements are concrete and defined. In contrast, soft elements are harder for management to explicitly control. Typically, soft elements are more influenced by company culture.
