For a company to achieve its objectives, all its elements have to perfectly align. The company’s structure, strategy, and management all need to be moving in the same direction towards common goals. McKinsey’s 7S model helps to establish this alignment. Learn about the origins, elements and practical use of this change management methodology.
The McKinsey 7S model was developed in the late 70s by Thomas J. Peters and Robert H. Waterman, all 3 consultants at McKinsey & Company. The main purpose of this model was to analyze General Electric’s portfolio of strategic business areas (SBAs). This analysis is now known as the General Electric matrix or the McKinsey matrix.
The McKinsey framework can be used by companies to:
This framework enables you to assess seven key elements of their organization that need to be changed or aligned to ensure your success.
The 7-S framework is made up of hard and soft S words demonstrated below.
| Hard S 5 (Tangible) | Soft S (Intangible) |
|---|---|
| Strategy | Style |
| Structure | Staff |
| System | Skills (Competencies) |
| Shared values |
This management tool is based on the principle that, to ensure the success of your company’s organization, 7 internal elements must be perfectly organized within it. These factors are divided into two categories: hard elements, which are tangible, and soft elements, which are intangible.
In McKinsey’s 7S model, structure refers to the approach a company uses to strengthen its competitive edge and achieve its long-term objectives. A good strategy is based not only on a clear mission and vision, but also on strong values.
In the McKinsey 7S model, structure simply means organizational structure. In other words, structure refers to the way in which the company is organized, and its chain of command. Without structure, it is virtually impossible for the company to carry out its day-to-day activities.
Systems refer to the processes used to carry out a company’s day-to-day activities. These include the processes, procedures, and staff operating methods that characterize the way activities are carried out within the company.
Shared values are a central element of the McKinsey 7S model. When the framework is diagrammed, all other elements are represented around “shared values”. These are the core values reflected in individual work ethics and corporate culture.
Style is the predominant management style of an organization. In other words, it encompasses typical group behavior patterns as defined by the company’s managers and other executives. It includes not only corporate culture, but also informal rules.
As the name suggests, the term “competencies” refers to the skills and know-how of the people working within a company. To achieve its objectives, a company needs to ensure that its staff have the necessary skills to carry out their activities effectively.
The term “staff” refers not only to an organization’s employees. It also includes the way in which they are recruited, trained or retained within the company. It also takes into account other criteria such as the diversity and size of the workforce, as well as employee benefits.
Using the McKinsey 7S model is fairly straightforward. When used in a business context, each of the elements is interdependent. As a result, adjusting one element affects the other 6. To use this organizational analysis tool in your business, you need to proceed step by step.
You need to :
More concretely, your company needs to ensure that its shared values are consistent with the other factors that make it up. Analyzing the hard elements helps to understand and address any misalignment of objectives. Making frequent adjustments requires not only financial resources, but also time.
McKinsey’s 7S model is therefore a very important tool in business organization. You need to master the seven elements to use it in the best possible way.