McKinsey's 7s

In 1980 Bob Waterman, Tony Athos, Richard Pascale and Tom Peters, a mix of McKinsey consultants and academics, hid themselves away in what Peters referred to as a two-day séance and arrived at the 7-S framework. In the same year, Peters, Waterman and Phillips wrote an article called Structure Is Not Organization that introduced the McKinsey 7Ss framework. Tom Peters, and Robert Waterman developed this further in 1982 in their book, In Search Of Excellence.

Every business needs to know whether it is on track. There are lots of obvious metrics that can help in this regard. Financial targets such as sales and profits are obvious indicators of the performance of the company. However, it is possible to have a financially successful company that is heading for the rocks. For example, a company may make money for a time but, if it is over-charging customers, or if it hasn't invested in the right systems or if employees are overworked and are beginning to feel disgruntled, it will eventually hit the buffers.

The consultancy firm McKinsey developed a model with seven elements, each an indicator of the health of the company. The seven elements all begin with the letter S and so the model is known as the McKinsey 7S framework. Three of the seven elements of the model are referred to as hard elements. They are called hard elements because they are easier to define and management can affect them directly. They are strategy, structure and systems.

Alongside these hard elements are four soft elements. These soft elements are so-called because they are less tangible, more influenced by culture but just as important. In fact, because they are harder to identify, they are harder to copy by the competition and so can be important in giving the company a competitive advantage. They are skills, style, staff and shared values. All the elements are interrelated so that the change in performance in any one of the components will influence another.

The 7 components of the McKinsey 7 framework are as follows:

Strategy: This is the overarching direction of the business and the plan that the management has laid down to grow the company over the medium to long term.

Structure: This describes the way the organisation is put together. It could be a description of the organisational hierarchical or the strategic business units and how they report to the centre.

Systems: The systems refer to the procedures for measuring things that happen in the company. They include financial processes, IT systems, HR procedures and the like. These are critical components of any company going through organisational change.

Shared values: The shared values describe the culture and the DNA of an organisation. They are the recognisable traits that enables someone to say “You can tell this person works for company x”.

Style: This describes the behavioural attitudes of the top management team which in turn will be influenced by the management style of the company leader.

Staff: These are the employees, their number, how they are recruited, how they are trained, their demographic make-up and their attitudinal characteristics.

Skills: These are the core competences of the employees.

The 7S tool has found favour among change consultants for providing a structure to:

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• Improve the performance of a company.

• Account for the effects of changes within a company

• Align departments and processes during a drive to greater efficiencies or following a merger or acquisition.

• Work out how to implement a strategy.

Some things to think about:

• Every successful business has to be aligned with the needs of its customers. This should be borne in mind when examining the strengths of the 7S elements. To what extent does each of them deliver against customers’ needs?

• Companies are made up of people and they are involved in every one of the 7 elements. When reviewing each of the 7S elements it is worth asking “Have we got the right people?  Are they connecting successfully with their colleagues?”