Lessons from McKinsey and Weinstock
The consultancy group, McKinsey, should know a thing or two about business success. After all, its clients include 80% of the world's largest corporations, and an impressive list of governments and non-profit organisations. According to its entry in Wikipedia, McKinsey can boast "More current and former Fortune 500 CEOs are alumni of McKinsey than of any other company".
It is not surprising therefore that one of the most popular business frameworks is from McKinsey. It is called the McKinsey 7S. The 7S refers to 7 elements that indicate the health of a company. Three of the seven elements are referred to as hard elements because they are easier to define, to measure and management can affect them directly. They are strategy, structure and systems.
Alongside these hard elements are four soft elements, so-called because they are less tangible and more influenced by culture. They are harder to identify, harder to measure, and harder to copy. These soft elements are skills, style, staff and shared values.
All the elements interact and all are important. But are some more important than others? Certainly the hard factors are easier to deal with and so very often they are the focus of managers.
One of the most celebrated post-Second World War industrialists in the UK was Arnold Weinstock. For more than 30 years he was Managing Director of the General Electric Company (GEC - not to be confused with GE). Under his leadership he grew GEC throughout the 1970s and 1980s breaching the £1 billion profit mark in the early 1990s when the UK was in a severe recession. How did he do this?
To many people Weinstock was a cold eyed industrialist, willing to close uneconomic factories, take on the unions, and scouring the company accounts to ensure the tightest cost control down to the smallest washer. Woe betides an employee who spent too much on washers. He thought nothing of reaching them at home, late in the evening, after his blood pressure was raised by his assiduous examination of the accounts.
And yet, behind the facade of this apparently forbidding figure was a caring man who would always be there to ensure the best medical attention for one of his employees or a manager's relative who had a health problem. He looked after his staff, they respected his skills, he had style, and he shared values. These four S elements were just as important as his obsession with strategy, structure and systems.
McKinsey's 7S framework may be 40 years old and Arnold Weinstock may be resting in peace for 17 years but we have much to learn from these history lessons.