A business is a blend of several components that interact with each other and play separate roles. When these components align properly, the desired results are produced. And when they play their roles well, goals are achieved. The Mckinsey 7s model discusses the impact of this interaction through the lens of seven crucial elements.
What is it?
The McKinsey 7S Model is a strategic framework that tracks the interaction between certain elements as key to an organization's success. It is defined by seven elements that play crucial roles in a company's pursuit of its goals and objectives.
These seven elements influence a company's organizational design by aligning. They include Structure, Strategy, Skill, System, Shared Values, Style, and Staff, all of which we'll discuss.
1. Structure
An organization's structure is its operational framework. It includes its chain of command, management setup, and the people who make decisions that affect the organization.
2. Strategy
A company's strategy is a product of its plans, techniques, and approaches to achieve its goals and give it a competitive advantage.
3. Systems
A framework of workflows, processes, and other facilities defines a company's system. These components are deployed in the company's daily operations to function in various capacities.
4. Skills
Skills include the talents, abilities, and proficiencies possessed by a company's staff or executives. It is the human resource factor that the company exploits to achieve its goals.
5. Style
Style refers to the approach and the method of operation used by those in the hierarchy of an organization. A company's style impacts its performance and determines if it can achieve its goals.
6. Staff
Staff includes all personnel that makes up a company's workforce. It also considers their skills, knowledge, and capacity to perform an assigned function.
7. Shared Values
A company's shared values are marked by certain core objectives, missions, standards, and norms that guide its operations. These values provide the push that rallies staff efforts and defines a company's corporate identity.
When do we use it?
Different organizations can use the framework for various purposes, including to:
Define goals and communicate them across the board
The 7s model helps your organization define its goals and the strategies deployed to achieve them. It can help you determine the most optimal design that is best suited for an organization.
Assess its present conditions of operation
You can use this model to determine your company's market position and identify the factors responsible for it.
Implement key changes
The model can help you determine the impact that a change to any aspect of your operation will have on the whole. This will help you determine what changes can upset the balance in your organization.
Improve its performance
If you suspect your company is performing below expectations, you can trace the cause to a problem with any of the 7s elements. A change in strategy, organizational style, or structure can do the trick.
What business questions is it helping us to answer?
The Mckinsey 7s model can provide answers to the following questions.
What gaps exist in the organization
A problem with your strategy, structure, style, or another 7s element can hinder achieving your company's goals.
What is my most strategic fit?
Your most strategic fit is the perfect combination of all 7s elements to promote efficient management of an organization. It is the search for a working formula for your business.
How can I improve performance in my organization?
The 7s model can uncover the forces behind an observed underperformance in any sector/unit of an organization. As a result, you can now plan toward effecting the corrective changes in the right places.
How is change processed in an organization?
Using this model, you can determine the impact that will be felt in your organization when certain changes are made. This way, you'll be well-positioned to endorse or delay the changes.
How do we use it?
Below are a few quick steps to help you use the Mckinsey 7d model.
Step 1: Identify the areas that are not in alignment
Track down any gaps, pain points, and disparities in your organization. Research the existing organizational ecosystem and
Step 2: Establish the optimal organization framework
Using the data available, map out the most effective way to integrate the 7s elements. Identify their convergence point for determining the company's most favorable strategic position.
Step 3: Determine what changes to make and where to make them
Once you've addressed all the problem areas, you can devise means to effect positive change.
Step 4: Execute the required changes
After you've determined what changes are crucial, execute them in the areas where they'll have a direct impact.
Practical Example
A company is set to enter into a merger with another company. It examines the existing company's balance sheet and thoroughly reviews its present organization profile. Then, using the McKinsey 7S model, it can examine the level of impact that its planned institutional changes will have on the business.
It identifies certain gaps in the strategy, structure, and staff that affect the company's performance. After identifying these issues, it plans to effect the right changes. It resolves to overhaul the present structure, adopt more innovative solutions and strategies and retrain the staff.
Advantages
It promotes organizational balance and efficiency.
The Mckinsey 7s model looks at ways to align elements of an organization's operation. It identifies gaps and problem areas in an organization and sets you on the path of positive change.
It can help a company attain its most competitive position
When the seven components of this framework are well integrated, it becomes easier for a company to achieve its goals. It can help find a competitive advantage that confers a strong market position.
It provides a sense of direction.
A company can use Mckinsey's 7s model to identify its strategy, key resources, and core competencies. Then, these components can be employed in the design of its organizational framework.
It promotes better decision-making processes.
Mckinsey's model lays out all the facts on the table so you can see the bigger picture. This way, you can consider every element's impact and plan to manage them.
Disadvantages
It does not consider the role of external factors
External factors like government policies and the prevailing economic outlook can interfere with the interaction of these seven elements.
It is a complex model
The Mckinsey 7s model considers the roles that several factors play in a business. However, it is no easy task to understand the interaction of these factors or to align them to create a working system.
It demands significant effort and time to be executed
Careful research has to be done to discover the best fit for the alignment of the seven elements. This can take a lot of time to achieve and may pose huge financial implications for any company.
It does not present a clear roadmap to follow.
One of this model's biggest issues is its seeming lack of a clear roadmap to achieve organizational growth and efficiency. You'll still have to map out the best route to achieve your team goals by optimizing the elements and finding their strategic fit.
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