McKinsey 7-S Framework

Making Every Part of Your Organization Work in Harmony

(Compiled from mindtools)

Do you know how well your organization is positioned to achieve its goals? Or what
elements influence its ability to implement change successfully?

Models of organizational effectiveness go in and out of fashion, but the McKinsey 7-S
framework has stood the test of time.

The model was developed in the late 1970s by Tom Peters and Robert Waterman, former
consultants at McKinsey & Company. They identified seven internal elements of an
organization that need to align for it to be successful.
Do you know the seven key elements of your organization?
In this article, you can explore the seven elements in detail, and learn how to improve
performance or manage change in your organization by ensuring that they all work in
harmony.

Also, we provide a worked example and a downloadable template that you can use to apply
the model.

When to Use the McKinsey 7-S Model

You can use the 7-S model in a wide variety of situations where it's useful to examine how
the various parts of your organization work together.

For example, it can help you to improve the performance of your organization, or to
determine the best way to implement a proposed strategy.

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.

The Seven Elements of the McKinsey 7-S Framework

The model categorizes the seven elements as either "hard" or "soft":

Hard Elements Soft Elements

Strategy Shared Values

Structure Skills
 Hard Elements Soft Elements

Style

Systems Staff

The three "hard" elements are strategy, structures (such as organization charts and reporting
lines), and systems (such as formal processes and IT systems.) These are relatively easy to
identify, and management can influence them directly.

The four "soft" elements, on the other hand, can be harder to describe, less tangible, and more
influenced by your company culture. But they're just as important as the hard elements if the
organization is going to be successful.

Figure 1, below, shows how the elements depend on each other, and how a change in one
affects all the others.

Figure 1: The McKinsey 7-S Model

Figure reproduced with permission from McKinsey & Company, www.mckinsey.com.

Copyright © 2016. All rights reserved.

 Let's look at each of the elements individually:

 Strategy: this is your organization's plan for building and maintaining a

competitive advantage over its competitors.
 Structure: this how your company is organized (that is, how departments and
teams are structured, including who reports to whom).
 Systems: the daily activities and procedures that staff use to get the job done.
  Shared values: these are the core values of the organization, as shown in its
corporate culture and general work ethic. They were called "superordinate goals"
when the model was first developed.
 Style: the style of leadership adopted.
 Staff: the employees and their general capabilities.
 Skills: the actual skills and competencies of the organization's employees.
Placing shared values  in the center of the model emphasizes that these values are central to
the development of all the other critical elements.
The model states that the seven elements need to balance and reinforce each other for an
organization to perform well.

Using the McKinsey 7-S Model

You can use it to identify which elements you need to realign to improve performance, or to
maintain alignment and performance during other changes. These changes could include
restructuring, new processes, an organizational merger, new systems, and change of
leadership.

Follow these steps:

1. Start with your shared values: are they consistent with your structure, strategy, and
systems? If not, what needs to change?

2. Then look at the hard elements. How well does each one support the others?
Identify where changes need to be made.

3. Next, look at the soft elements. Do they support the desired hard elements? Do
they support one another? If not, what needs to change?

4. As you adjust and align the elements, you'll need to use an iterative (and often
time-consuming) process of making adjustments, and then re-analyzing how that
impacts other elements and their alignment. The end result of better performance
will be worth it.

Figure 2 shows a template matrix that you can use to help with your analysis. You can click
on the image to download it as a PDF worksheet.

We've also developed a checklist of the right questions to ask, which you can find in the
next section. Supplement the questions in our checklist with your own questions, based on
your organization's specific circumstances and your own knowledge and experience.
Figure 2: The McKinsey 7-S Matrix Template
 

You can use the 7-S model to help analyze your current situation (Point A in the worksheet),
your proposed future situation (Point B in the worksheet), and to identify gaps and
inconsistencies between them.

To examine your where you are now (Point A), use the data that you've learned from your
checklist questions to fill in the worksheet grid, putting a tick in any box where the two cross-
referenced elements work together well. If the two elements aren't working well together, put
a cross.

Point B is an agreed endpoint in the future (in six months or a year, for example). When you
reach Point B, revisit the worksheet and fill it in again. If your changes have worked, you'll
have a grid full of ticks. If not, you may need to make further adjustments.

Note:
The 7-S model is a good framework to help you ask the right questions, but it won't give you
all the answers. For that, you'll need to bring together the right people with the right
knowledge, skills and experience. Our article, Setting up a Cross-Functional Team , can
help you to do this.
Checklist Questions for the McKinsey 7-S Framework
The following questions are a starting point for exploring your situation in terms of the 7-S
framework. Use them to analyze your current (Point A) situation first, and then repeat the
exercise for your proposed situation (Point B).
Strategy:
 What is our strategy?

 How do we intend to achieve our objectives?

 How do we deal with competitive pressure?

 How are changes in customer demands dealt with?

 How is strategy adjusted for environmental issues?

Structure:
 How is the company/team divided?

 What is the hierarchy?

 How do the various departments coordinate activities?

 How do the team members organize and align themselves?

 Is decision making and controlling centralized or decentralized? Is this as it should

be, given what we're doing?

 Where are the lines of communication? Explicit and implicit?

Systems:
 What are the main systems that run the organization? Consider financial and HR
systems as well as communications and document storage.

 Where are the controls and how are they monitored and evaluated?

 What internal rules and processes does the team use to keep on track?
Shared Values:
 What are the core values?

 What is the corporate/team culture?

 How strong are the values?

 What are the fundamental values that the company/team was built on?
Style:
 How participative is the management/leadership style?

 How effective is that leadership?

 Do employees/team members tend to be competitive or cooperative?

  Are there real teams functioning within the organization or are they just nominal
groups?
Staff:
 What positions or specializations are represented within the team?

 What positions need to be filled?

 Are there gaps in required competencies?

Skills:
 What are the strongest skills represented within the company/team?

 Are there any skills gaps?

 What is the company/team known for doing well?

 Do the current employees/team members have the ability to do the job?

 How are skills monitored and assessed?

Key Points
You can apply the McKinsey 7-S framework to almost any organizational or team
effectiveness issue.

If something within your organization or team isn't working, chances are there is
inconsistency between some of the seven elements identified in the model. These are:
strategy, structure, systems, shared values, style, staff, and skills.

Once you reveal these inconsistencies, you can work to align these elements to make sure
they are all contributing to the shared goals and values.

The process of analyzing where you are right now in terms of these elements is worthwhile in
itself. But you can really move your organization or team forward by determining the desired
future state for each of the factors.