The model was developed in the late 1970s by Tom Peters and Robert Waterman, former consultants at McKinsey & Company. It was developed and also used during the research work of two bestselling books “The Art of Japanese Management” and “In Search of Excellence”. They identified seven internal elements of an organization that need to align for it to be successful.
The 7-S
model can be used 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 to improve the performance of the 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. One can also apply the McKinsey 7-S model to elements of a team or
a project.
The organization’s effectiveness is determined by seven
factors whose nomenclature begins with the alphabetic “s” therefore the name
7S. The seven factors are- superordinate goals, strategy, staff, skills,
structure, system, shared values, and style. The framework gives equal weight
to each of the seven factors and emphasizes the interrelatedness and the “fit”
among them.
The three "hard" elements include Strategy, Structures
(such as organization charts and reporting lines) and Systems (such as formal
processes and IT systems.). These elements are relatively easy to
identify, and management can influence them directly.
The four "soft" elements, viz.., shared values,
skills, style and staff, on the other hand, can be harder to describe, and are
less tangible, and more influenced by the company culture. But they're just as
important as the hard elements if the organization is going to be successful.
Superordinate Goals
Fundamental ideas of
business
Main values
Broad notions of future
directions
The superordinate goals or the core values which get
reflected within the organizational culture or influence the code of ethics.
A
set of values and aspirations that goes beyond the conventional formal
statement of corporate objectives. All targets and attention of all activities
and exercise of the other six levers of any organization should be directed
towards accomplishment of the best possible goals
-
the ultimate & terminal point
-
where organization will have to reach
Effective
organizational change may be understood as a complex relationship between 7Ss.
A company has been set up with a certain vision of the founders. This radiates to all parts of the company. If the central values within a company change, this affects all factors within the company. Businesses commonly use it to analyze internal elements that affect organizational success.
To diagnose causes of organization
problem & formulate program, the 7Ss framework is used. Individual Ss are
discussed below:
Shared Values
These are the core
values of the organization and reflect its general work ethic. They were called
"superordinate goals" when the model was first developed. They are the norms and standards that guide
employee behavior and company actions and thus, are the foundation of every
organization.
Skills
Acquainted with state of the art
technology & improvised methods & practices
Examples: MCKINSEY’S 7S FRAMEWORK
– SKILLS
Procter & Gamble
- Best known - Skills in product management
Hindustan Lever &
Richardson Hindustan - Marketing skills
BHEL, TELCO, L&T
- Engineering skills
DCL, Mecon & M.N.
Dastur & Company - project consulting skills
Dominant Skill in an organization
-
Part of organization acquired through continuous effort
Organization change
-
Acquire & develop new skills
Style
The style of leadership adopted; one
of the seven levers which top management can use to bring about organization
Change
With change of systems &
procedures
-Style of functioning changes
-Culture of organization changes
Staff
Update knowledge & skills to
keep pace with change
Strategy
Includes purpose, mission,
objectives, goal, action plans & policies 7S model emphasize - Development
easy – execution
Systems
Procedures & methods framed
by organization & followed by operational personnel in the respective
functional area
Traditional systems
Change in
view of advanced technology & processes developed
Structure
Relationship between/among
various positions and activities
Design of structure - critical
task for top mgmt.
Need based structural changes -
to cope with specific strategic tasks without abandoning basic structural
divisions throughout the organizations
The placement of Shared Values in the center of the model emphasizes that
they are central to the development of all the other critical elements
The McKinsey’s 7Ss model remains one of the
most popular strategic planning tools. It sought to present an emphasis on
human resources (Soft S), rather than the traditional mass production tangibles
of capital, infrastructure and equipment, as a key to higher organizational
performance. The goal of the model was to show how 7 elements of the company:
Structure, Strategy, Skills, Staff, Style, Systems, and Shared values, can be
aligned together to achieve effectiveness in a company. The key point of the
model is that all the seven areas are interconnected and a change in one area
requires change in the rest of a firm for it to function effectively.
Advantages and Disadvantages of McKinsey 7-S Model
Advantages
- Considers 7 elements of
strategic fit, which is more effective than the traditional model that
only focuses on strategy and structure
- It helps align the processes,
systems, people, and values of an organization
- Since it analyzes each element
and the relationship between them in detail, it ensures that you miss no
gaps caused by changed strategies
- Helps organizations identify
how they should align the different key parts of the organization to
achieve their goals
Disadvantages
- It requires the organization to
do a lot of research and benchmarking, which makes it time-consuming
- It only focuses on internal
elements, while paying no attention to the external elements that may
affect organizational performance.
- It requires the help of senior
management which may not be readily available depending on how busy they
are
Application of the
Mckinsey’s 7Ss model
- To
successfully execute new strategies
- To
analyze how different key parts of your organization work together
- To
facilitate changes in the organization
- To
help align processes during a merger or acquisition
- To
support management thinking during strategy implementation and change management
McKinsey's 7S framework has significance as a tool in Internal analysis for assessing strategic intent, Strategy Implementation, GAP analysis in strategy as well as drawing the Organization Capability Profile.
Those who read this, also read:
1. Internal & External Analysis
3. GAP Analysis
4. Organization Capability Profile
No comments:
Post a Comment