Management & Strategy

McKinsey 7S Framework

By April 12, 2023No Comments

What is the McKinsey 7S Framework?

The McKinsey 7S Framework is a framework that consists of seven interdependent internal elements that must be aligned for an organization to achieve success. McKinsey consultants developed this framework in the late 1970s and featured it in the book In Search of Excellence”, by former McKinsey consultants Thomas J. Peters and Robert H. Waterman.

The seven elements are: Strategy, Structure, Systems, Skills, Staff, Style, and Shared Values. Each element must be aligned with the others to create a cohesive and effective organizational system.

The framework helps organizations evaluate and improve their internal alignment and effectiveness. It is used to identify areas of strength and weakness within an organization and to develop strategies for improving performance.

One of the benefits of using the 7S Framework is that it provides a holistic approach to organizational improvement. It takes into account all of the key elements that contribute to organizational success and helps to identify areas for improvement. Another benefit is that the framework is applicable in a variety of contexts, from large corporations to small non-profits. It is adaptable to different industries and organizational structures, making it a versatile tool for improving organizational effectiveness.

McKinsey 7S FrameworkStrategy

The strategy element of the McKinsey 7S Framework refers to the organization’s plan for achieving its goals. This includes the company’s mission, vision, and strategic objectives. The strategy element is an essential part of the framework, as it sets the direction for the organization and determines its priorities and goals.

The strategy element involves several key components, including the organization’s mission statement, its long-term goals and objectives, and its competitive strategy. The mission statement is a clear and concise statement that defines the organization’s purpose and values. It serves as a guide for decision-making and helps to align the organization’s activities with its overall goals.

Long-term goals and objectives are specific, measurable targets that the organization aims to achieve over a period of several years. These goals should be aligned with the organization’s mission and vision and should be achievable within the organization’s resources and capabilities.

Competitive strategy refers to the organization’s approach to competing in the market. This includes the organization’s positioning, pricing, and product/service offerings. The competitive strategy should be aligned with the organization’s mission and long-term goals and should take into account the organization’s strengths, weaknesses, opportunities, and threats.

To develop an effective strategy, organizations must conduct a thorough analysis of their internal and external environment. This involves analyzing the organization’s strengths and weaknesses, as well as the opportunities and threats presented by the external environment.

Once the analysis is complete, the organization can develop a clear and comprehensive strategy that aligns with its mission and vision and takes into account the internal and external environment. The strategy should be communicated clearly to all members of the organization and should be regularly reviewed and updated as needed.

Structure

The structure element of the McKinsey 7S Framework refers to the formal and informal systems, processes, and hierarchies that make up the organization. This includes the reporting structure, decision-making processes, and communication channels. The structure element is an important aspect of the framework, as it defines how work is organized and how decisions are made within the organization.

The reporting structure defines the formal hierarchy within the organization, including the roles and responsibilities of each position. The decision-making process defines how decisions are made within the organization, including who has the authority to make decisions and how decisions are communicated to the rest of the organization. Communication channels are the formal and informal methods used to communicate within the organization, including email, meetings, and other forms of communication. Effective communication channels are essential for ensuring that information is shared effectively and that decisions are communicated clearly to all members of the organization.

To create an effective structure, organizations must evaluate their current structure and identify areas for improvement. This may involve changing the reporting structure, clarifying decision-making processes, or improving communication channels. It is important to ensure that the structure aligns with the organization’s mission and strategy and enables the organization to achieve its goals.

In addition to formal systems and processes, the structure element also includes informal aspects of the organization, such as culture and norms. These informal aspects can have a significant impact on the organization’s effectiveness and must be taken into account when evaluating and improving the structure.

Systems

The systems element involves several key components, including technology, procedures, and policies.

The technology used by the organization should support the work being done and should be appropriate for the organization’s size and needs. This may include software, hardware, and other tools used to support work. Procedures are the formal and informal methods used to carry out work within the organization. These procedures should be clear and easy to follow, and should support the organization’s overall goals and objectives. Policies are the rules and guidelines that govern how work is done within the organization, and should align with the organization’s values and strategic goals.

To create an effective systems element, organizations must evaluate their current technology, procedures, and policies and identify areas for improvement. This may involve upgrading technology to support more efficient work, creating clear and consistent procedures, and updating policies to align with the organization’s values and goals.

Skills

The skills element involves several key components, including the knowledge, experience, and abilities of the employees, as well as the organization’s culture and values. The employees within the organization should have the necessary knowledge and skills to carry out their work effectively, and should be aligned with the organization’s overall goals and objectives.

In addition to the knowledge and abilities of the employees, the culture and values of the organization are also an important part of the skills element. The culture of the organization should be aligned with the organization’s mission and vision, and should support the organization’s goals and objectives. The values of the organization should also be clear and consistent, and should be reflected in the behavior of the employees.

To develop an effective skills element, organizations must evaluate the knowledge, experience, and abilities of the employees, as well as the culture and values of the organization. This may involve developing training programs to improve employee knowledge and skills, hiring employees with the necessary expertise, and developing a culture that supports the organization’s strategic goals.

In addition to formal training and development programs, organizations can also support employee skills development through informal methods, such as mentoring and coaching. These methods can help employees develop new skills and gain the knowledge and experience needed to support the organization’s goals.

Staff

The staff element involves several key components, including the roles and responsibilities of each employee and the relationships among employees. This element is closely related to the skills element, as it involves the people within the organization, but focuses more on the roles that people play and their interpersonal relationships.

The roles and responsibilities of each employee should be clearly defined, and should align with the organization’s overall goals and objectives. This ensures that everyone within the organization is working towards a common goal.

The relationships between employees are also an important part of the staff element. Strong relationships between employees can lead to better collaboration and communication, and can improve the overall effectiveness of the organization. It is important for the organization to foster a positive culture that encourages collaboration and teamwork.

Style

The style element involves several key components, including the leadership style of the organization’s top executives, the management practices that are used within the organization, and the overall culture of the organization. The style element is particularly important in determining how the organization adapts to change and how it responds to challenges.

The leadership style of the organization’s top executives is a key component of the style element. The style of leadership can impact the overall culture of the organization, and can determine how the organization responds to change and uncertainty. Effective leaders are able to inspire and motivate their teams, and are able to create a positive and supportive culture within the organization.

In addition to the leadership style, the management practices used within the organization are also an important part of the style element. Effective management practices can improve efficiency and productivity, and can create a positive culture within the organization. Management practices may include things like goal-setting, performance evaluations, and employee recognition programs.

The overall culture of the organization is another important aspect of the style element. The culture of the organization can be influenced by the leadership style and management practices, and can impact how the organization responds to change and uncertainty. A positive culture that values collaboration, innovation, and continuous improvement can help the organization to adapt to changing circumstances and achieve its goals.

To develop an effective style element, organizations must evaluate their current leadership style, management practices, and overall culture. This may involve developing training programs to improve leadership skills, implementing new management practices to improve efficiency and productivity, and fostering a positive culture that supports collaboration and innovation.

Shared Values

The shared values element of the McKinsey 7S Framework refers to the guiding principles and beliefs that underpin an organization’s culture and strategy. This element is focused on the fundamental values that shape the behavior and decision-making of employees within the organization.

Shared values are important because they serve as a common foundation for decision-making, and help to align the organization’s goals and objectives with its culture and values. When shared values are effectively communicated and adopted by employees throughout the organization, they can help to foster a sense of community and shared purpose, and can support collaboration and teamwork.

The shared values element involves several key components, including the values that are important to the organization, the culture of the organization, and the communication and adoption of shared values throughout the organization.

The values that are important to the organization are a key component of the shared values element. These values may include things like integrity, innovation, customer focus, and employee empowerment. The values should be aligned with the organization’s overall goals and objectives, and should serve as a foundation for decision-making and behavior within the organization.

The communication and adoption of shared values throughout the organization is also an important aspect of the shared values element. Organizations must communicate their values clearly and consistently, and must ensure that employees at all levels of the organization understand and embrace these values. This may involve developing training programs, promoting open communication channels, and recognizing and rewarding employees who embody the organization’s values.

7S Framework Example: Apple & Steve Jobs

One company that successfully applied the 7S Framework is Walmart. In the early 2000s, Walmart’s growth had slowed and its profits had stagnated. Walmart’s management team used the McKinsey 7S Framework to identify areas for improvement and to develop a plan for change. Here are the specific actions they took for each element.

Strategy: Walmart’s management team developed a new strategy that focused on international expansion and diversification. The company entered new markets around the world and expanded its product offerings to include more upscale and niche products.

Structure: Walmart restructured its organization to create a more centralized decision-making process. The company also introduced new performance metrics to evaluate individual store performance and to better align incentives with the company’s overall goals.

Systems: Walmart invested heavily in new technology systems to improve supply chain management and inventory control. The company introduced a new system for tracking and ordering inventory in real-time, which helped to reduce waste and increase efficiency.

Skills: Walmart implemented a new training program for employees at all levels of the organization. The program focused on developing customer service skills, as well as technical skills related to the new systems and processes.

Staff: Walmart revised its hiring and promotion practices to focus more on employee performance and potential. The company also introduced a new employee feedback and recognition program to improve employee morale and engagement.

Style: Walmart’s management team adopted a more collaborative and open leadership style, encouraging feedback and ideas from all employees. The company also emphasized the importance of ethical and responsible business practices.

Shared Values: Walmart’s management team reinforced the company’s values of low prices and customer satisfaction. The company also placed a greater emphasis on sustainability and social responsibility, and established new initiatives to reduce waste and improve energy efficiency.

Learn More than Just 7S Framework

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