We already have covered different change management models such as The Bridges Transition Model, Change Equation, Burke-Litwin Change Model, The Diagnostic Model, Organizational Development (OD), The EFQM Excellence Model, Lewin’s Change Management Model, and Kotter’s 8-Step Change Model. McKinsey 7S model is another strategic planning model that can help you initiate and implement successful change initiatives to ensure your organization is effectively aligned according to environmental requirements.

Let’s look at the core of the 7S model – seven elements that are crucial for an organization’s success.

What is the McKinsey 7S Framework?

The McKinsey 7S framework is a planning model that highlights seven internal elements that are key to an organization’s success. Tom Peters and Robert Waterman developed this framework in the late 1970s, and it’s been a timeless tool in organizational management.

At its heart, the 7S Framework is about the alignment of these seven elements: strategy, structure, systems, shared values, skills, style, and staff. For an organization to succeed, all these elements must work together, each supporting the others to create a cohesive and effective operating environment.

You can use the 7S model to perform better and manage organizational change. It’s a checklist to make sure all seven elements are in line.

The Seven Elements (Hard and Soft) of the McKinsey 7S Model

The seven elements of this change management model are:

1. Strategy
2. Structure
3. Systems
4. Shared Values
5. Skills
6. Style, and
7. Staff.

These elements are categorized as either “hard” or “soft”: Strategy, Structure, and Systems are hard elements, while Shared Values, Skills, Style, and Staff are soft components.

The hard elements are relatively easy to identify and can be influenced directly by management, while the soft elements are less tangible and more influenced by company culture.

Hard Elements in the McKinsey 7S Model

Hard elements in the McKinsey 7S framework include:

1. Strategy

The business strategy element refers to a well-defined and systematically arranged strategy that outlines how your company intends to achieve a sustainable competitive advantage.

Strategy is crucial because it provides direction and a roadmap for the organization, ensuring that all efforts are aligned toward common goals.

2. Structure

Organizational structure or design is the hierarchy of control that outlines the distinct roles and responsibilities of members across top, middle, and lower management within the organization.

In our organizational design article, we looked at the different types of organizational structures: hierarchical, functional, flat, divisional, and matrix. They will all impact other elements of the model.

A clear structure is key to good communication and decision-making for smoother operations and quicker response to change.

I have experienced a very large problem with a client that highly impacted the company’s profitability. We’ve tried everything to solve the problem. However, the results were the same. Namely, the biggest problem was the poor quality of their products and services. In such a case, our focus was more on the quality, not the reasons or root causes for poor quality. After we conduct root causes analysis and implement 5 Whys tool, we come to the conclusion that the main cause of the problem was poor reporting relationships between departments because the current organizational design doesn’t define them in the right way.

3. Systems

Systems are the established procedures, processes, and activities that govern how work is done within the organization. Good systems are key to consistency, efficiency, and quality in operations and, ultimately, to change success.

These hard elements are the foundation of change management and organizational success as they create a solid platform for adaptability and performance. Without a clear strategy, defined structure, and good systems, organizations will struggle to change and achieve their goals.

Soft Elements

Other elements of the McKinsey 7S model are soft. They are crucial for understanding how a company operates and engages with its employees, and they include the following:

4. Shared Values

The main question here is, what are your organization’s core values?

Shared values are the core norms and standards that shape employee behavior and guide the actions of the company. They create a common purpose and culture within the organization.

Related: 15 Simple Questions to Define Core Values of Business

5. Skills

The skills element refers to the specific abilities and competencies that your employees excel in. These skills are vital for your company’s success and contribute to its overall performance. If there is a specific skill gap, you must proactively ensure that you will achieve all necessary skills.

You can ask the following questions related to skills:

• What are the strongest skills required within your company?
• What skills does your business environment require for the success of your company?
• Are there any skills gaps between required and current skills?
• For what is your company known for doing well?
• Can your current employees do the job with the current skills and processes?
• How will you monitor your organization’s skills and improve them over time?

6. Style

This element focuses on the management approach of top-level executives. Management style and leadership style contain how managers interact with their team members, their decisions, and their symbolic actions, all of which influence the company’s culture.

Related: Unlocking the Secrets of Effective Management Style

7. Staff

The staff element involves the human resources aspect of the organization, including how many employees you have and talent management strategies related to hiring, training, retention, and incentives. Effective staff management ensures that the right people are in place to drive the company forward.

Related: 29 Top Interviewing Questions for Managerial Positions

Together, these soft elements help create a cohesive and effective organizational environment, fostering collaboration and alignment toward shared goals.

How to Analyze and Align the 7S Elements to Achieve Organizational Effectiveness and Competitive Advantage?

To analyze and align the 7S elements, follow these steps:

1. Identify the Current State of the Seven Key Elements

The first step to analyze and align all 7S elements is to assess the current state of each element in your organization. This involves a careful analysis of the seven components of McKinsey’s 7S model.

Use your internal databases in addition to surveys, interviews, and observations to collect data and understand how each element currently operates and interacts with the others. This assessment will provide you with a baseline from which you can measure progress and identify areas requiring improvement.

For example, you may find that your strategy (one of the seven elements) is well-defined and understood by employees. Still, it is not effectively implemented due to a lack of skills (another element). You may also discover that your organizational structure limits department communication and coordination, leading to inefficiencies.

2. Identify Gaps and Misalignments

Now you have data on each of the McKinsey 7S elements, and the next step is to identify gaps or misalignments between them. This means you must analyze how each element contributes to higher effectiveness and competitive advantage for your organization.

For example, if your shared values (one of the 7S) are not in line with your strategy and goals, this will lead to confusion and a lack of direction for employees. If your organizational structure is not aligned with your processes and systems or your management style is not aligned with shared values, you will experience bottlenecks and delays in communication, decision, and execution.

Now that you have identified the gaps and misalignments, you can see where you need to make improvements so all elements work together to achieve your overall objectives.

3. Determine the Desired Future State

Once you have a clear understanding of the current state, the next step is to define your desired future state for each of the McKinsey 7S elements. This might involve setting specific goals and objectives that align with your organization’s overall strategy. Think about what successful alignment looks like and how each element can contribute to that vision. Engage stakeholders in this process to ensure the desired state is a shared vision and commitment.

For example, for strategy, the desired future state might be to increase market share by 10% in the next year. To achieve this, the structure element might need to be adjusted to allow for faster decision-making and communication. Employees’ skills might need to be improved through training or hiring new talent.

4. Define Possible Improvement Areas

The fourth step in the McKinsey 7s model is to identify the areas to improve. These are the areas that will get you to your desired future state and need special attention.

You can use tools like gap analysis or SWOT analysis to determine the improvement areas. Gap analysis is comparing your current state to your desired state to find gaps and prioritize the improvements. SWOT analysis is understanding your organization’s strengths, weaknesses, opportunities, and threats to find areas to improve.

For example, through gap analysis, you may find that your organization lacks employee training and development programs. This could be an area to improve, as investing in employee growth will lead to better performance and overall organizational success.

Similarly, SWOT analysis may reveal that your company has outdated technology or processes. This could be less efficiency and productivity, so it’s an area to improve.

Or, shared values and goals may be identified through SWOT analysis, so potential collaboration opportunities with other organizations or stakeholders.

5. How to Get to the Desired State?

Now, you have a clear picture of the current and desired states. It’s time to define how to get there through a clear plan, which implementation will get you to the desired state. Such a plan should outline all actions, timelines, and responsibilities for changing the 7S elements across your organization.

When it comes to actions your organization must take, you can prioritize them based on their impact and feasibility and make sure you use resources accordingly. Also, you must review and adjust your plan regularly to stay on track and aligned as your organization and environment evolve.

For example, if there is a gap between your strategy and organizational structure, you may need to restructure departments or change communication channels to support your business strategy better. You may also need to invest in training or hiring new talent if there’s a gap in skills and capabilities.

6. Review and Adjust

The final step in the McKinsey 7s model is to review the progress of the change and adjust if needed. This is crucial to ensure the change works and aligns with your overall business strategy.

This step allows you to identify any issues or obstacles blocking the change’s implementation.

For example, if the change isn’t working as expected, you may need to reallocate resources and processes within your organization. If there are blockers or resistance to organizational change from specific individuals or departments, you may need to address those issues and find ways to overcome them with an appropriate strategy.

As you can see through these steps, you can use the framework to look at the impact of future changes or align departments and processes during the organizational change process.

Key Points to Consider for Effective Implementation

To implement the McKinsey 7S model effectively:

1. You Must Know the 7 Elements

To implement the McKinsey 7S model, you need to know the seven elements—strategy, structure, systems, shared values, skills, style, and staff—and how they interconnect.

For example, if you want to improve your strategy, you need to look at how your structure supports that strategy. If the structure is not aligned with the strategic objectives, it will limit the organization’s progress. Running workshops or training sessions can help team members understand these concepts and how they interconnect. You can apply this thinking and analysis to other elements of the McKinsey 7S model in the same way.

2. Define a Clear Vision

As you have seen before, a clear vision of the desired future state is key to the implementation process. You need to articulate where you want to be and what success looks like.

Let’s take an example of a tech startup wanting to be a market leader in AI solutions. The company may define its vision as innovating user-friendly applications that improve the daily lives of users. This vision should be communicated across the entire organization so everyone is aligned and motivated toward the same goals.

3. Develop a Strategic Implementation Plan

Having a planned and executed implementation strategy is key. This plan should outline specific actions, timelines, and responsibilities for each of the seven elements. For example, if your company needs to improve its business systems, the implementation plan could include steps to change organizational design, adopt new software and train employees on its use.

Remember to create a project timeline with key milestones so your team is motivated and accountable, and most importantly, you can track the progress of the organization with the change.

4. Continuous Monitoring and Evaluation

Finally, continuous monitoring and evaluation are required to ensure alignment and optimal organizational design. Regular check-ins can help you see if the changes are delivering the desired results. Also, when you measure the results, you can take action to keep up with changes in your business environment.

For example, a quarterly review of performance metrics can show if the new strategies are working or if adjustments need to be made. Using feedback tools like employee surveys or performance dashboards can provide insights for continuous improvement and alignment with the organization’s goals.

Conclusion

In summary, the McKinsey 7S model is a great strategic planning framework for organizations looking to improve their strategy and overall performance. You can get a sustainable advantage and drive performance improvement by focusing on the seven factors—strategy, structure, systems, shared values, skills, style, and staff.

And it’s a really powerful tool for managing change and making sure everything in the organization is aligned. By using the 7S framework to design your organization, you can manage the complexity of change and position yourself for long-term success.