McKinsey 7-S Model

The McKinsey 7-S Model is a management framework developed by Tom Peters and Robert Waterman while working for McKinsey & Company.

Useful in Creating Change

McKinsey 7 S Framework
Download a free McKinsey 7-S Model Template

What is the The McKinsey 7-S Model?

The McKinsey 7-S Model is a management tool developed in the 1980s by business consultants Robert H. Waterman, Jr. and Tom Peters. It’s a strategic framework designed to help organisations understand and manage change within their structures. The model uses seven interconnected elements to provide a holistic picture of an organisation, highlighting areas where change may be needed for better performance.

The model’s power (but also its limitations) lies in its simplicity. By breaking down a complex organisation into seven key elements, it allows change managers and leadership to gain a better understanding of their organisation’s strengths, weaknesses and interconnected characteristics. It also facilitates a more strategic approach to managing change, as it highlights how changes in one area can impact others.

The McKinsey 7-S Model is a versatile tool that can be applied across a range of industries and organisation types. It’s particularly useful for businesses undergoing significant change, such as mergers, acquisitions, or strategic shifts. The model helps to ensure that all aspects of the organisation are considered, ensuring a more successful and smoother transition.

The Seven Elements of the McKinsey 7-S Framework

McKinsey 7-S Model Framework

The McKinsey 7-S Framework is composed of seven elements, divided into ‘hard’ and ‘soft’ categories. The hard elements are tangible and can be directly managed while the soft elements are less tangible and often influenced by culture and social factors.

One reason the McKinsey Framework is popular is because it recognises the interplay between each of the elements and the symbiotic nature of improvements or changes. The model sees all seven elements as interconnected, meaning a change in one will impact the others.

Shared Values

At the heart of the framework is shared values: Core beliefs and culture.

McKinsey 7-S Framework - Shared Values

Shared values are the core beliefs and principles that guide an organisation’s behaviour and decision-making. They create a sense of identity and unity, influencing the organisation’s culture and work environment. Shared values are crucial for creating a positive culture and motivating employees towards common goals.

Hard Elements

Strategy

Strategy looks at where the organisation is aiming (and how aligned that strategy is).

McKinsey 7-S Framework - Strategy

Strategy is the plan an organisation follows to achieve its goals and objectives. It’s the roadmap that guides the organisation’s decisions, activities, and resource allocation. It’s crucial because it determines the direction of the organisation and sets the agenda for what it aims to achieve.

The effectiveness of a strategy can be measured in several ways, such as the achievement of objectives, profitability, market share, customer satisfaction, and competitive position. Regular reviews of the strategy are essential to ensure it’s still relevant and effective, particularly in dynamic and competitive business environments.

Structure

How we’re organised and how aligned this is to where we want to go.

McKinsey 7-S Framework - Structure

Structure refer to the way an organisation is organised. This includes its hierarchical structure, departmentalisation, lines of authority, reporting systems and communication channels. Structures are important because they determine how tasks are allocated, who reports to whom, and how information flows within the organisation.

The effectiveness of structures can be measured by how well they facilitate the achievement of organisational goals, the efficiency of operations, and the level of employee satisfaction. Poorly designed structures can lead to inefficiencies, confusion, and conflict, hindering the organisation’s ability to succeed.

Systems

How the organisation functions and operates.

McKinsey 7-S Framework - Systems

Systems refer to the procedures, processes, and routines that underpin daily operations and activities. Systems are important because they ensure consistency, efficiency, and quality. They also provide a means for monitoring performance and controlling activities.

The effectiveness of systems can be measured by their efficiency, reliability, and adaptability. They should enable the organisation to function smoothly and meet its objectives, while also being flexible enough to adapt to changes in the environment or organisation.

Soft Elements

Skills

The capabilities and skills the organisation has.

McKinsey 7-S Framework - Skills

Skills refer to the capabilities and competencies within the organisation. This includes the knowledge, abilities, and expertise of the employees, as well as the organisation’s ability to innovate, adapt, and compete. Skills are vital for delivering on the organisation’s strategy and maintaining a competitive edge.

Staff

The people and resources available.

McKinsey 7-S Framework - Staff

Staff refers to the people within the organisation. This includes their roles, responsibilities, and capabilities. Staff are crucial for executing the strategy, maintaining the structures and systems, and upholding the shared values. Effective management of staff can significantly enhance organisational performance.

Styles

How the organisation likes to operate and behave.

McKinsey 7-S Framework - Styles

Style refers to the leadership style and culture of the organisation. This includes the values, attitudes, and behaviours of the leaders and employees, as well as the overall corporate culture and how decisions are made. An organization’s style can have a significant impact on its success, as it affects how individuals interact with each other, how decisions are made, and how work is accomplished. By ensuring that the style of an organisation is aligned with its strategy, structure, systems, staff, skills, and shared values, leaders can create a cohesive and effective organisation.

How to Use the The McKinsey 7-S Model

The McKinsey 7-S Model is a useful framework to analyse and implement organisational change. Here are the step-by-step instructions that you can follow to use the model:

  1. Start with the “Hard Ss”: Strategy, Structure, and Systems. Analyse your organisation’s current strategy, structure, and systems, and determine if they need to be changed in order to achieve your desired outcomes.
  2. Move on to the “Soft Ss”: Shared Values, Skills, Style, and Staff. Analyse your organisation’s culture, employee skills and capabilities, leadership style, and employee roles to determine if they need to be changed. Remember that these soft skills aren’t easy to measure qualitatively so it’s more effective to measure through inference, qualitative and observation of behaviour/actions. Something like the iceberg model or culture web are useful for this.
  3. Analyse the interrelationships between the Hard Ss and the Soft Ss. Determine how changes to one “S” will affect the others. You’re looking for cause and effect, or symptom and cause relationships and how each factor might be influencing the others. Root cause analysis or 5 whys are helpful tools here.
  4. Develop a plan for implementing the changes. Determine what changes need to be made to each “S”, and how they will be implemented.
  5. Communicate the changes to all stakeholders. Ensure that everyone in the organisation understands the changes that will be made, and how they will affect them.
  6. Monitor progress and adjust the plan as necessary. Track the implementation of the changes, and make adjustments as needed to ensure that they are successful.

By following these steps, you can effectively use the McKinsey 7-S Model to implement organisational change. Remember that change can be difficult, so it’s important to communicate openly with your team and stakeholders, and to remain flexible and adaptable as you implement the changes.

Examples of the McKinsey 7-S Model in practice

The McKinsey 7-S Model, a strategic planning tool developed by the consulting firm McKinsey & Company, has been widely used by many organisations to evaluate and identify the changes required to reach business objectives. The model places equal emphasis on hard (Strategy, Structure, and Systems) and soft (Shared Values, Skills, Style, and Staff) elements of an organisation that need to be aligned for it to be successful. As such, several companies have utilised this model to bring about significant transformations in their operations and structures.

One notable case is that of a global technology company that was struggling with a decrease in market share and profitability due to increased competition and rapid changes in technology. The company used the McKinsey 7-S Model to identify the areas where change was necessary. They realised that their existing structure was not supporting their strategy, and their systems were outdated, leading to inefficiencies. The shared values of the company were not well articulated and communicated, leading to confusion among staff about the company’s direction. After identifying these issues, the company implemented a new organisational structure aligned with its strategy, updated its systems for greater efficiency, and launched an internal communication campaign to foster shared values.

Another example is a large multinational bank that implemented the 7-S model when it decided to merge with another financial institution. The merger posed significant challenges due to differing corporate cultures, operational systems, and organisational structures. Using the McKinsey model, they were able to identify these differences and develop a detailed plan to align both banks’ strategies, structures, systems, shared values, style of management, staff skills, and competencies. This led to a smoother transition during the merger and increased post-merger performance.

A leading consumer goods company also used the 7-S model when launching a digital transformation initiative. The model helped them understand that their traditional hierarchical structure was inhibiting fast decision-making needed for digital innovation. They also realised that they lacked some critical skills among their staff for driving digital transformation. Using these insights from the 7-S Model, they restructured their organisation into a more agile one and initiated a massive up-skilling program for their employees.

In all these cases, the McKinsey 7-S Model provided a comprehensive overview of the companies’ current situation by examining both tangible aspects like strategy and structure and intangible aspects like culture and skills. This helped them identify areas of misalignment and devise effective strategies for change. Therefore, these case studies demonstrate how the 7-S model can be effectively used by organisations across different industries for diagnosing problems and planning changes.

Summary

The McKinsey 7-S Model is a powerful tool for understanding and managing change within organisations. By considering both the hard and soft elements of an organisation, it provides a holistic view that facilitates more effective decision-making and change management. Whether you’re leading a small team or managing a large corporation, the McKinsey 7-S Model can provide valuable insights to enhance performance and success.

McKinsey 7-S Model Template

Use this template as a starting point for exploring the McKinsey 7-S Model.

McKinsey 7-S Model Framework

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 James Freeman-Gray 

I'm James. A change consultant and organisational development specialist. I've been working in people-centred change for over 15 years. I partner with causes, champions, teams & leaders on projects for social, environmental, technological & human good. If you think I can support in making your change a success, drop me a message. 

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