McKinsey 7S Framework¶
Overview¶
The McKinsey 7S Framework is a management model developed in the early 1980s by Tom Peters and Robert Waterman, two consultants working at McKinsey & Company. The basic premise of the model is that there are seven internal aspects of an organization that need to be aligned for it to be successful. These seven aspects are divided into "hard" and "soft" elements.
Purpose of the 7S Model¶
The 7S model is used to:
- Identify actions to improve company performance.
- Plan for change within the organization.
- Identify what’s not working in the organization.
The model helps in diagnosing issues within an organization and aligning different elements to improve overall effectiveness.
The 7S Framework¶
Hard Elements¶
- Strategy
- Structure
- Systems
Soft Elements¶
- Skills
- Staff
- Style
- Shared Values
Detailed Explanation of the 7S Elements¶
- Strategy
Strategy determines how an organization will compete and succeed in its mission. It involves setting goals and determining the best course of action to achieve those goals.
Possible Strategies: - Market Penetration: Increasing market share within existing industries by selling more to existing customers or finding new customers within the same market. - Product Development: Developing new products to meet customer needs more effectively and outperform competitors. - Market Development: Finding new groups of buyers for existing products. - Diversification: Expanding into new markets or industries, either related (complementary to existing products) or unrelated.
- Structure
Organizational structure refers to how a company is organized, often represented as a hierarchy or organizational chart.
Types of Structures: - Functional Structure: Organization is divided into departments based on function (e.g., marketing, finance). - Divisional Structure: Larger organizations may divide operations by product lines or geographic areas. - Matrix Structure: Combines elements of both functional and divisional structures, often used in multinational companies.
Temporary Structural Changes: Successful organizations may make temporary changes to their structure to address specific strategic tasks without abandoning their core structural divisions.
- Systems
Systems refer to the processes, procedures, and resources that support the operations of the organization. This includes everything from IT systems to financial reporting mechanisms.
- Skills
Skills represent the capabilities and competencies that the organization excels at. These are the activities that the organization does best and for which it is known.
- Staff
Staff refers to the employees of the organization and their capabilities. Successful organizations view their people as valuable resources that should be nurtured, developed, and allocated effectively.
- Style
Style refers to the leadership style and organizational culture. It represents the way managers lead the organization and how decisions are made.
Management Styles: - Autocratic: Manager makes decisions unilaterally, without much input from subordinates. Example: The New York Times (2001-2003), Trump Organization. - Democratic: Employees are involved in decision-making, and there is extensive communication between leaders and employees. - Paternalistic: A fatherly management style where the leader uses organizational power to control and protect subordinates, expecting loyalty and obedience in return. - Budget-Conscious: Managers are evaluated on their ability to achieve budget targets in the short term. - Profit-Conscious: Managers are evaluated on their ability to reduce costs and increase profits in the long term.
- Shared Values
Shared values are the guiding principles, values, and aspirations that unify the organization. These values influence how work is conducted and how problems are solved within the organization. Shared values are central to the 7S model and are crucial for ensuring alignment between all other elements.
Application of the 7S Framework¶
The McKinsey 7S Model can be applied to almost any issue at work. If there are inconsistencies within the organization, the model helps reveal them and ensures that the elements are aligned to help the team or company achieve its goals. By ensuring that all seven elements are aligned and consistent, organizations can improve their effectiveness and achieve better results.
The McKinsey 7S Framework is a versatile tool that provides a comprehensive approach to understanding and aligning the internal elements of an organization, ensuring that all parts work together harmoniously towards achieving strategic objectives.
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