The McKinsey 7S Model can help Change Managers and Business Owners to understand their current organisational design and identify misalignments between different aspects of how the business runs. This will help you to implement change strategies efficiently. In the end, it is the internal alignment of a business that will allow you to effectively drive it towards reaching its objectives. This model also provides useful guidance for facilitating the smooth running of a merger between two organisations.

The model compares 7 internal elements that, as the name implies, were identified by McKinsey & Company consultants in the late 1970s. The elements are divided into Hard elements (Strategy, Structure and Systems) and Soft elements (Shared values, Skills, Staff, and Style). The former refers to aspects of the business that are concrete and easy to identify and manage. The latter are elements that are more challenging to manage but also the most likely to lead to a sustained competitive advantage, if tackled right.

The model holds the Shared values of an organisation at its centre, signifying that to optimise operational capacity, all other elements must be aligned with these values and vice versa. If these values are currently not as you wish them to be, then you may need to first explore your ideal organisational culture, and compare it with where you currently stand. This is an exercise that can be carried out through the Cultural Web discussed in last week’s Edition 26 of Empowerment Through Knowledge.

The main hurdle in the 7S Model is that all the elements are interconnected and that a change in one will require a change in others until total alignment is achieved. Before you work on this alignment, let’s take a look at what each of the 7 elements are comprised of.

Hard Elements

Strategy

This describes that plan that an organisation attempts to carry out in order to achieve sustained competitive advantage. This should be detailed and clear and should push the company towards fulfilling its mission and vision. To be clear about your strategy for the sake of using this model, you may want to ask yourself the following questions:

• What is the main objective of your organisation’s strategy?
• How is your organisation using resources to achieve this objective?
• How do you differ from your competitors?
• How do you compete in the market?
• Are you adapting to a changing market? If so, how?

Structure

The structure of a business refers to the way in which roles are distributed, the existing departments, the way departments interact with each other, the hierarchical or flat nature of the company and who is accountable for what and for whom. This tends to be one of the easier elements to change and questions you could ask yourself include:

• Who do various employees report to?
• Who takes final decisions?
• Is the decision-making centralised or decentralised?
• How do employees follow the organisational strategy identified in the previous section?
• How is information and knowledge shared across the organisation?

Systems

Systems refer to the processes and procedures of a company, including formal SOPs and unwritten ways of working. This includes everything from how work is delegated to how decisions are made. This is how the business operates and should be a main focus when attempting to undergo organisational change. Questions to consider:

• What are the most important processes and systems of your organisation?
• How do you control and enforce these systems?
• How does your organisation track progress?
• What rules must not be broken in an effort to keep processes running smoothly?

Soft Elements

Skills

Skills refer to the tasks that employees perform particularly well and where their strengths lie. It is crucial for these skills to be well-aligned with Strategy, Structure and Systems of the business in order to fulfil its goals. Just imagine having people in team-lead positions who have very good people skills but lack time-management skills, the team will be harmonious but will not get much done to drive the business towards its goals. Ask yourself:

• What are the competencies needed to fulfil the Strategy, Structure and Systems of your organisation?
• Are these core competencies sufficiently available in of the staff within your organisation?
• Are there skill gaps present? If so, what are they and how do they affect the fulfilment of employees’ roles and responsibilities towards the above?
• What do you do to monitor and evaluate skills?

Staff

This element is strongly linked to the required headcount, recruitment and performance management of your organisation. To identify your position when it comes to staff, you could ask yourself:

• How many individuals are currently employed with the company?
• How many people do you really need and are there any staffing gaps?
• How do you tackle filling these gaps? Through recruitment, training or otherwise?
• How are employees trained and rewarded or warned?

Style

This refers mostly to the managerial approach taken by the leaders within the organisation. Are they very people-oriented or more task-oriented? Do they have very strict parameters as to how they need a task to be completed or is there room for a team member’s opinion? This will have a heavy impact on the organisation’s culture and values. Other questions include:

• What management style do most managers in your organisation follow?
• How do staff respond to this?
• Is there a competitive, collaborative or cooperative culture amongst staff?
• What behaviours are rewarded by the organisation’s leaders?
• Are there actual teams present within your organisation or do they just exist on paper? How do individuals within teams interact with each other?

Shared values

These are the unwritten values that guide every action and behaviour within your organisation and its culture. Every other aspect of the model has an impact on this element and it, in turn, leaves an impact on all others. You could use the Cultural Web to explore this element for your desired values but should also use it to get direct feedback from your staff for the mapping of your current Shared values. However, you could also ask yourself:

• What is the mission and vision of your organisation?
• What are the desired values of the organisation and what values are actually presented through real actions?
• How present are the desired values versus the ones actioned by staff?

Using the 7S Model

To use the model effectively you should ensure that you give all elements of the model equal importance. Although you might have a preference for bettering one, or some, of the elements only, the key here is to understand that although improvements in one part of the model may create an increase in efficiency and productivity, the improvement will not be sustainable as other elements of the business can later start to dwindle as a result of the misalignment.

Due to the many interlinking aspects of this model, its application can, at first, seem quite complex. One strategy to simplify its application is to first focus on the relationship between the Hard elements and your Shared values, and to then move on to comparing your Shared values with the rest of the Soft elements. Lastly, you would compare all Hard with all Soft elements to ensure that they are also aligned with each other, and not just with the Shared values.

Steps to Success

Once you have answered all of the above questions and others that may be relevant to your particular business context, you will need to compare and contrast your findings with the responses about the other elements. Identify where there are misalignments and what needs to change for the 7S to be balanced. Determine you ideal scenario when it comes to organisational design and be patient. It will take time to identify what each element needs to be like in order to have harmony amongst them. There are no templates you can follow as each organisation is unique and will require a slightly different setup. Next, make your change plan by deciding exactly what needs to change, when and how. After you implement these changes you will want to keep continuously monitoring the 7S. There are so many variables at play here that it is only through continuous monitoring that you would be able to ensure that your desired change is occurring and that, following the change, everything remains aligned.