The McKinsey 7S Model for Strategic Planning and Assessment
The 7S model is a management tool which evaluates the seven important elements of organizing, structuring and developing a business organization. This is a very useful framework for managers and decision makers when they need to evaluate the organization during strategic planning, change management and new business development.
While some of these elements will be more important at some point in time in another initiative you may find some other elements to be of more important consideration. The 7 elements together offer a model for holistic and overall evaluation and planning. In addition to organizational assessment and planning the same approach can be used for evaluating and planning business departments, projects, regional operations, teams, etc.
The elements of are: shared values, strategy, structure, systems, staff, style and skills.
The goal of this model is to help analysts and management in the process of understanding the business environment and the organizational effectiveness. It is a management and business analysis methodology as well as diagnostic tool for discovering the relevant drivers of organizational performance. Important for any change management initiative is a very detailed analysis and deep understanding of the organizational structure, system and environment. For a successful change program the 7s model should be used in order to analyze the overall company position and situation. In addition the model offers a structured and disciplined approach to organizational assessment.
Here is a short overview with examples of the 7 factors / components of the 7S Model:
1. Shared values
The shared values include the organizational culture, core values, tradition, beliefs and the way of thinking and managing the business. The shared values have a deep origin into the foundation of the organization and in many cases the beliefs and values of the company founder are embraced deep into the company culture. Why is it important? In any change management understanding these shared values is critical for success – this is the reason why certain change approaches work in some companies and yet they do not work in another.
Any company initiative, project, process and activity should be linked to the overall business strategy. Starting with the overall strategy in mind the performance targets and objectives are developed. Consequently any planning within the organization must consider and be linked to the business strategy.
The organizational structure of a certain business has an impact on the way the activities are performed within the company. For example the flow of activities and the chain of control is very different in traditional organizational structures compared to project and matrix structured organizations.
The organizational systems include all the ongoing activities, processes, methodologies, procedures, policies and everything which is performed daily in the organization with the purpose of creating and maximizing value for the stakeholders.
This element includes the people – the employees in the business. In more details the importance here is in the employees’ skills, experience, core capabilities, know-how, etc. Many companies today compete on the basis of human capital and core expertise and the people perspective is becoming even more important than ever before.
This component considers the management style and the leadership style in the organization. Different leaders and managers use different styles and approaches to manage, lead and control their employees. While some leaders inspire followers others use traditional organizational control mechanisms to manage their businesses. The leadership style varies significantly from organization to organization as well as from one individual to another.
Skills are the particular expertise and capabilities which are required by the employees – certain improvements and change programs can include training and employee development in order to improve the organizational and individual performance.