The McKinsey 7-S Framework

© Operational Excellence Consulting
7S
Structure
Systems
Style
Staff
Skills
Strategy
Shared
Values
The McKinsey
FRAMEWORK

4© Operational Excellence Consulting 4
Contents
2
3
4
7-S Checklist Questions
Implementation Approach
7-S Application Examples
1 The 7-S Framework
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The 7-S Framework
Structure
Systems
Style
Staff
Skills
Strategy
Shared
Values
The framework is most often used as a tool to assess and monitor
changes in the internal situation of an organization.

How do we Use the Framework?
The framework is based on the theory that, for an organization to
perform well, these seven elements need to be aligned and mutually
reinforcing
The framework can be used to identify what needs to be realigned to
improve performance, or to maintain alignment (and performance)
during other types of change
Whatever the type of change – restructuring, new processes,
organizational merger, new systems, change of leadership, and so on
– the framework can be used to understand how the organizational
elements are interrelated, and so ensure that the wider impact of
changes made in one area is taken into consideration

Benefits of the 7-S Framework
1. It offers an effective method to
diagnose and understand an
organization
2. It provides guidance in
organizational change
3. It combines rational (“hard S”)
and emotional (“soft S”)
components
4. All parts are integral and must
be addressed in a unified
manner

Description of the 7-S Elements
Elements Description
Strategy
The plan devised to maintain and build competitive advantage
over the competition.
Structure The way the organization is structured and who reports to whom.
Systems
The daily activities and procedures that staff members engage in
to get the job done.
Shared Values
The core values of the company that are evidenced in the
corporate culture and the general work ethic.
Style
The style of leadership adopted and the organization’s overall
operating approach.
Staff The employees and their general capabilities.
Skills
The actual skills and competencies of the employees working for
the company.

7-S Hard Elements (“Hard S”)
“Hard” elements are easier to
define or identify
Management can directly
influence them – these are
strategy statements; organization
charts and reporting lines; and
formal processes and IT systems
The hard elements are:
• Strategy
• Structure
• Systems
Structure
Systems
Style
Staff
Skills
Strategy
Shared
Values

The Vectors of Contention is a Useful Tool to Profile
an Organization with Respect to the 7 Factors
Factors Vectors of Contention
Strategy Planned Opportunistic
Structure Elitist Pluralist
Systems Mandatory Discretionary
Shared values Hard minds Soft hearts
Style Managerial Transformational
Skills Collegiality Individuality
Staff Maximize ‘Meta-mize’

Structure – Key Questions
1. How is the company/team divided?
2. What is the hierarchy?
3. How do the various departments coordinate activities?
4. How do the team members organize and align themselves?
5. Is decision making and controlling centralized or decentralized?
6. Is this as it should be, given what we’re doing?
7. Where are the lines of communication? Explicit and implicit?This document is a partial preview. Full document download can be found on Flevy:

Style – Key Questions
1. How participative is the
management/leadership style?
2. How effective is that leadership?
3. How good is management in making
decisions?
4. Where does management focus most
of its time and attention?
5. Do employees/team members tend to
be competitive or cooperative?
6. Are there real teams functioning
within the organization or are they
just nominal groups?

© Operational Excellence Consulting
Implementation Approach
3

When conducting a 7-S analysis, it is best to use an iterative approach
starting with Shared Values, followed by hard S’s and then soft S’s
Source: Adapted from Mindtools
Start with Shared
Values
• Are they consistent
with your strategy,
structure, and
systems? If not, what
needs to change?
Evaluate the Hard
Elements
• How well does each
one support the
others? Identify where
changes need to be
made.
Evaluate the Soft
Elements
• Do they support the
desired hard
elements? Do they
support one another?
If not, what needs to
change?
Adjust and align the
elements, and then
reanalyze how that
impact other elements
and their alignments
1
2
3
4

Example of 7-S Application at Apple
Strategy – Focus on a small number of products and to make them
innovative and excellent – enabling the business to capture a huge
market share relative to its size, and build a loyal customer following.
Structure – Flat management structure which facilitates two-way
communication and decision-making.
Systems – Supply chain with built capacity for launching and
supplying huge new market-dominating products.

Example of 7-S Application at Starbucks
Strategy – Starbucks has to be concentrating on the quality of its products at
the same time offering excellent level of customer services. The main strategy
for the company is to increase revenues through effectively positioning
Starbucks stores as ‘third place’ environment.
Structure – Flat management structure needs to be achieved through de-
layering. Specifically, the positions of assistant managers need to be
eliminated within the stores, after which there will be only three levels of
management – store manager, shift manager and customer assistants, thus
considerable amount of costs can be saved and organizational efficiency can
be increased.
Systems – Rather than daily roles among customer assistant being appointed
by shift supervisors, the rotation system of duties needs to be introduced that
will reduce the potential of conflicts among the workforce, and the work
process would be more interesting.

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About Operational Excellence
Consulting
Operational Excellence Consulting is a management training and
consulting firm that assists organizations in improving business
performance and effectiveness.
One of our unique strengths is going beyond a tools-focused
approach to seamlessly integrate people, processes, technology
and continuous improvement initiatives to suit the specific needs
and situations of our clients.
We provide corporate learning programs and management advisory
services to assist our clients to achieve breakthrough in business
performance and effectiveness. Our aim is to support our clients in
designing, managing and executing lasting beneficial change.

Strategy: Planned versus Opportunistic
Organizations need both planned and opportunistic tendencies, but the key to success lies
in the in a dynamic synthesis thereof. Opportunistic responses often shape the content of
a new thrust whilst strategic thinking identifies the underlying context. Strategic planning is
about asking questions, more than attempting to answer them. Strategy formulation entails
a search for a different frame of reference.
It is the quest for a new business paradigm. There are two types of paradigms that apply
to management, namely the business and the organizational or managerial paradigms.
The business paradigm defines a company’s position in the marketplace with respect
customers, technology and products. The organizational or managerial strategy pertains to
assumptions on how the company inspires and co-ordinates collective activity, their
fundamental assumptions about human beings at work and their expectations concerning
their capabilities.
Strategy causes us to question the fundamental premises on which all else rest. Strategic
thinking involves the understanding of basic economics of business; identifying one’s
sources of competitive advantage, and allocating resources to ensure that ones distinctive
capabilities remain strong. Strategy’s most important contribution is searching for, and
redefining, context. Strategic thinking also creates a readiness to exploit unforeseen
opportunities.

Shared Values: Hard Minds versus Soft Hearts
“Hard minds” refers to the financial performance of an organization.
According to Pascale, an enterprise that cannot generate a profit is not adding
enough value to perpetuate its right to exit, but when short-term profits are over-
emphasized, a company’s long-term competitive position can be sacrificed.
Hard minds drive for financial results and this drive manifest itself in a
preoccupation with concrete, bottom-line results.
Hard-minded values are tied to goals that are unambiguous and quantifiable.

Skills: Maximize versus “Meta-Mize”
A company’s skills can include hard assets such as financial strengths and
dominant market share, but it takes the human and managerial input to translate
these into sustainable a sustainable competitive advantage.
Pascale uses the terms “maximize” and “meta-mize” to describe a company’s
decision to decide whether it should be getting better at what it is already good
at or whether it should be looking toward higher order capabilities that are
beyond the old.

Insert Header
McKinsey 7-S Framework – Current State Situation (Point A) (TEMPLATE)
Shared
Values
Strategy Structure Systems Style Staff Skills
Shared
Values
Strategy
Structure
Systems
Style
Staff
Skills

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