Framework 2 McKinsey 7-S Framework
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Seven-S Framework
The 7-S framework explains the supporting elements that are crucial for success. It contains 3 "hard" elements, 3 'soft' elements and the 7th in the middle (shared values of the organisation).
Hard or tangible elements are:
- organisational/business strategy
- formal organisational structure
- administrative systems of the organisation
Soft or intangible elements are:
- leadership style
- organisational and employee skills
- staff
All elements are linked; thus changing one will have an influence on all the others.
Consistency
To achieve internal consistency and successful transformation, all of the 'S's should be supporting each other.
Inconsistency
If this is not the prevailing pattern, there is internal inconsistency as illustrated below, which limits the ability of the organisation to handle the transformation. Therefore it is vital to get all the elements supporting each other.
Describe the impact of the following elements of the business:
|
Elements |
Impact |
|
Organisational/Business Strategy |
|
|
Organisational Structure |
|
|
Administrative Systems |
|
|
Leadership/managerial style |
|
|
Organisational & employee skills |
|
|
Staff |
|
|
Culture |
|
|
Stakeholders (customers) |
|
|
Profitability of organisation |
All the elements link together and any change in one element is likely to precipitate change in another element. For example,
A new product/service range may require a different strategy and new information system;
New skills may be needed to develop and market the new product/service;
Organisational changes may be required to handle the new product/service, with different distribution networks and sales team;
A different culture may need to be developed for the new product/service, ie rewards and recognition system;
Stock levels and pricing to handle the new product/service could be different with a different customer base.
Some questions to promote an understanding of each element of the 7-S framework:
|
Elements |
Consideration |
|
Organisational/Business Strategy |
How to obtain and maintain competitive advantage? How to create value? What is the organisation's purpose? Who are the customers? How to satisfy customers' needs? How to handle competitors' reactions? How to handle stakeholders? What market share is desired? What is the organisation's capacity to handle the strategy, ie what activities should be outsourced? |
|
Organisational Structure |
What is the best structure to handle the business strategy, ie flat or hierarchical, competitive or collaborative, flexible or rigid, functional or product/service? Importance of informal networks? Effect of outsourcing? |
|
Administrative Systems |
What are the best administrative systems to handle the business strategy and organisational system? How does information flow? What performance and measurement system is required? What reward and recognition system is required? What levels of inventories are required? |
|
Leadership/managerial style |
How are power sources determined, ie who makes decisions, where are they made? What style of leadership/management is required, ie autocratic or collaborative or delegative? |
|
Organisational & employee skills |
What degree of involvement of staff in decision-making? What is required for the communication and information flow? What new skills (technical and non-technical) are required? |
|
Staff |
Are current staff members adequately skilled/equipped to handle the changes? What skill levels are required? What staff training is required? What staff levels are needed? What rewards and recognitions are suitable? |
|
Culture |
Effect on organisation's values, beliefs, rituals, symbols and routines? |
|
Stakeholders (customers) |
What are the benefits the stakeholders desire, perceive and will pay for? What value do the stakeholders place on each of these benefits? |
(source: Graham Hubbard et al, 1996)