McKinsey 7S Model

Updated on March 21, 2024
Article byKhalid Ahmed
Edited byKhalid Ahmed
Reviewed byDheeraj Vaidya, CFA, FRM

What Is McKinsey 7S Model?

The McKinsey 7S Model refers to a management outline examining seven internal elements of an organization. It is designed to help organizations assess and align various internal elements to improve performance and effectiveness. Moreover, This model suggests that all these elements are interconnected, and changes in one component can impact others.

McKinsey 7S Model

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The seven elements are shared values, staff, structure, strategy, style, skills, and systems. It mainly focuses on achieving a firm’s strategic objectives by aligning its internal elements. Moreover, it applies to problem-solving, organizational development, and strategic planning. Hence, this model offers diagnosing problems, a holistic view, and strategic decision-making facilitation to a firm to enhance its performance.

Key Takeaways

  • McKinsey 7S Model assesses organizational alignment and effectiveness by analyzing seven internal elements and identifying disturbances.
  • It analyzes organizational alignment, and effectiveness through strategy, structure, systems, skills, staff, style, and shared values.
  • Therefore, one can apply the model in an organization through information gathering, 7s analysis, alignment assessment, action plan development, alignment identification, stakeholder involvement, progress monitoring, and review.
  • Its benefits include its thorough consideration of many organizational factors, but it also has the drawback that evaluating each of the seven components is too tricky.

Mckinsey 7s Model Explained

The McKinsey 7S Model is defined as a management framework to identify seven main internal elements of an institution. The seven elements are strategy, structure, systems, skills, staff, style, and shared values. These elements help users to get a holistic approach to assessing and improving institutional effectiveness. Moreover, McKinsey 7S model change management does it by evaluation of alignments and interconnections among these elements. Therefore, this model serves as a tool for analyzing and aligning these elements to improve overall organizational performance.

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How It Works?

It assesses the current state of every element while identifying the misalignment or areas of strength. Hence, it aids the organizations in understanding how edits in any element could impact others. Additionally, it also guides decision-making strategically and efforts in organizational change.

  • Application of McKinsey 7S Model: Organizations have been using it in various scenarios like diagnosing their issues, strategic planning, internal change initiatives, and mergers or acquisitions. Moreover, it helps in culture assessment, strategic planning, and executing change initiatives.
  • Importance of McKinsey 7S Model: It has become essential for organizations to understand their present status and prepare for a successful future. It guides the organization to achieve its vision and success by creating an alignment between its people, structure, and strategy. As a result, the organizations drive their to a higher performance state.
  • McKinsey 7S Model Template: It consists of modules evaluating every S element and their interrelationships. Furthermore, it represents the model as a diagram or matrix.
  • Effect on Financial World: Financial institutions make more strategic and informed decision-making while enhancing their adaptability and competitiveness in market dynamics.

Hence, the McKinsey 7S Model is a versatile tool that helps organizations assess their internal components, ensure alignment, and drive effective change and performance improvement.

Elements

The McKinsey 7S Model encompasses seven factors that analyze organizational alignment and effectiveness. These elements are divided into “Hard Ss” and “Soft Ss.”

Here are the seven elements explained:

Hard Ss

  • Strategy:  An organization prepares its plan and direction to set its goals and how to accomplish them. It involves making decisions about the organization’s competitive position, target markets, product offerings, resource allocation, and overall direction.
  • Structure: It means an organization’s reporting lines, hierarchy, and roles. Hence, it includes factors such as hierarchy, reporting relationships, departmental divisions, and how information flows.
  • Systems: These are the workflows, communication processes, procedures, and processes guiding an organization’s operation.
  • Skills: Skills refer to the capabilities and competencies of the organization’s employees. The right skills and expertise are essential for executing the organization’s strategy and delivering value to customers and stakeholders.

Soft Ss

  • Staff: The roles and engagement of employees who worked in the organization with each other. Therefore, having the right people with the necessary skills and attitudes is crucial for achieving the organization’s goals.
  • Style: The culture and leadership style of an organization. Therefore, this includes how leaders communicate, make decisions, motivate employees, and shape the overall work environment.
  • Shared Values: The fundamental values, convictions, and ethics define an organization’s character and direct actions. Besides, these values influence the behavior, attitudes, and decisions of individuals within the organization and help define its unique identity.

How To Use?

To apply the model in an organization, the following must be done:

  • Information gathering: First, collect all information concerning the 7s elements of the model using surveys, social media, and interviews.
  • 7s analysis creation: Then, create a 7S framework using the information gathered to illustrate the links between the parts.
  • Alignment assessment: Next, examine how effectively the components of your company are aligned. Determine your strengths and weaknesses.
  • Action plan development: Identify where the various pieces are out of alignment. These differences might hamper the efficacy of the company.
  • Misalignments identification: Next, create action plans according to the findings to correct misalignments and reinforce weak points. Moreover, one must consider the potential effects of changing one element on others.
  • Action plan development: After that, one must include essential parties, including leaders and workers, to guarantee buy-in and successful implementation.
  • Key stakeholders’ involvement: Start implementing the action schemes, ensuring everyone in the business is informed and involved in the changes.
  • Progress monitoring: Now, periodically evaluate the alignment endeavors’ success and, if necessary, modify the strategies.
  • Implement Changes: Start implementing the action plans. Therefore, this could involve revising the organization’s strategy, adjusting the reporting structure, introducing new systems, enhancing skills, fostering desired values, modifying leadership practices, or making staffing decisions.
  • Review and sustenance: Finally, maintain the alignment efforts by reviewing them frequently and making the required modifications while the organization changes.

Therefore, the McKinsey 7S Model does not constitute a one-time activity. Moreover, it is a continuous process that keeps a business productive and focused on its objectives.

Examples

Let us use a few examples to understand the topic.

Example #1

Nokia is a case study of organizational failure—from being a pioneer in mobile technology to being purchased by Microsoft in 2013. Let’s examine the company’s mistakes using the McKinsey 7S model.

With an operational profit of about $4 billion in October 1998, Nokia overtook all other mobile phone brands as the most popular worldwide. Hence, the Nokia 1100, which has sold the most units of any mobile phone ever, was developed in 2003. After waiting five years, Apple unveiled the iPhone. By the end of 2007, Nokia smartphones accounted for 50% of all smartphones sold globally, with the iPhone holding only a 5% market share.

Thus, in 2010, Nokia unveiled the “iPhone Killer” to eliminate Apple from the market. The model’s failure to accomplish its objective marked Nokia’s demise. As a result, Nokia’s market value decreased by roughly 90% in just six years. Microsoft purchased the business in 2013.

However, at the time, Nokia produced 40% of all mobile phones sold worldwide. The business has the staff and human resources it needs to keep innovating and grow its market share.

Sadly, the company’s leadership (style factor) lacked the fundamental skills and strategic vision to promote organizational transformation.

They refused to let the company’s tech staff offer important insights while making crucial judgments. The business made the wrong strategic decision, which ultimately contributed to its death.

Example #2

Suppose Retailex, a leading retail conglomerate, successfully applied this model to navigate a significant organizational transformation. They shifted their strategy to focus on e-commerce expansion and customer experience enhancement. To support this strategy, they restructured their operations, adopting a more matrix-based organizational structure that encouraged cross-functional collaboration. Moreover, they implemented new systems for inventory management, order fulfillment, and customer relationship management, aligning with their strategic goals.

Besides, the shared values of customer-centricity and innovation were reinforced through internal communication campaigns and recognition programs. Hence, the company provided training and development opportunities to ensure their employees acquired the necessary skills for digital retail. However, the leadership style evolved towards a more consultative approach, fostering open communication and inclusiveness. By considering and aligning all these elements, the firm achieved a successful transformation, leveraging the synergy of the McKinsey 7S Model.

Advantages And Disadvantages

The model has its pros and cons, which will be shown in the table below:

AdvantagesDisadvantages
It comprehensively considers numerous aspects concerning an organization.Appraising all seven elements turn out to be too complex an exercise.
This model addresses interdependence amongst elements.Personal biases may interfere with the assessment of the elements.
These models help in finding areas of gaps and misalignment within an organization. Market dynamics and external factors may need to be noticed.Market dynamics and external factors may be overlooked.
Different elements may undergo collaboration and coordination.Adjustment and monitoring of the seven elements need continuous monitoring.
For analyzing the organization, a systematic approach has to be undertaken.It consumes a lot of time and resources.
Here, it diagnoses organizational problems and helps in decision-making strategically.The model does not cater to all types of organizations, and the cultural factors may not be addressed fully.
Moreover, the model promotes stakeholder engagement and buy-in.Its overemphasis on structures leaves other factors out.

Frequently Asked Questions (FAQs)

1. Who created the McKinsey 7S model?

In the latter part of the 1970s, McKinsey & Company consultants Tom Peters and Robert Waterman developed the McKinsey 7S Model. It first appeared in their book “In Search of Excellence,” which continues to rise in popularity as a management tool for evaluating and enhancing organizational efficiency.

2. Can the McKinsey 7S model be applied to any type of organization?

This model can be applied to various organizations, including businesses, non-profits, government agencies, and more. However, the emphasis on each element and how they interact might vary based on the organization’s specific context.

3. Is the McKinsey 7S model static or dynamic?

The model recognizes that organizations exist within a dynamic environment, and the alignment of the seven elements should be continuously assessed and adjusted to respond to changes in the internal and external landscape.

4. Can the McKinsey 7S Model identify external factors affecting an organization?

The model primarily focuses on internal factors, but it indirectly considers external factors by examining how the interior elements are aligned to respond to external changes and challenges.

This article has been a guide to what is McKinsey 7S Model. Here, we explain its examples, advantages, disadvantages, how to use it, and its elements. You may also find some useful articles here –

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