The McKinsey 7-S Framework
Every organization needs to have specific objectives, or goals, that it is striving to achieve. Without these targets in place, it is easy for a business to just ‘wander’ from day to day, without ever making any headway in the market. If your company is going to not just scrape by, but actually thrive moving forward, you want to have clear and measurable objectives that you are working to achieve.
Of course, it is one thing to have objectives in mind that you would like to reach – but it is another thing entirely to actually have your organization aligned correctly in order to achieve those goals. No matter what size of organization you happen to be running, it is imperative that all actions within the company are designed to help move closer and closer to your stated goals. It is common for businesses to ‘lose their way’ while trying to do too much, or too many different things. The businesses that are successful in the end tend to be those who work cohesively as a unit to check off goals one at a time.
With that in mind, one of the best business models available to help you stay on the same page throughout your company is the McKinsey 7-S Framework.
As the name would indicate, there are seven components to this model, each beginning with the letter ‘s’. Those components are as follows –
- Shared Values
Each of these plays an important role in the ultimate destination of the company over the long run. If you are out of alignment within your business on even one or two of these points, there could be trouble waiting ahead. Below, we are going to take a quick look at each of these seven components to better understand how they impact the direction of the company as a whole.
This one should be pretty self-explanatory, as all organizations should have a clearly defined strategy in place for how they are going to beat the competition. If you don’t have a good strategy already in place for your business, that should quickly become one of your top priorities.
You have to seek out and obtain some kind of competitive advantage in the market if you are going to consistently bring in revenue and grow your company. Some basic strategy examples are entering the market at the lowest possible price point, or entering the market with a high-quality, high-priced item.
The design of your organization from a structural standpoint has a lot to do with how successful you can be in reaching your goals. Who answers to whom within the company? How to the various departments interface with one another? There needs to be a clearly defined structure in place to make sure that time is not wasted trying to determine who can make decisions on a given matter.
Each day, business is conducted within your office in a certain fashion. The way things are done can be referred to as the systems that you have in place. Obviously, it is a big advantage to be as efficient as possible when it comes to the design and execution of your systems.
Are employees wasting time doing tasks that are redundant in nature? Are you spending too much money on outsourcing a task that could actually be done in-house? Refining systems is an important part of your organizational success.
You can think of this point as being ‘what the company is all about’. Some organizations strive to produce the highest quality products on the market, and that is a mission that is shared throughout the business. Or, other companies may strike to do their work in a way that not only makes money, but also does good things for the environment or the community (or some other ‘greater good’).
You want to have a clearly established leadership style within the business to ensure that all employees know what to expect, and know what is expected of them. Some companies are run tightly, with plenty of oversight and control in place. Others choose to put more trust in their employees to get the job done without assistance.
The right choice for your business likely depends on the specific industry you are in, as well as the skill of those employed by the company.
Speaking of employees, they naturally play a large role in this equation as well. With the right people in place, working toward the goals of the organization should become a relatively easy task. However, if your company lacks the skills in key areas to get the job done right, you may struggle even if you are hitting on the other six points on this list.
There is no substitute for talented and invested employees. Also, experience is a critical part of having a quality team, so keeping people around for many years will help you to get the most from your employees.
What skills do you have available to you within the staff that is currently assembled? What are they capable of, and where are they lacking? Knowing the skills that you have on hand will help you make hiring decisions, as you can choose new employees who ‘fill in the gaps’ that exist in your current team.
Also, you may decide to outsource some of your work from time to time based on need, and you can do so with a thought toward getting help in areas where your own team is less-capable.
Working through the McKinsey 7-S Framework is a great way to gain an overall understanding of your business and what it is capable of achieving. By having clear organizational goals in place, and then using this framework to understand where you are headed, it should be possible to make adjustments as necessary to steer the business in the right direction. Success doesn’t happen by accident in the real world – it happens through hard work, careful planning, and a commitment to reaching the ultimate objective of the organization.
- The McKinsey 7-S Framework is a tool designed to help business owners and managers understand how aligned their organization is, and where it can be approved.
- The framework is most often used as an organizational analysis tool to assess and monitor changes in the internal situation of an organization.
- It is based on the theory that, for an organization to perform well, seven elements need to be aligned and mutually reinforcing. They are:
- Strategy – Purpose of the business and the way the organization seeks to enhance its competitive advantage.
- Structure – Division of activities; integration and coordination mechanisms.
- Systems – Formal procedures for measurement, reward and resource allocation.
- Shared Values – The overall culture of the company, and the purpose behind everything that is done.
- Skills – The organization’s core competencies and distinctive capabilities.
- Staff – Organization’s human resources, demographic, educational and attitudinal characteristics.
- Style – Typical behaviour patterns of key groups, such as managers, and other professionals.
- The framework can be used to help identify what needs to be realigned to improve performance, or to maintain performance during other types of change.