The model was developed in the late 1970s by Tom Peters and Robert Waterman, former consultants at McKinsey & Company. They identified seven internal elements of an organization that need to align for it to be successful.
In this article, you can explore the seven elements in detail, and learn how to improve performance or manage change in your organization by ensuring that they all work in harmony.
Also, we provide a worked example and a downloadable template that you can use to apply the model.
When to Use the McKinsey 7-S Model
You can use the 7-S model in a wide variety of situations where it’s useful to examine how the various parts of your organization work together.
For example, it can help you to improve the performance of your organization, or to determine the best way to implement a proposed strategy.
The framework can be used to examine the likely effects of future changes in the organization, or to align departments and processes during a merger or acquisition. You can also apply the McKinsey 7-S model to elements of a team or a project.
The Seven Elements of the McKinsey 7-S Framework
The model categorizes the seven elements as either “hard” or “soft”:
|Hard Elements||Soft Elements|
The three “hard” elements are strategy, structures (such as organization charts and reporting lines), and systems (such as formal processes and IT systems.) These are relatively easy to identify, and management can influence them directly.
The four “soft” elements, on the other hand, can be harder to describe, less tangible, and more influenced by your company culture. But they’re just as important as the hard elements if the organization is going to be successful.
Figure 1, below, shows how the elements depend on each other, and how a change in one affects all the others.
Figure 1: The McKinsey 7-S Model
v Strategy: this is your organization’s plan for building and maintaining a competitive advantage over its competitors.
v Structure: this how your company is organized (that is, how departments and teams are structured, including who reports to whom).
v Systems: the daily activities and procedures that staff use to get the job done.
v Shared values: these are the core values of the organization, as shown in its corporate culture and general work ethic. They were called “superordinate goals” when the model was first developed.
v Style: the style of leadership adopted.
v Staff: the employees and their general capabilities.
v Skills: the actual skills and competencies of the organization’s employees.
Placing shared values in the center of the model emphasizes that these values are central to the development of all the other critical elements.
The model states that the seven elements need to balance and reinforce each other for an organization to perform well.
Using the McKinsey 7-S Model
You can use it to identify which elements you need to realign to improve performance, or to maintain alignment and performance during other changes. These changes could include restructuring, new processes, an organizational merger, new systems, and change of leadership.
Follow these steps:
1. Start with your shared values: are they consistent with your structure, strategy, and systems? If not, what needs to change?
2. Then look at the hard elements. How well does each one support the others? Identify where changes need to be made.
3. Next, look at the soft elements. Do they support the desired hard elements? Do they support one another? If not, what needs to change?
4. As you adjust and align the elements, you’ll need to use an iterative (and often time-consuming) process of making adjustments, and then re-analyzing how that impacts other elements and their alignment. The end result of better performance will be worth it.
Figure 2 shows a template matrix that you can use to help with your analysis. You can click on the image to download it as a PDF worksheet.
We’ve also developed a checklist of the right questions to ask, which you can find in the next section. Supplement the questions in our checklist with your own questions, based on your organization’s specific circumstances and your own knowledge and experience.
Figure 2: The McKinsey 7-S Matrix Template
You can use the 7-S model to help analyze your current situation (Point A in the worksheet), your proposed future situation (Point B in the worksheet), and to identify gaps and inconsistencies between them.
To examine your where you are now (Point A), use the data that you’ve learned from your checklist questions to fill in the worksheet grid, putting a tick in any box where the two cross-referenced elements work together well. If the two elements aren’t working well together, put a cross.
Point B is an agreed endpoint in the future (in six months or a year, for example). When you reach Point B, revisit the worksheet and fill it in again. If your changes have worked, you’ll have a grid full of ticks. If not, you may need to make further adjustments.