A company is a complex ecosystem, and you never truly know how changing one aspect might affect others.
But you can get close.
The McKinsey 7-S model offers a holistic understanding of an organization, breaking it down into seven key elements you must balance to achieve alignment and, thus, company success. The trick to effectively leveraging this organizational framework lies in understanding how each factor affects the whole — and what you’d like this whole to look like.
What’s the McKinsey 7-S model?
The McKinsey 7-S model is a strategic planning framework former McKinsey and Co. consultants Thomas J. Peters and Robert H. Waterman developed in their book “In Search of Excellence.” The model defines how to reach company objectives by aligning these seven elements:
- Shared values
This framework then categorizes these seven elements as follows:
- Hard elements include strategy, structure, and systems. These are factors leadership professionals can easily identify.
- Soft elements include skills, staff, style, and shared values, and these are culture-driven and more difficult to pinpoint.
Notice how there are more soft than hard elements. A key aim of Peters and Waterman’s project was to show that intangible factors, like staff and working styles, are crucial to how a company performs. Another goal was to showcase how connected every element is: When one changes, company leaders must assess how this change has affected every other factor to find balance.
The 7 elements of the McKinsey 7-S framework
To better understand the interconnectedness this framework showcases, here’s more on each element. A company that’s successfully implementing the 7-S framework will ensure each of these seven elements aligns with the others:
- Strategy: This is the long-term and high-level strategy company leaders create to encourage company success. You’ll also include the critical success factors your team must meet to accomplish this strategy’s goals.
- Structure: A company must always have a clear organizational structure that defines roles, communication cadences, and chains of command. For example, the McKinsey and Co. hierarchy is quite standard, with most firms following some version of this cadence: Analyst, Senior Analyst, Associate, Engagement Manager, Principal, Partner.
- Systems: This includes all processes and procedures, like how to onboard an employee, take vacation time, or use the team communication platform. These processes directly affect how employees complete their work, so ensuring alignment is crucial.
- Skills: Each employee offers a unique skill set that leaders can leverage to achieve company objectives. When deciding how to make organizational changes to ensure all seven factors are aligned, leaders will identify and fill any skill gaps.
- Staff: This covers everything staff-related, like how many employees a team or company has now versus what they’ll need in five, 10, and 15 years.
- Style: The 7-S framework also includes overall management styles and how they affect company culture.
- Shared values: This component sits at the center of the 7-S model, connecting every other element. It includes every norm and standard leaders exemplify to guide employee work and the overall workplace culture.
The pros and cons of the McKinsey 7-S model
Viewing your organization as a seven-piece whole when conducting strategic planning or adjusting to changes might feel daunting — and it is.
The greatest disadvantage of using this framework is that it requires extensive research and data analysis. You must accurately document, audit, and measure the efficacy of factors like employee skill sets and how your current organizational structure is performing. And you must also heavily research alternatives, considering how they’ll affect each of the seven elements before deciding whether to implement changes.
That said, if you’re a medium-to-large organization with the resources to implement and maintain this framework, the McKinsey method offers several benefits. This systems-thinking-style method, where you consider how each part affects the whole:
- Offers you a more comprehensive understanding of your organization’s performance
- Shows the broader impacts of small changes, like how filling a skill gap affects structures, processes, and staff
- Aligns all company operations around shared values you’ve thoughtfully developed to ensure everyone contributes work that respects these principles
When should companies use this framework?
Any company that wants to ensure these seven important factors are aligned to achieve increased efficiency and efficacy can use the 7-S framework. You might leverage it to assess how future changes will affect different elements or how previous adjustments did. Or, if you’re starting a company, you could consider each aspect to determine how you’d like to build out all seven elements.
You might even apply it on a smaller scale, like within a project. During project planning, a manager might consider how their project plan aligns with the company’s overall strategy, structure, systems, and shared values. They might also determine whether task delegation respects each employee’s role and skills. Lastly, they could consider whether their management style throughout project execution resembles that of higher-up leaders.
How to implement the McKinsey 7-S model: 5 steps
Ready to build a more comprehensive understanding of how your organization functions — and how you could improve it? Here’s a five-step guide on implementing the 7-S model.
1. Define your desired state
Working closely with the leadership team, outline your ideal version of each of the seven elements. Start with shared values to ensure you entrench these principles into every aspect of the company as you define each element. You’ll also want to include thorough strategic planning in this stage to better understand how you must define the other five elements in order to meet broad company objectives.
2. Analyze each element
Now, review the company’s current state of affairs. Gather research and create thorough definitions, not worrying yet about whether everything aligns with your desired state.
3. List improvement areas
Perhaps the most daunting step, compare your desired state with your current state to illuminate gaps. Here are some factors you might consider:
- Does our management style align with our shared values?
- Are there any skills gaps, and if so, do we have a hiring plan for filling them?
- Is there anything we can do to better support employees?
- Are there any glaringly misaligned elements, like a shared value of cross-functional teamwork when most employees work independently and departments are often siloed?
4. Prepare an operational implementation plan
With your list of improvement areas in hand, create a McKinsey change management action plan that roadmaps how to re-align each of the seven elements. Include the following information in your action plan:
- A general implementation timeline
- A follow-up/progress review plan
- A section discussing how you’ll monitor and track progress and success
- A list of employees taking charge of actioning this implementation plan
- A section for each of the seven elements, with action items that include due dates, resource necessities, employee assignees, and success metrics
5. Review progress, make changes
Routinely check employee progress as they execute your plan, tracking success metrics and making changes as you go. And, to respect the “Staff” element, frequently ask employees for feedback on this change, implementing it as needed.
An example of the 7-S model in action
McDonald’s is an oft-cited example of a company that leverages the McKinsey 7-S model to improve overall alignment and enjoy increased success. Here’s a brief overview of their 7-S elements:
- Strategy: McDonald’s focuses on a cost-leadership approach, meaning they strive to have the lowest-cost operation in the industry.
- Structure: To simplify and streamline operations, McDonald’s uses a flatter organizational structure than most large corporations, with store managers leading all of a location’s employees.
- Systems: McDonald’s constantly improves the entire production and supply process to reduce costs and increase customer service value. Their app ordering and self-serve kiosks are excellent examples of this.
- Skills: To improve employee performance and, in turn, reduce costs, McDonald’s offers frequent training and workshops.
- Staff: To respect the shared values of diversity and inclusion, McDonald’s employs workers from more marginalized communities. The previously mentioned training workshops also contribute to employee development to increase productivity and the customer service experience.
- Style: McDonald’s uses a more participative management style, with leaders frequently collecting and implementing employee and customer feedback.
- Shared values: McDonald’s’ core values are: serve, inclusion, integrity, community, and family. They respect these values throughout each of the other six elements, focusing on providing excellent customer service and building a close workplace community built on respect and continuous development.
Use Tempo’s tools to streamline your strategic planning
Once you’ve crafted your operational implementation plan, pair it with a comprehensive roadmap that clearly visualizes how your team will get from point A to point B. Roadmunk by Tempo lets you quickly create a flexible guide you can adjust to accommodate any roadblocks and challenges. Then, use Timesheets by Tempo to track team progress on important action items for overall implementation plan visibility.