McKinsey

7S Model
 *** What is McKinsey 7S Model?

McKinsey 7S model is a tool that analyzes firm’s organizational design by looking

at 7 key internal elements: strategy, structure, systems, shared values, style, staff
and skills, in order to identify if they are effectively aligned and allow organization
to achieve its objectives.

*** start up of McKinsey 7S Model :

McKinsey 7s model was developed in 1980s by McKinsey consultants Tom Peters,

Robert Waterman and Julien Philips with a help from Richard Pascale and Anthony
G. Athos. Since the introduction, the model has been widely used by academics
and practitioners and remains one of the most popular strategic planning tools. It
sought to present an emphasis on human resources (Soft S), rather than the
traditional mass production tangibles of capital, infrastructure and equipment, as a
key to higher organizational performance. The goal of the model was to show how
7 elements of the company: Structure, Strategy, Skills, Staff, Style, Systems, and
Shared values, can be aligned together to achieve effectiveness in a company. The
key point of the model is that all the seven areas are interconnected and a change
in one area requires change in the rest of a firm for it to function effectively.
*****There are seven components to the 7S Model—all of
which start with an “S.” :

These seven components are grouped into “hard” and “soft” elements. Both are
equally important to driving successful change initiatives.

Hard elements
Hard elements are tangible, easy to identify, and can be directly impacted by management. 

 Structure
 Strategy
 Systems

Soft elements
Soft elements are intangible and primarily driven by the organization’s corporate culture.

 Skills
 Style
 Staff
 Shared Values

Let’s look at the different elements of the McKinsey 7S Model in more detail.
1. Structure

This is how the organization is set up for decision-making, ownership, and leadership. It includes
hierarchy, the chain of command, and accountability between role players.

2. Strategy

The business’s approach to strategic planning and executing actions that ensure success,
sustainability, and competitive advantage.

3. Systems

Systems refers to the processes, infrastructure, and workflows established and utilized within the
organization.

4. Skills

Skills are the competencies and capabilities of people within an organization that help it reach
business goals and objectives.

5. Style

Style is the way and manner in which people in the organization operate and interact. This includes
interpersonal business relationships, management styles, and codes of conduct.

6. Staff

Staff encompasses human resources and talent management related to company decisions, like
hiring, training, retention, and incentives.

7. Shared Values

These are the common objectives and values that help form an organization’s culture and align the
other elements within the organization. In and outside of your organization, they influence
employee, customer, and work experiences.

How to Use the McKinsey 7S Model? (In 7 Steps)

1. Analyze each component of the 7S Model
Here’s how you should take it step-by-step: 

1. Start in the middle and analyze Shared Values. This step should help you to identify if you have a
clear understanding of where your company wants to be in the future. 
2. Move into the Hard elements (Strategy, Structure, and System).
3. Finish with Soft Elements (Skills, Staff, and Style).

Strategy: 

 How should we proceed to resolve the specific business problem?

 What is our strategy and its priorities?
 How will we achieve our strategic objectives?
 How do we compete in the market? What are our competitive capabilities? 
 How does the organization respond to changes in customer demand or the business environment? 

Structure: 

 How is our organization organized? 

 How are reporting and working relationships structured (hierarchical, flat, silos, etc.)? Who reports to
whom? 
 How are our employees aligned with the strategy? 
 How do our teams align and collaborate on shared goals?
 What is our process for making decisions? Is it through centralization, empowerment,
decentralization, etc.?
 How does the organization share information (formally and informally)?

Systems: 

 Can we execute the strategy with the existing business system or do we have to develop a new one?
 How do we track progress and performance? 
 What internal processes and guidelines do we have in place to stay on track? 
Shared Values: 

 What principles help us to achieve our goals? 

 What makes us do what we do in the way we do it?
 What is our vision for the future? What is our mission to get there?
 What are our core values? How are we incorporating them into daily activities? 

Skills: 

 What are our strongest skills within the organization? What are our weaknesses? 
 How are we going to fill the skill gap? Which skills are required?  
 Is the current employee's skill set sufficient for the job?
 How do we monitor, assess, and improve skills?

Style: 

 What leadership style and cultural qualities will help us to achieve a strategic objective?
 What is our current management approach?
 How are our employees respond to it? 

Staff

 Is there anything we can do to support the growth of our team members?

 What are the current staffing needs?
 Are there any gaps in required capabilities or resources?
 What is our plan for addressing those needs?

2. Identify areas that are misaligned with your vision and strategy

 Review your findings and use them to find gaps and inconsistencies in the organization. Create a list
of these existing issues. 
 “If you want to go to the moon, you need to understand the distance you need to bridge to go from
here to there.” – Thibault Mesqui, Managing Director, Heineken
 Additionally, speak to other key stakeholders and get their opinions on different business areas and
processes in your organization. 
 “When you involve people, when you ask them their opinions, they feel a lot more inclined to actually
execute the thing later on.” - Ilana Rosen, Director of Strategy and Head of Enterprise Innovation
at Old Navy

3. Define the desired state

You’ll then need to identify and articulate the organization's ideal alignment. Go through each “S” and use
this question:  “What do we need to change in each element so we can execute our strategy?”.  

This will likely require additional research and consultations with external experts to understand what an
optimal organizational design can look like and the possible obstacles that might stand in its way.  
Remember, your “ideal” state should be informed by your company’s long-term strategic goals,
conversations with role players, and other internal analyses. 

Once you’re done, review everything and ensure it aligns with your company’s vision and strategy.

4. Prepare your change management plan

Analysis of the 7S Model holds no value if you don’t map out a change management action plan. Your
organization needs a clear roadmap to get where it needs to be. Without it, you will either miss growth
opportunities or continue to be stagnant. 

As part of this step, clearly define your strategic objectives, key projects or initiatives, and KPIs. Co-create an
action plan with the owners who will be responsible for executing it. This collaborative approach is essential if
you want to get buy-in and maintain momentum. 

Strategic planning can be challenging depending on your organization's size and existing processes. 

An all-in-one strategy execution platform, like Cascade, can help simplify the strategic planning process with
tools to lead, monitor, and manage key change initiatives and projects.

5. Execute your plan

Now it’s time to turn your plans into reality. Execution is the most crucial step in the change process. 

Getting it right will result in impactful changes and help your organization reach important milestones. Getting
it wrong will mean delays, lackluster outcomes, and failure. 

But, strategy execution in a complex business environment can be tricky. Especially if you don’t have the
right tools to align efforts, ensure accountability, and manage change initiatives. 

6. Review your progress against set targets

Monitoring progress is vital if you want your change initiative to have maximum impact. 

Continually review the performance of your teams and projects to ensure your organization is constantly
aligned and on track.
Cascade is one of the few platforms that make oversight and monitoring easy. Its focus on strategic
alignment, powerful real-time reporting features, and drill-down capabilities give organizations a holistic
overview of progress.

7. Adapt your plans and strategy if needed

Any good strategy will change, iterate, and adapt. Don’t be afraid to change your plans and approach as you
progress. 

Using insights, knowledge, and new information to improve your approach is important. Plans must be
adjusted or refocused as your organization progresses toward its goals. 

“The True North should not change that much, that frequently, but the components of the pillars that make
up for the solution might evolve.” - Carlos Trad, Director of Global Business Strategy, Google.

****McKinsey 7S Model Example: Chick-fil-A

Chick-fil-A is a popular fast-food restaurant with over 2000 locations in the US, Canada, and the UK.
Here’s an example of how a McKinsey 7S Model might look for Chick-fil-A:
Structure

 A private family-owned fast-food franchise. 

 Wholly-owned subsidiaries that supply franchisee restaurants.
 Individual Chick-fil-A restaurants are owned and operated by franchisees.
 Franchise owners (Operators) manage day-to-day operations in their stores.

Strategy

When it comes to growth, Chick-fil-A pursues a market development strategy. They are
expanding into new markets with existing products through franchising. They also pursue
international expansions by opening new locations outside the US, including Canada and UK. And
they are planning to enter new markets, such as Asia. 

System

 Franchise and licensing business with corporate offices to manage broad strategic initiatives.
 Corporate control of food production and distribution channels.
 A rigorous vetting process for all prospective franchise owners.

Shared values

Christian and family values play a large part in Chick-fil-A’s corporate identity. For example, all
Chick-fil-A restaurants are closed on Sundays. 

Chick-fil-A’s core values also play a big role in shaping their culture, work, and customer
experience:

 “We are better together” 

 “We're here to serve.”
 “We are purpose-driven.”
 “We pursue what's next.”

These values drive their presence and approach in the fast-food industry. And it proves to be worth
the investment. Chick-fil-a is one of the most beloved fast-food chains in America, and it enjoys
a reputation for providing the best customer service. 

Skills

The company invests heavily in upskilling franchise owners through training, support, and
investments. 
They also provide staff members with opportunities to grow and move into new roles. For example,
in 2019, Chick-fil-A gave employees $15.3 million in educational scholarships.

Style

In the fast-food industry, Chick-fil-A is known for its unique management style and the trust it places
in franchise owners. 

 Known for its servant-leadership style of management.

 The corporate office is known as the “Support Center.”
 Franchisees are known as “Operators,” and employees are known as “Team members.”

Staff

Chick-fil-A represents over 170,000 Team Members, Operators, and Staff. This is how the

 Corporate: Strategy, licensing, business development, marketing, compliance, and human resources.
 Franchise owners: Business management, operations, and people management.  
 Restaurant staff: Food preparation, front-of-desk service, customer relations, cleaning, and team
management.

Now let’s take a look at the 7S Model in action…

The example above suggests Chick-fil-A's operations are aligned and efficient. But what happens if
Chick-fil-A decides to enter a new market with a new product? For the sake of example, let's ignore
the fact that a diversification strategy like this would be a bold and risky move based on the Ansoff
matrix. 

Using the 7S Model, they might realize that they lack the right management staff to help them
through this transition. In terms of Staff, they will need to hire people with the right skills and
experience to fill these gaps. Looking at Skills, they might even identify that franchise owners and
restaurant staff will need additional training because the new product requires new processes and
workflows. 

Strategy is another area they should consider.

Their strategy needs to change and it might even require a new approach to strategic planning.
They might also realize that their current approach to strategy execution isn’t fast enough and it will
need to change if they want to outperform competitors and stay relevant. 
A McKinsey 7S Framework forces leaders to do their homework and identify gaps that could result
in a failed strategy execution. As a leader, you don't want to be in that 90% of strategies that fail.

Summary
 It shows the wider impacts of changes on organizations.
Simplifies the process of planning and executing change initiatives.
Helps align different segments of business units during periods of change. 
benefits Useful for different types of change initiatives. 

It requires a lot of research and benchmarking to be used effectively.

disadvanta Ignores the impact of the external environment on businesses
ges

The McKinsey 7S Model is a simplified method of understanding organizational structures and how
they impact one another. It is beneficial for identifying key organizational elements impacting
performance, such as gaps, inconsistencies, and misalignment.
The 7S Model is a great strategic tool for analyzing organizational design and change management
in complex environments. It can be used for various types of organizational change initiatives, such
as:
when to Diversity, Equity, and Inclusion (DEI) initiatives
Innovation
use Digital transformation
Restructuring due to M&A
Market Development