Gap Analysis with the 7S Model

The McKinsey 7S Model is a widely used framework that helps organizations assess their internal alignment and identify gaps. It can be particularly useful for gap analysis when determining where discrepancies exist between current and desired states across key organizational elements. The model consists of seven elements:

1. Strategy – What the organization plans to do to achieve its objectives.
2. Structure – How the organization is structured in terms of hierarchy, roles, and responsibilities.
3. Systems – The formal and informal processes and procedures that drive the organization.
4. Shared Values – The core values and beliefs that guide behavior within the organization.
5. Skills – The competencies and capabilities that exist within the organization.
6. Style – The leadership style and overall culture of the organization.
7. Staff – The people in the organization, including their talents, demographics, and engagement.

Step-by-Step Practical Guide to Using the 7S Model for Gap Analysis

1. Define the Objective of the Gap Analysis: What are you trying to achieve? Are you assessing performance, adapting to change, or aligning resources for a new strategy? Defining your objective helps you focus the analysis on relevant aspects of the 7S model.
2. Assess the Current State (Current Reality): Strategy: Analyze the current strategic goals. What are your current business objectives, and how well are they being achieved? What are the outcomes of current strategic initiatives? Structure: Evaluate your organizational structure. Is it hierarchical, flat, or matrixed? Are roles and responsibilities clearly defined? Does the structure support or hinder achieving goals? Systems: Look at existing processes and systems. Are workflows and systems efficient? Are there redundancies or bottlenecks in day-to-day operations? Shared Values: What are the prevailing organizational values? Are they aligned with the organization's strategic goals and the behavior of employees? Are these values communicated effectively? Skills: Identify the current capabilities and skills of your workforce. Are the right people in the right positions? Are there skill gaps? Style: Assess the leadership style and culture of your organization. Is the leadership effective in driving performance? Does the organizational culture support collaboration and innovation? Staff: Evaluate the people within the organization. Are staffing levels adequate? Is there turnover, and are the right people in key roles?
3. Identify the Desired State (Future Goals): Strategy: What strategic changes or improvements need to happen to achieve future goals? Do you need to pivot the strategy, expand into new markets, or innovate in your offerings? Structure: Should the structure change to support new strategic objectives? Would a more decentralized or centralized structure be more effective? Systems: Which new systems or processes need to be introduced or optimized? Are there technology tools that can improve efficiency? Shared Values: Are the current shared values adequate, or do they need to evolve to better align with the future strategy and vision? Skills: What new skills and capabilities are required to execute the strategy? Is there a need for upskilling or hiring? Style: Does leadership need to adopt new behaviors to motivate and guide the workforce? Is the leadership style currently fostering innovation and employee engagement? Staff: Do you need to recruit, retain, or upskill staff to meet future needs?
4. Perform the Gap Analysis: For each of the 7S elements, compare the current state with the desired state. Look for misalignments or gaps. For example: If your strategy calls for global expansion, but your organizational structure is overly centralized, this represents a gap. If the desired culture emphasizes innovation, but the current leadership style is risk-averse, there is a misalignment. If new skills are required but your staff lacks these competencies, it’s a skills gap. Analyze interdependencies between the elements. A gap in one area (e.g., skills) could impact other areas (e.g., systems or strategy).
5. Develop an Action Plan: Prioritize the Gaps: Based on the importance and urgency, identify which gaps need immediate attention and which can be addressed over time. Set Clear Objectives: For each identified gap, define clear objectives. For example, if there’s a skills gap, the objective might be to implement a training program within six months. Assign Responsibilities: Allocate responsibilities to specific teams or leaders for addressing each gap. Set a Timeline: Determine a realistic timeline for each action item, considering resources and current capabilities.
6. Implement the Changes: Execution: Implement the actions and changes identified in your action plan. This could involve restructuring teams, updating processes, providing new training, or enhancing communication about shared values. Monitor Progress: Track the progress of the gap-closing efforts. Regularly review if the changes are having the desired effect and if new gaps have emerged.
7. Review and Iterate: After implementing the changes, assess whether the gaps have been closed and if the organization is on track to achieve its desired state. Continuously improve: Gap analysis should be an ongoing process, especially as business environments and internal dynamics change.

Example of McKinsey’s 7S in Action

Scenario: A company is struggling to execute a new strategy of becoming a market leader in technology innovation.

• Strategy: The company has the right innovation strategy but lacks alignment with operational capacity.
• Structure: The structure is too hierarchical, with decisions being delayed, which is slowing down innovation.
• Systems: Outdated systems prevent the smooth flow of information, slowing decision-making.
• Shared Values: The company values efficiency over creativity, leading to a risk-averse culture.
• Skills: Many staff members lack the technical skills necessary to support new innovations.
• Style: Leadership is conservative and slow to make changes, which stifles innovation.
• Staff: The company lacks sufficient talent in key areas of research and development (R&D).

Action Plan:

• Revise the organizational structure to create cross-functional teams that can make faster decisions.
• Implement new project management systems to streamline communication and decision-making.
• Foster a culture of innovation by revisiting the company’s shared values and encouraging more risk-taking in leadership.
• Launch a skills development program to help staff acquire necessary technical skills and hire additional R&D talent.

By following this practical approach, you can leverage the McKinsey 7S Model to conduct a thorough gap analysis and take action to align your organization more effectively with its strategic objectives.

McKinsey's 7S Model is trademaked concept, the above explained concept is for education purpose only.