CEO Tool 2: How to Manage Change Using the McKinsey 7-S Framework

The difficulty of guiding your organisation through changes, whether they are strategic, structural, cultural, or technical, is one that CEOs are continuously faced with. Transitions can generate opportunities and competitive advantages if they are well handled, but they can also be disruptive and unpleasant for your stakeholders, customers, and staff.

How can you guarantee that your initiatives for change are effective and in line with your strategic objectives? Using the McKinsey 7-S Framework, a potent tool for analysing and enhancing your organization's performance, is one option. The McKinsey 7S framework is one of the resources that can assist you in successfully managing change. In the late 1970s, consultants at McKinsey & Company created the McKinsey 7-S Framework. It is predicated on the idea that an organisation is made up of seven interconnected components: employees, shared values, shared systems, strategy, structure, and organisational systems. The hard S's (strategy, structure, and systems) and the soft S's are other names for these components (shared values, skills, style, staff). The framework contends that these components must be coordinated and supportive of one another in order for an organisation to function effectively. All the elements are affected when one changes. Because of this, it's important to think about how each component will be affected by the change and how they will cooperate to support it when managing change.

This paradigm takes a comprehensive approach to organisational analysis by looking at seven interconnected organisational components: strategy, structure, systems, shared values, skills, style, and staff. You can make sure that your company is prepared and capable of effectively implementing the change by matching these components with the expected results of the change.

You cannot, however, attempt this alone. You may effectively manage changes as a CEO by utilising the McKinsey 7S framework with your senior staff. You may ensure that your company is prepared and able to adapt to changing surroundings by aligning its strategy, structure, systems, shared values, skills, and personnel with the goals of the transition. Your leadership staff, who are in charge of informing and implementing the change throughout the organisation, have to be on board with you.

Here are some actions you can do to effectively manage changes by implementing the McKinsey 7S framework with your senior team:

1. Specify the goals and parameters of the modification. What do you hope to accomplish with the change? What are the changes' advantages and disadvantages? How will you determine whether the change was successful? Inform your senior team of the change's goals and objectives with clarity and specificity.

2. Use the 7S framework to evaluate the current state of your company. How well is your company now doing in each of the seven areas? What are the advantages and disadvantages of each component? How do they fit or don't fit with the goals of the change and each other? Use statistics and reviews from numerous sources to compile a thorough and accurate evaluation of the state of your firm today.

3. Using the 7S framework, visualise the desired condition of your business. What do you envision your company's future to look like? What actions and results are wanted for each of the seven elements? How will they work together to achieve the goals of the transformatio and support one another? Create a compelling image of the ideal state for your organisation using your imagination and ingenuity.

4. Using the 7S framework, determine the gaps and the steps required to close them. In each of the seven elements, where are the gaps between your present situation and your ideal situation? What steps must you take to fill these gaps? Who is in charge of carrying them out? These acts will be carried out when and how. Create a practical and workable approach to close the gaps using reasoning and priority.

5. Encourage and equip your senior staff to use the 7S framework to bring about the transformation. How will you involve your senior team in the change process and communicate with them? How will you encourage and assist them in accepting responsibility for their actions? How will you keep track of and assess their development and performance? How will you recognise their accomplishments and draw lessons from their struggles? To foster change among your senior team, use empowerment and collaboration.

6. Create and carry out the adjustments. How will you fill the gaps and resolve the contradictions? What steps will you take to improve or alter each component? Who will be in charge of carrying them out? How are you going to interact and communicate with your stakeholders? How will you track, assess, and gauge the results of the changes?

7. Examine and improve. How well do your adjustments help you get where you want to be? What were the outcomes, and what were your stakeholders' comments? What have been the best practises and lessons learned? What modifications or enhancements are required?

An illustration of the McKenzie 7s in Malaysian retail business

To demonstrate how the model can be used, we will use a Malaysian retail store as an example

The plan of action an organisation uses to accomplish its goals and objectives is referred to as its strategy. In Malaysia, a retail company's strategy could involve diversifying into new markets, providing competitive prices, fostering client loyalty, and setting itself apart from rivals.

Structure: This describes how an organisation is set up and how its members are assigned roles and tasks. Depending on the size, scope, and degree of centralization or decentralisation of the firm, the structure for a retail operation in Malaysia may vary. Unlike a major retail chain, which may have a complex structure with numerous levels of management and departments, a small retail store may have a simple organisation with a few employees reporting to the owner.

Systems: These are the methods and processes that the organisation use to run and oversee its operations. Systems for a retail company in Malaysia could involve marketing, accounting, customer service, sales monitoring, and inventory management.

Shared values: These are the fundamental ideals and ideas that shape the behaviour and culture of an organisation. Shared values for a retail company in Malaysia could include client satisfaction, quality, innovation, honesty, and social responsibility.

Skills: The qualities and competencies that members of the organisation must possess in order to carry out their duties successfully are referred to as skills. Skills for a retail company in Malaysia could include leadership, merchandising, negotiation, and problem-solving.

Style: This describes how the organization's supervisors and managers persuade and inspire their employees. Depending on the personalities and tastes of the managers and leaders, as well as the demands and comments of their followers, the style for a retail business in Malaysia may change. Democratic, autocratic, participative, and laissez-faire are a few possible philosophies.

Staff: This is a term used to describe the human resources that an organisation uses and develops in order to accomplish its goals and objectives. Store managers, sales representatives, cashiers, stockers, delivery drivers and cleaners are examples of potential employees for a retail company in Malaysia.

Lastly, you can ensure that your change projects are extensive, coherent, and consistent by using the McKinsey 7-S Framework. You may improve the performance of your business and reach your strategic objectives by bringing all of its components into alignment.

Why not give it a try today?