The McKinsey 7-S Model
Prakash Menon
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Introduction
What’s the most important part of running a business? Is it strategy? Staff size? Or is leadership style the foundation of every healthy company?
The McKinsey 7-S model tells us that organizations consist of seven essential elements—and all are equally important. Every element is crucial to the organization’s health, and all elements are intertwined, affecting one another. According to this model, successful organizations deeply understand their seven elements.
In this lesson, you’ll learn about these elements and how to use them to analyze your organization’s design.
Defining the Model
The McKinsey 7-S Model is a tool that analyzes a company’s organizational design. It identifies how different aspects of an organization interact.
The model is commonly used to analyze and respond to organizational changes like mergers and new strategies. It highlights weaknesses and helps organizations stay aligned during a change.
While it’s a trusted model, the McKinsey 7-S model has strengths and weaknesses. Check out the table below to see if the model fits your needs.
The 7 Elements
Seven elements, each of which starts with the letter “s,” are at the core of the McKinsey 7-S model. These elements include two types: hard elements, which are easy to identify and modify, and soft elements, which are subjective and harder to change.?
The graph below demonstrates how all seven elements are connected. Notice how a change to one impacts the others. No point is more important than the other, but “shared values” is placed in the center to indicate how it drives the other elements.
The McKinsey 7-S Model
Start Where You Are
It’s important to understand where you stand with the seven elements. Before you jump into analysis, reflect on how your organization relates to each foundational point. Explore the list below for questions to guide your review.
- Strategy: a plan that guides an organization to competitive advantage.?What is your strategy? How do you intend to reach your goals? What makes you stand out from competitors?
- Structure: how the company is organized.?What defines your organizational chart? What are the hierarchies? How do teams communicate?
- Systems: the daily procedures, processes, and tools used to finish tasks.?What processes do you use, including HR, financial, and other systems? What checks, if any, keep these systems under control?
- Shared values: the principles that guide the organization.?What is your mission and vision? What are your values? What is your company or team culture like?
- Style: leadership’s approach to leading.?What management styles are common in the organization? What’s the relationship between managers and employees?
- Staff: your employees, their abilities, and how they relate to the organization.?What abilities do your staff bring to the organization? What positions need filling?
- Skills: the competencies and specializations of both individual employees and the organization as a whole.?What are you known for doing well? Do you have any skill gaps?
The McKinsey 7-S Model
Once you have a comprehensive understanding of your organization’s seven elements, you can bring them together for analysis. Click through this process to explore the McKinsey 7-S model.
Step 1
Examine Your Alignment
Take a look at your seven elements and examine their alignment. Do they support one another? Or are there gaps and inconsistencies? What do you need to change for cohesiveness between your elements?
For example:
A small business is growing, reaching more customers, and increasing sales. However, they don’t have enough staff to support their growth. To successfully achieve this goal, they have to develop ways to align strategy and staff.
Step 2
Determine Your Goals
Once you’ve identified any misalignment between elements, determine your overall goals. What is your ideal organizational design? Where do you want to be, and what will your company look like when you achieve that goal?
For example:
The small business wants to expand to a second storefront location. To do so, they would have to adjust almost all of their elements: expanding staff, modifying systems and structures, adopting leadership styles better suited for bigger teams, etc.
Step 3
Create an Action Plan
Once you understand the gaps between your elements and what they’ll look like aligned to your goals, you can create an action plan. Develop a plan that outlines concrete changes you will make to promote cohesiveness and optimization within your company.
For example:
The small business analyzes their elements and determines their optimal organizational design for expanding to a second location. Using this insight, they develop improvement plans. For instance, HR prepares to hire and train more employees.
Step 4
Implement Your Plan
Finally, put your plan into action. Make the changes to align your elements with each other and your goals. Remember that this isn’t a one-time process—the elements are dynamic! Continue to review each area and its relationship to the others to maintain alignment.
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For example:
The small business implements its plans. As they prepare to open a second location, they monitor their seven elements, making modifications as they move toward their goals.
Check Your Understanding
Pause and Reflect
Say that the pet supply business wants to create a city-wide marketing campaign. What gaps do they need to fill to reach this goal? How would they modify each element to adapt to this change?
Summary
The McKinsey 7-S Model is a framework that helps companies optimize their organizational design. The model emphasizes seven foundational elements found in every organization: strategy, structure, systems, shared values, style, staff, and skills.?
Once you understand your organization’s seven elements, you can start analysis:
- Examine your alignment.
- Determine your goals.
- Create an action plan.
- Implement your plan.
The McKinsey 7-S model builds cohesiveness in complex organizations and provides a guiding plan for navigating change. It highlights the interconnectedness of a business, reminding us that a change in one part of an organization affects others.
This model requires time, effort, and collaboration from the entire organization, including leadership.?
To benefit from this model’s strengths, include everyone with relevant authority, insight, and experience.
Remember, if you’re ever unsure of how to apply a model, you can always consult an expert.
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