McKinsey 7s model.pdf

The McKinsey 7-S model is a useful tool that can be used to diagnose and solve organizational problems. It depicts an organization as a
collection of seven interconnected elements: structure, strategy,
systems, staff, skills, style and shared values. By considering how
each of these elements impacts on the others, it is possible to take a
holistic approach to organizational change.

1. Quality Management
System
Topic : McKinsey 7s Model
Presented By: Mohini Tawade
Under The guidance Of : Dr. Sudhir Pandya
Department: Quality Assurance
Dr. D.Y. Patil College of
Pharmacy , Akurdi

2. Introduction
TheMcKinsey7-Smodelisausefultoolthatcanbeusedtodiagnose
andsolveorganisationalproblems.Itdepictsanorganisationasa
collectionofseveninterconnectedelements:structure,strategy,
systems,staff,skills,styleandsharedvalues.Byconsideringhow
eachoftheseelementsimpactsontheothers,itispossibletotakea
holisticapproachtoorganisationalchange.
2/3/2023

3. Background
McKinsey7smodelwasdevelopedin1980sbyMcKinsey
consultantsTomPeters,RobertWatermanandJulienPhilips
withahelpfromRichardPascaleandAnthonyG.Athos.Since
theintroduction,themodelhasbeenwidelyusedbyacademicsand
practitionersandremainsoneofthemostpopularstrategicplanning
tools.Itsoughttopresentanemphasisonhumanresourcesrather
thanthetraditionalmassproductiontangiblesofcapital,
infrastructureandequipment,asakeytohigherorganizational
performance.
2/3/2023

4. The 7S model is a strategic model that can be used for any of the
following purposes
A.Organizational alignment or performance improvement
B.Understanding the core and most influential factors in an organization’s strategy
C.Determining how best to realign an organization to a new strategy or other
organization design
D.Examining the current workings and relations an organization exhibits
2/3/2023

5. 2/3/2023
Eachelementisconnectedtoeveryother,
withoutanyobviousstartingpoint.Thisis
deliberate,aseveryoneoftheelements
could,potentially,bethedrivingforcefor
change.Thepurposeofthistoolisto
emphasisethatchangingoneaspectofan
organisationwillimpactupontheothers.
Inatrulyeffectiveorganisation,allseven
elementswilloperatetowardthesame
goal.Ifachangeleaderbelievesthattheir
organisationcouldbemoreeffective,they
canusetheframeworktohelpidentifythe
elementorelementsthatneedtochange.

6. 2/3/2023

7. 2/3/2023
Hard Elements Soft Elements
Strategy Skills
Structures Style
Systems Staff
Shared Values

8. Hard elements
Hard elements are easy to identify and describe. They are the foundation of any
organisation and can be used to describe its management structure, processes and
objectives. They tend to be recorded and referenced in corporate documents like
statements, strategy reports and organisational charts.
➢Structure: The way in which an organisation's activities are managed. In small
businesses, this might be a traditional hierarchy. In larger organisations, this is more
likely to be a divisional or matrix structure, where different managers have varying
areas of responsibility.
2/3/2023

9. ➢Strategy:Theplananorganisationhastoachieveitsobjectives.Thisisadynamic
element,inthatitchangesallthetimeinresponsetooutsidefactorslike
competition,demandandtechnologicalinnovations.
➢Systems:Theprocessesanorganisationhasinplace.Thisincludesinformation
systems,aswellasfinancialprocedures,legalpolicy,riskassessment,healthand
safety,payandbenefits.Inshort,allthesystemsthatdirectorganisationalactivity.
2/3/2023

10. Soft Elements
ThefoursoftSsareoftendifficulttoidentify,andconstantlyevolve.Itcanbehardtoputthem
intowordsandtheysometimesoverlapwithoneanother.However,theyarenolessimportantto
anorganisationundergoingaperiodofchange.Theyare:
➢Style:theorganisationalculture,usuallydescribedas'thewaythingsaredonearoundhere'.This
alsoincludesindividualmanagementandleadershipstyles.
➢Staff:thepeopleintheorganisation,theirtalentsandthewaytheyaredeveloped.
➢Skills:thecompetenciesandcapabilitiesoftheorganisationanditspeople.
➢SharedValues:theguidingprinciplesthatdirecttheorganisation'sbehaviour.Thesewere
originallyreferredtoas'superordinategoals'andareoftenunwritten.Examplesofsharedvalues
mightincludegreatcustomerservice,constantinnovationorhonesty.
2/3/2023

11. Questionstoassesseachelements?
Strategy
Whatistheorganization’sstrategyseekingtoaccomplish?
Howdoestheorganizationplantouseitsresourcesandcapabilitiestodeliverthat?
Whatisdistinctaboutthisorganization?
Howdoestheorganizationcompete?
Howdoestheorganizationadapttochangingmarketconditions?
2/3/2023

12. Structure
Howistheorganizationorganized?
Whatarethereportingandworkingrelationships(hierarchical,flat,silos,etc.)?
Howdotheemployeesalignthemselvestothestrategy?
Howaredecisionsmade?
Isitbasedoffofcentralization,empowerment,decentralizationorother
approaches?
Howisinformationshared(formalandinformalchannels)acrosstheorganization?
2/3/2023

13. Systems
What are the primary business and technical systems that drive the organization?
What and where are the system controls?
How is progress and evolution tracked?
What internal rules and processes does the team utilize to maintain course?
2/3/2023

14. SharedValues
Whatisthemissionoftheorganization?
Whatisthevisiontogetthere?
Whataretheidealversusrealvalues?
Howdothevaluesplayoutindailylife?
Whatarethefoundingvaluesthattheorganizationwasbuiltupon?
2/3/2023

15. Style
What is the management/leadership style like? How do they behave?
How do employees respond to management/leadership?
Do employees function competitively, collaboratively, or cooperatively?
Are there real teams functioning within the organization or are they just nominal
groups?
What behaviors, tasks and deliverables does management/leadership reward?
2/3/2023

16. Staff
What is the size of the organization?
What are the staffing needs?
Are there gaps in required capabilities or resources?
What is the plan to address those needs?
2/3/2023

17. Application of McKinsey 7s Model
2/3/2023
Identify the area which requires alignment
Ascertain an excellent organisational design
Determine where and what changes are to be made
Implement the change planned
Constant review of 7 elements

18. 2/3/2023
Advantages of 7s Model
Enhancement of Organization Effectiveness
Align Organization Department and Processes
Implementation of Strategies
Analyses Impact of Future Organization Change
Comprehensive Framework
Link Academic research with management practice

19. Disadvantagesof7sModel
Lack of practical support
Loopholes in strategy formulation or Execution
Lacks Proper Expiation of strategy Implementation
Static Model
Difficult to assess its Viability
Ignores External Environment
2/3/2023

20. Examples of the McKinsey 7s Model in Action
The practical applications of this model including both the failure &
success of organisational change projects can be seen by studying the
following corporate examples:
2/3/2023

21. 2/3/2023

22. Nokia
2/3/2023
Frominitiallybeingamobilephoneindustrypioneer,todrasticallylosingmarket
share,andfinallygettingacquiredbyMicrosoft,Nokia’sjourneyofchangefailure
canbeexplainedusingthe7-Sframework.
Strategy:Nokiafacedadilemmaandhadtooptimisecostsandvolume,enhance
performance,andmaximisesecurity.Nokiaoptedforacost-leadershipapproach
andfailedmiserablyonitsinnovationandperformancefronts.
Structure:Nokiahadatop-downlineofhierarchywhereemployeeswereworking
insiloswithlimitedcommunication.TocompetewiththelikesofApple,Nokia
shouldhaveoptedforanagileanddecentralisedstructure,alongwitha
collaborativeapproach.

23. Systems:Nokiaconsideredagilityandbeingnimbleasitskeycompetitiveadvantages.Witha
skilledworkforce,Nokiawasinapositiontoinnovateitsproductsandincreaseoperational
efficiency.
Skills:Nokiahadapoolofhighly-skilledengineersandinitiallydesignedhighlyefficientmobile
phones.Therewasn’tanyskillgapweighingthemdown.
Staff:During2007-2010,NokiasurprisinglyremovedtheCTOpositionfromtopmanagement,
leadingtoextremelyhighattritionrates.Newhiresweren’tproperlyskilled,tobeginwith,causing
thedownfallofNokiaasacutting-edgebrand.
Style:Duetothelowtechnicalcompetenceofleaders,employeemoralewaslow.Insteadof
bringinginpeoplewiththerightbackgroundstofurthercompanyinnovationandgrowth.,Nokia
neededtransformationalchangeleadershiptohelpwithtechnologicaladvancementandcutting-
edgedesigns.
SharedValues:ThecorevaluesofthecompanyenablingbusinessperformancewereRespect,
Achievement,Renewal,Challenge.
2/3/2023

24. 2/3/2023

25. McDonald’s
Here’showthefast-foodgiantleveragesMcKinsey’s7-Smodelfordrivingorganisational
change:
Strategy:McDonald’sgainedasignificantmarketsharethroughitscost-leadershipapproach.
Additionally,itsetsclearSMARTgoalstoachievethelong-termandshort-termvision.
Structure:Unlikeothermultinationalcorporations(MNCs)withcomplexhierarchical
structures,McDonald’shasaflatstructurewhereastoremanagermanagesitsemployees.
Employeesworkasaclose-knitteamandhaveeasyaccesstotheseniormanagementif
required.
Systems:McDonald’sisknownforconstantlyinnovatingtoreducethewaittimeandmake
itsentireproductionandsupplychainmoreefficient–suchasitsnewMcDonaldsappand
self-orderingkiosks.
2/3/2023

26. SharedValues:McDonald’saimstohaveahighlevelofintegrity,serveawiderangeof
customers,hireemployeesfromdifferentbackgrounds,encourageteamwork,andfinally,
givesomeprofitsbacktothecommunitywithitscorevalues:Serve,Inclusion,Integrity,
Community,andFamily.
Style:McDonald’sleveragesaparticipativeleadershipstylewhereseniorsengagewith
employeesatdifferentlevelstoseektheirfeedbacktoimproveoperationsandresolve
conflicts.
Staff:Withover210,000employees,McDonald’sisoneofthelargestemployersinthe
world.Itbelievesintheconceptofdiversityandworkstowardsemployeesatisfaction.
Skills:McDonald’sregularlytrainsitsemployeestoprovideanunparalleledcustomer
experienceandhandleobjections.
2/3/2023

27. 2/3/2023

28. Coca-Cola
Strategy
1Portfoliobuilding–acquisitionsoftheChineseFruit/VegandAsianSpecialitybrandtocreateafootholdintheAsia
Pacific.
2RidingonHW-SwitchsafetyswitchestoFVJ.
3Packagingamendedtoraisevolumepercustomer.
4Resourceexpansionwithaconcentratedapproach"China-India".
5Takingadvantageofcostsynergiesthroughitsmanufacturingandbottlingfacilitiestoensurequality.
Marketingstrategy–wellbackedbytheoverallpoweroftheCoca-Colabrand,eachproductrangespanning7Coca-Cola
categories.Talentmanagementstrategy–Coca-Colamaynothaveadequatelyengageditsworkerstoreducetherateof
workforceturnover.Itwillneedtotightenupitspoliciesonretentionandgrowth.Developmentstrategy-capitalizingoncost
synergiesbycombiningbottlingfacilitiesvertically.Supplychainoperationsaresupportedonaglobalscalewiththenew
tools.Marketstrategy–closepartnershipswithretailers,proximitystrategyforbringingaCokebrandwithinreachthrough
theuseofvendingmachines,andmaintainingsufficientdistributioncoveragebydifferentmeans.
2/3/2023

29. 2/3/2023
Structure Coca-Cola –has the Head Office division responsible for providing overall guidance
to Coca-Cola and maintaining the regional structure. ExCo'sPresident of Coca-Cola, sometimes
the CEO. Other managers are either responsible for the big regions or have significant specialized
companies, e.g. the CFO. Coca-Cola combines centralized and decentralized elements.Divisions
and regions act as product line teams and report to the Chairman of the Division with each
Country Manager. The various departments are responsible for national (local) decision-taking,
national market analysis, and local advertising production, for example, using languages from the
countries where Coca-Cola works. Regional decision-making is a matter of fact. A big region such
as the Asia Pacific is grouped according to a map with its own marketing structure.
SystemProcess Systems: each unit is responsible for splitting these into manageable activities
and providing benchmarks for 6P initiatives. (Profit, People, Portfolio, Partners, Planet,
Productivity). Management day to day systems: administrative steps to be placed at a managerial
level along with daily reviews and reports to provide information about the outcomes. Day to day
management systems, In addition to the advantages and opportunities for meeting targets
alignment.

30. Style Coke Society –look forward and inspired, reflecting solidarity. “One business-One team.
One team. One love. One love. As one business”, employees are provided with relevant and
expedited learning opportunities for the greater good of Coca-Cola. One team links to job
development partnerships. One Love goes beyond the brand's portfolio to sustainability,
community support, and earth preservation and security.
Staff Benchmarked business strategy of recruitment and retention. Facilitating work pathways.
Systems for performance improvement are best controlled. Given the silo existence of some
employees' roles, activities should be implemented in order to promote creativity and to include
employees. Coca-Cola stock ownership financial incentives encourage workers to support the
company.
Skill Vision 2021 calls for creative approaches to achieve its objective, particularly with regard
to product content (new preferences, healthcare trends), volume and efficiency innovation.
Objectives explain the main activities to be performed by Coca-Cola and what should be done at
each stage. Strategically, investment dedication in product quality innovation, volume (new
packaging with a minimum of 10% increase in volume) and effectiveness.
2/3/2023

31. Shared visions
Coca-Colasystemsrevenuesfor2010by2020throughtheproductionofnew
beverages,meetingchangingconsumertastesbytakingtheplanintolinewith
their6Pdream;Profit,People,Portfolio,Partners,Planet,Productivity.
2/3/2023

32. 2/3/2023