McKinsey 7-S McKinsey 7-S FrameworkFramework

Prof. P.V.S.SAIProf. P.V.S.SAI

SSIMSSIM

HYDERABADHYDERABAD

IntroductionIntroduction

The 7-S framework was developed by The 7-S framework was developed by the McKinsey Consultancy firm of the McKinsey Consultancy firm of USA towards the end of 70s.USA towards the end of 70s.

The purpose is to diagnose the The purpose is to diagnose the causes of organizational problems causes of organizational problems and to formulate programs for and to formulate programs for improvement.improvement.

McKinsey 7-S FrameworkMcKinsey 7-S Framework

According to Waterman effective According to Waterman effective organizational change may be organizational change may be understood to be a complex understood to be a complex relationship between relationship between strategy, strategy, structure, systems, style, skills, structure, systems, style, skills, staff and super ordinate goals.staff and super ordinate goals.

MCKINSEY 7-S FRAMEWORKMCKINSEY 7-S FRAMEWORK

The framework suggests that there is a The framework suggests that there is a multiplicity of factors that influence an multiplicity of factors that influence an organization's ability to change.organization's ability to change.

Because of the interconnectedness of the Because of the interconnectedness of the variables it would be difficult to make variables it would be difficult to make significant progress in one area without making significant progress in one area without making progress in the others as well. progress in the others as well.

There is no starting point or implied hierarchy There is no starting point or implied hierarchy in the diagram. It is not obvious which of the in the diagram. It is not obvious which of the seven factors would be the driving force in seven factors would be the driving force in changing a particular organisation at a certain changing a particular organisation at a certain point of time.point of time.

The critical variables could be different across The critical variables could be different across organizations and in the same organisation at organizations and in the same organisation at different points of time. different points of time.

Strategy and Super Ordinate GoalsStrategy and Super Ordinate Goals

In this framework the concept of strategy In this framework the concept of strategy includes mission, objectives, goals, major includes mission, objectives, goals, major action plans and policies.action plans and policies.

The term Super ordinate goals may be The term Super ordinate goals may be considered as equal to the Basic Purpose considered as equal to the Basic Purpose of the organisation. of the organisation.

According to McKinsey, super ordinate According to McKinsey, super ordinate goals are “set of values and aspirations goals are “set of values and aspirations that go beyond the conventional that go beyond the conventional statement of objectives”statement of objectives”

They are the fundamental ideas around which a They are the fundamental ideas around which a business is built. business is built.

They are the broad notions of the future They are the broad notions of the future direction.direction.

They are the main values.They are the main values. Ex: HLL super ordinate goals is “To gain respect Ex: HLL super ordinate goals is “To gain respect

from India, by providing the best possible from India, by providing the best possible products to cater to the daily needs of Indians”.products to cater to the daily needs of Indians”.

Super ordinate goals are expressed at high Super ordinate goals are expressed at high levels of abstraction and may not mean very levels of abstraction and may not mean very much to outsiders who are not very familiar much to outsiders who are not very familiar with the organisation.with the organisation.

StructureStructure Refers to relatively more durable organizational Refers to relatively more durable organizational

arrangements and relationships.arrangements and relationships. These include, reporting relationships, These include, reporting relationships,

communication practices, rules and procedures.communication practices, rules and procedures. The major functions of organisation structure are The major functions of organisation structure are 1.1. Reduces external uncertainty through forecastingReduces external uncertainty through forecasting2.2. Reduces internal uncertainty through control Reduces internal uncertainty through control

mechanismsmechanisms3.3. Undertakes a wide variety of activities through Undertakes a wide variety of activities through

departmentalization, specialization and division departmentalization, specialization and division of work.of work.

4.4. Enables organisation to keep its activities Enables organisation to keep its activities coordinated and to have a focus on the midst of coordinated and to have a focus on the midst of diversity. diversity.

Super structure and InfrastructureSuper structure and Infrastructure

Division of organizational tasks, Division of organizational tasks, allocation of responsibilities, relationship allocation of responsibilities, relationship between various departments, between various departments, specialization of activities, integration of specialization of activities, integration of activities denote super structure of an activities denote super structure of an organisation.organisation.

Network of information, values, Network of information, values, traditions, customs and culture of the traditions, customs and culture of the organisation denotes infrastructure. organisation denotes infrastructure.

SystemsSystems

Refers to all rules, regulations and Refers to all rules, regulations and procedures both formal and informal that procedures both formal and informal that complement the organisational structure.complement the organisational structure.

Production planning and control, Production planning and control, recruitment and selection, training and recruitment and selection, training and development, performance evaluation development, performance evaluation system are some of the examples of system are some of the examples of systems in the organisation. systems in the organisation.

Often changes in the strategy may be Often changes in the strategy may be implemented with some changes in the implemented with some changes in the system rather than some changes in system rather than some changes in the structure.the structure.

StyleStyle The style of an organisation becomes The style of an organisation becomes

evident through the patterns of actions evident through the patterns of actions taken by top management over a period of taken by top management over a period of time. time.

Reporting relations also convey style. Reporting relations also convey style. The framework considers style more than The framework considers style more than

the style of top management. the style of top management. It focuses on the style of management It focuses on the style of management

after a new strategy is implemented. Ex: after a new strategy is implemented. Ex: Acquisition of a new company. Acquisition of a new company.

In the framework aspects of organisational In the framework aspects of organisational culture also include culture also include “style”“style”

StaffStaff

This includes the competencies of This includes the competencies of human resources in the organisation. It human resources in the organisation. It is also concerned with availability, is also concerned with availability, acquisition, maintenance and retention acquisition, maintenance and retention of talent.of talent.

It also includes the way new recruits are It also includes the way new recruits are introduced in the organisation, how they introduced in the organisation, how they are nurtured, developed and molded are nurtured, developed and molded according to organisational culture.according to organisational culture.

SkillsSkills

Core competencies of staff and Core competencies of staff and organisation include skills. These organisation include skills. These skills are developed over a period of skills are developed over a period of time for the organisation. time for the organisation.

Ex: HLL for marketing, L&T for Ex: HLL for marketing, L&T for Engineering, Toyota for quality, Sony Engineering, Toyota for quality, Sony for innovation. for innovation.

ConclusionConclusion Because of the interconnectedness of the Because of the interconnectedness of the

variables it would be difficult to make variables it would be difficult to make significant progress in one area without significant progress in one area without making progress in the others as well. making progress in the others as well.

There is no starting point or implied There is no starting point or implied hierarchy in the diagram. It is not obvious hierarchy in the diagram. It is not obvious which of the seven factors would be the which of the seven factors would be the driving force in changing a particular driving force in changing a particular organization at a certain point of time.organization at a certain point of time.

The critical variables could be different The critical variables could be different across organizations and in the same across organizations and in the same organization at different points of time. organization at different points of time.

This frame work is used in This frame work is used in different contexts in Strategic different contexts in Strategic Management. It is used to Management. It is used to analyze the internal analyze the internal environment, to implement a environment, to implement a strategy and to evaluate a strategy and to evaluate a strategy. strategy.