Introduction

This paper discusses McKinsey's 7S Model that was created by the consulting company

McKinsey and Company in the early 1980s. Since then it has been widely used by
practitioners and academics alike in analysing hundreds of organisations. The paper
explains each of the seven components of the model and the links between them. It
also includes practical guidance and advice for the students to analyse organisations
using this model. At the end, some sources for further information on the model and
case studies available on this website are mentioned.

The McKinsey 7S model was named after a consulting company, McKinsey and

Company, which has conducted applied research in business and industry (Pascale &
Athos, 1981; Peters & Waterman, 1982). All of the authors worked as consultants at
McKinsey and Company; in the 1980s, they used the model to analyse over 70
large organisations. The McKinsey 7S Framework was created as a recognisable and
easily remembered model in business. The seven variables, which the authors term
"levers", all begin with the letter "S":

These seven variables include structure, strategy, systems, skills, style, staff and
shared values. Structure is defined as the skeleton of the organisation or the
organisational chart. The authors describe strategy as the plan or course of action in
allocating resources to achieve identified goals over time. The systems are the routine
processes and procedures followed within the organisation. Staff are described in terms
of personnel categories within the organisation (e.g. engineers), whereas the skills
variable refers to the capabilities of the staff within the organisation as a whole. The way
in which key managers behave in achieving organisational goals is considered to be the
style variable; this variable is thought to encompass the cultural style of the
organisation. The shared values variable, originally termed superordinate goals, refers
to the significant meanings or guiding concepts that organisational members share
(Peters and Waterman, 1982).
The shape of the model (as shown in figure 1) was also designed to illustrate the
interdependency of the variables. This is illustrated by the model also being termed as
the "Managerial Molecule". While the authors thought that other variables existed within
complex organisations, the variables represented in the model were considered to be of
crucial importance to managers and practitioners (Peters and Waterman, 1982). 
The analysis of several organisations using the model revealed that American
companies tend to focus on those variables which they feel they can change (e.g.
structure, strategy and systems) while neglecting the other variables. These other
variables (e.g. skills, style, staff and shared values) are considered to be "soft"
variables. Japanese and a few excellent American companies are reportedly successful
at linking their structure, strategy and systems with the soft variables. The authors have
concluded that a company cannot merely change one or two variables to change the
whole organisation. 
For long-term benefit, they feel that the variables should be changed to become more
congruent as a system. The external environment is not mentioned in the McKinsey 7S
Framework, although the authors do acknowledge that other variables exist and that
they depict only the most crucial variables in the model. While alluded to in their
discussion of the model, the notion of performance or effectiveness is not made explicit
in the model.

Description of 7 Ss

Strategy: Strategy is the plan of action an organisation prepares in response to, or

anticipation of, changes in its external environment. Strategy is differentiated by tactics
or operational actions by its nature of being premeditated, well thought through and
often practically rehearsed. It deals with essentially three questions (as shown in figure
2): 1) where the organisation is at this moment in time, 2) where the organisation wants
to be in a particular length of time and 3) how to get there. Thus, strategy is designed to
transform the firm from the present position to the new position described by objectives,
subject to constraints of the capabilities or the potential (Ansoff, 1965).

Structure: Business needs to be organised in a specific form of shape that is generally

referred to as organisational structure. Organisations are structured in a variety of ways,
dependent on their objectives and culture. The structure of the company often dictates
the way it operates and performs (Waterman et al., 1980). Traditionally, the businesses
have been structured in a hierarchical way with several divisions and departments, each
responsible for a specific task such as human resources management, production or
marketing. Many layers of management controlled the operations, with each answerable
to the upper layer of management. Although this is still the most widely used
organisational structure, the recent trend is increasingly towards a flat structure where
the work is done in teams of specialists rather than fixed departments. The idea is to
make the organisation more flexible and devolve the power by empowering the
employees and eliminate the middle management layers (Boyle, 2007). 

Systems: Every organisation has some systems or internal processes to support and

implement the strategy and run day-to-day affairs. For example, a company may follow
a particular process for recruitment. These processes are normally strictly followed and
are designed to achieve maximum effectiveness. Traditionally the organisations have
been following a bureaucratic-style process model where most decisions are taken at
the higher management level and there are various and sometimes unnecessary
requirements for a specific decision (e.g. procurement of daily use goods) to be taken.
Increasingly, the organisations are simplifying and modernising their process by
innovation and use of new technology to make the decision-making process quicker.
Special emphasis is on the customers with the intention to make the processes that
involve customers as user friendly as possible (Lynch, 2005).

Style/Culture: All organisations have their own distinct culture and management style.
It includes the dominant values, beliefs and norms which develop over time and become
relatively enduring features of the organisational life. It also entails the way managers
interact with the employees and the way they spend their time. The businesses have
traditionally been influenced by the military style of management and culture where
strict adherence to the upper management and procedures was expected from the
lower-rank employees. However, there have been extensive efforts in the past couple of
decades to change to culture to a more open, innovative and friendly environment with
fewer hierarchies and smaller chain of command. Culture remains an important
consideration in the implementation of any strategy in the organisation (Martins and
Terblanche, 2003).

Staff: Organisations are made up of humans and it's the people who make the real
difference to the success of the organisation in the increasingly knowledge-based
society. The importance of human resources has thus got the central position in the
strategy of the organisation, away from the traditional model of capital and land. All
leading organisations such as IBM, Microsoft,Cisco, etc put extraordinary emphasis on
hiring the best staff, providing them with rigorous training and mentoring support, and
pushing their staff to limits in achieving professional excellence, and this forms the basis
of these organisations' strategy and competitive advantage over their competitors. It is
also important for the organisation to instil confidence among the employees about their
future in the organisation and future career growth as an incentive for hard work (Purcell
and Boxal, 2003).

Shared Values/Superordinate Goals: All members of the organisation share some

common fundamental ideas or guiding concepts around which the business is built. This
may be to make money or to achieve excellence in a particular field. These values and
common goals keep the employees working towards a common destination as a
coherent team and are important to keep the team spirit alive. The organisations with
weak values and common goals often find their employees following their own personal
goals that may be different or even in conflict with those of the organisation or their
fellow colleagues (Martins and Terblanche, 2003).

Using the 7S Model to Analyse an Organisation

A detailed case study or comprehensive material on the organisation under study is

required to analyse it using the 7S model. This is because the model covers almost all
aspects of the business and all major parts of the organisation. It is therefore highly
important to gather as much information about the organisation as possible from all
available sources such as organisational reports, news and press releases although
primary research, e.g. using interviews along with literature review is more suited. The
researcher also needs to consider a variety of facts about the 7S model. Some of these
are detailed in the paragraphs to follow.  

The seven components described above are normally categorised as soft and hard
components. The hard components are the strategy, structure and systems which are
normally feasible and easy to identify in an organisation as they are normally well
documented and seen in the form of tangible objects or reports such as strategy
statements, corporate plans, organisational charts and other documents. The remaining
four Ss, however, are more difficult to comprehend. The capabilities, values and
elements of corporate culture, for example, are continuously developing and are altered
by the people at work in the organisation. It is therefore only possible to understand
these aspects by studying the organisation very closely, normally through observations
and/or through conducting interviews. Some linkages, however, can be made between
the hard and soft components. For example, it is seen that a rigid, hierarchical
organisational structure normally leads to a bureaucratic organisational culture where
the power is centralised at the higher management level.

It is also noted that the softer components of the model are difficult to change and are
the most challenging elements of any change-management strategy. Changing the
culture and overcoming the staff resistance to changes, especially the one that alters
the power structure in the organisation and the inherent values of the organisation, is
generally difficult to manage. However, if these factors are altered, they can have a
great impact on the structure, strategies and the systems of the organisation. Over the
last few years, there has been a trend to have a more open, flexible and dynamic
culture in the organisation where the employees are valued and innovation encouraged.
This is, however, not easy to achieve where the traditional culture is been dominant for
decades and therefore many organisations are in a state of flux in managing this
change. What compounds their problems is their focus on only the hard components
and neglecting the softer issues identified in the model which is without doubt a recipe
for failure. Similarly, when analysing an organisation using the 7S model, it is important
for the researcher to give more time and effort to understanding the real dynamics of the
organisation's soft aspects as these underlying values in reality drive the organisations
by affecting the decision-making at all levels. It is too easy to fall into the trap of only
concentrating on the hard factors as they are readily available from organisations'
reports etc. However, to achieve higher marks, students must analyse in depth the
cultural dimension of the structure, processes and decision made in an organisation. 

For even advanced analysis, the student should not just write about these components
individually but also highlight how they interact and affect each other. Or in other words,
how one component is affected by changes in the other. Especially the "cause and
effect" analyses of soft and hard components often yield a very interesting analysis and
provides readers with an in-depth understanding of what caused the change.

Sources for Data on McKinsey's 7S Model

The main source of academic work on the 7S model has to be the writings of Waterman
et al. (1980; 1982), and Pascale and Athos (1981) who came up with the idea and
applied it to analyse over 70 large organisations. Since then, it has been used by
hundreds of organisations and academics for analytical purposes. Many such case
studies can be obtained from the academic journals and the books written on the topic.
A few case studies, for example the analyses of Coca-Cola and energy
giant Centrica (Owner of British Gas), are also available at this website.