McKinsey 7S Framework

1. C:\Users\Allan BigMac\Documents\000 OEC\Logo\The Logo Company\FINAL\OperationalExD24aR02bP01ZL\TRANSPARENT.png The McKinsey Structure 7 7S S FRAMEWORK Strategy Systems Shared Values Skills Style Staff C:\Users\Allan BigMac\Documents\000 OEC\Logo\The Logo Company\FINAL\OperationalExD24aR02bP01ZL\TRANSPARENT.png © Operational Excellence Consulting. All rights reserved.

2. NOTE: This is a PARTIAL PREVIEW. To download the complete presentation, please visit: https://www.oeconsulting.com.sg NOTE: This is a PARTIAL PREVIEW. To download the complete presentation, please visit: https://www.oeconsulting.com.sg Learning Objectives Learn how to apply the 7S framework to evaluate organizational effectiveness and alignment Understand the best practices for implementing the 7S framework in an organization Understand the McKinsey 7S framework and its interrelated elements 2 © Operational Excellence Consulting. All rights reserved.

3. Contents 1 7S Framework & Elements 2 7S Checklist Questions 3 Using the 7S Framework 4 7S Implementation Steps 5 Examples of 7S Applications 6 7 Vectors of Contention 7 Critical Success Factors 3 © Operational Excellence Consulting. All rights reserved.

4. What is the 7S Framework? ▪ It is a management framework that describes 7 factors to organize a company in a holistic and effective way ▪ Together these factors determine the way in which an organization operates ▪ Managers should take into account all 7 of these factors, to be sure of successful implementation of a strategy ▪ Large or small, the strategies are all interdependent, so if you fail to pay proper attention to one of them, this may effect all others as well 4 © Operational Excellence Consulting. All rights reserved.

5. The 7S Framework Structure Strategy Systems Shared Values Skills Style Staff The framework is most often used as a tool to assess and monitor changes in the internal situation of an organization. 5 © Operational Excellence Consulting. All rights reserved.

6. Description of the 7S Elements Elements Description ▪ The plan devised to maintain and build competitive advantage over the competition. Strategy Structure ▪ The way the organization is structured and who reports to whom. ▪ The daily activities and procedures that staff members engage in to get the job done. Systems ▪ The core values of the company that are evidenced in the corporate culture and the general work ethic. Shared Values ▪ The style of leadership adopted and the organization’s overall operating approach. Style Staff ▪ The employees and their general capabilities. ▪ The actual skills and competencies of the employees working for the company. Skills 6 © Operational Excellence Consulting. All rights reserved.

7. The 7S Elements ▪ The seven interdependent factors are categorized as either “hard” or “soft” elements Structure ▪ Hard Elements: Strategy, Structure and Systems Strategy Systems Shared Values ▪ Soft Elements: Shared values, Skills, Style and Staff Skills Style Hard elements Staff Soft elements 7 © Operational Excellence Consulting. All rights reserved.

8. 7S Hard Elements (“Hard S”) ▪ “Hard” elements are easier to define or identify Structure ▪ Management can directly influence them – these are strategy statements; organization charts and reporting lines; and formal processes and IT systems Strategy Systems Shared Values ▪ The hard elements are: • Strategy • Structure • Systems Skills Style Staff 8 © Operational Excellence Consulting. All rights reserved.

9. 7S Soft Elements (“Soft S”) ▪ “Soft” elements, on the other hand, can be more difficult to describe Structure ▪ They are less tangible and more influenced by culture Strategy Systems ▪ These soft elements are as important as the hard elements if the organization is going to be successful Shared Values Skills Style ▪ The soft elements are: • Shared Values • Skills • Style • Staff Staff 9 © Operational Excellence Consulting. All rights reserved.

10. Shared Values ▪ Shared values refer to the core beliefs and principles that an organization holds Structure ▪ This can include things like the organization’s mission, vision, and values, as well as its culture and overall philosophy Strategy Systems Shared Values ▪ Shared values can have a significant impact on an organization’s performance, as they can influence employee behavior, decision-making, and overall organizational culture Skills Style Staff 10 © Operational Excellence Consulting. All rights reserved.

11. “The soft stuff is always harder than the hard stuff.” Roger Enrico © Operational Excellence Consulting. All rights reserved. 11

12. Mastering the Framework: Implementation Strategies 1. Identifying gaps between current and desired states 2. Analyzing how changes in one element may impact other elements 3. Identifying opportunities for improvement 12 © Operational Excellence Consulting. All rights reserved.

13. 7S as an Organizational Gap Analysis Tool Current State Future State 13 © Operational Excellence Consulting. All rights reserved.

14. Benefits of the 7S Framework 1. It offers an effective method to diagnose and understand an organization 2. It provides guidance in organizational change 3. It combines rational (“hard S”) and emotional (“soft S”) elements 4. All parts are integrated and must be addressed in a unified manner 14 © Operational Excellence Consulting. All rights reserved.

15. The 7S Framework can be applied to a wide variety of situations 1. A diagnostic tool for an ineffective organization 2. Improve the performance of a company 3. Guides organizational changes 4. Examine the likely impacts of future changes within an organization 5. Align business units and processes during a merger or acquisition 6. Determine how best to implement a proposed strategy 7. Combine rational elements (“hard S”) with emotional elements (“soft S”) 15 © Operational Excellence Consulting. All rights reserved.

16. Style – Key Questions 1. How participative is the management/leadership style? 2. How effective is that leadership? 3. How good is management in making decisions? 4. Where does management focus most of its time and attention? 5. Do employees/team members tend to be competitive or cooperative? 6. Are there real teams functioning within the organization or are they just nominal groups? 16 © Operational Excellence Consulting. All rights reserved.

17. The 7S framework can best be used as a matrix for assessing the impact of the proposed strategy of the organization Example: Food4U Supermarket is moving away from its traditional middle-of-the-road retail model towards an upscale, fresh, full-service, convenience-oriented grocery and fresh market. An initial decision to hire specialists may have consequences reaching far beyond the scope of the strategy at it was proposed. Shared Values Staff Skills Style Systems Structure Strategy - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Strategy - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Structure - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Systems - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Shared Values Need for specialists: e.g. butcher, bread, baker, food display specialists - - - - - - - - - - - - - - - - - - - - Style - - - - - - - - - - Skills Potential conflict: (older) specialist vs. (younger) temporary employees Staff 17 © Operational Excellence Consulting. All rights reserved.

18. When conducting a 7S analysis, it is best to use an iterative approach starting with Shared Values, followed by hard S’s and then soft S’s 4 1 Adjust and align the elements, and then reanalyze how that impact other elements and their alignments • Are they consistent with your strategy, structure, and systems? If not, what needs to change? Start with Shared Values 2 • How well does each one support the others? Identify where changes need to be made. Evaluate the Hard Elements 3 • Do they support the desired hard elements? Do they support one another? If not, what needs to change? Evaluate the Soft Elements Source: Adapted from Mindtools 18 © Operational Excellence Consulting. All rights reserved.

19. The 7S Implementation Journey 1 Understand the Current State 2 Define the Desired Future State 3 Identify the Seven Elements 4 Conduct Gap Analysis 5 Develop Action Plans 6 Implement Action Plans 7 Monitor and Evaluate 19 © Operational Excellence Consulting. All rights reserved.

20. The 7S Implementation Journey – Steps 1 and 2 Step 1 Description Understand the Current State Key Activities Review existing organizational documents (e.g., mission statements, strategic plans). Conduct interviews with key stakeholders to gather insights. Analyze available data on organizational performance. Deliverables Current state assessment report highlighting key findings and insights. ▪ ▪ ▪ ▪ Facilitate workshops with leadership to define the organization’s vision and strategic objectives. Identify areas for improvement based on the current state assessment. Communicate the vision and strategic objectives to all stakeholders. Vision and strategic objectives document. 2 Define the Desired Future State ▪ ▪ ▪ ▪ 20 © Operational Excellence Consulting. All rights reserved.

21. “Innovation distinguishes between a leader and a follower.” Steve Jobs © Operational Excellence Consulting. All rights reserved. 21

22. The Vectors of Contention is a useful tool to profile an organization with respect to the 7 elements Elements Vectors of Contention Planned Opportunistic Strategy Elitist Pluralist Structure Mandatory Discretionary Systems Hard minds Soft hearts Shared values Managerial Transformational Style Collegiality Individuality Skills Maximize ‘Meta-mize’ Staff Refer to Appendix 1 for explanatory notes on the Contending Opposites (Vectors of Contention). 22 © Operational Excellence Consulting. All rights reserved.

23. Harmonizing Forces: Resolving Organizational Tensions Step Description Key Activities Review the 7S framework to understand the seven vectors. Identify specific examples or scenarios within the organization that correspond to each vector. 1 Identify the Seven Vectors of Contention ▪ ▪ Examine how each vector manifests in the organization. Evaluate the impact of the opposing forces on organizational alignment and effectiveness. 2 Analyze Each Vector ▪ ▪ Determine which vectors are causing the most tension or conflict. Consider the implications of these tensions on organizational performance. 3 Identify Areas of Tension ▪ ▪ Brainstorm potential strategies to resolve or mitigate the identified tensions. Prioritize strategies based on their potential impact and feasibility. Implement selected strategies and monitor their effectiveness. 4 Develop Strategies to Address Tension ▪ ▪ ▪ 23 © Operational Excellence Consulting. All rights reserved.

24. Example 1: Apple – Balancing Innovation and Efficiency Step Description Key Activities Apple identifies the vectors within its organizational structure, including conflicting goals between product innovation and supply chain efficiency. 1 Identify the Seven Vectors of Contention ▪ Apple analyzes how these conflicting goals impact its ability to introduce new products quickly while maintaining high-quality standards. 2 Analyze Each Vector ▪ Apple identifies that the tension between innovation and efficiency could lead to delays in product launches or compromises in product quality. 3 Identify Areas of Tension ▪ Apple implements strategies such as cross-functional collaboration, flexible manufacturing processes, and supplier partnerships to balance innovation and efficiency. 4 Develop Strategies to Address Tension ▪ 24 © Operational Excellence Consulting. All rights reserved.

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