Nirma University

Institute of Law
2nd Semester

Seven “S”
Model
Organizational Behaviour

Under Supervision of Mrs. Bindiya Soni

Mishika Shah 10BBL117

Manali Latta 10BBL087
 Seven “S” Model
The Seven S Framework was first seen in “The Art of Japanese
Management” which was given by Richard Pascale and Anthony Athos in the
year 1981. They were looking at how the Japanese industry had been so
successful. While they did so, Tom Peters and Robert Waterman had been
exploring as to what made a company excellent. The Seven S model came into
existence at the meeting of all these four authors. It was taken up as the basic
tool by the global management consultancy McKinsey: it’s also known as the
McKinsey Seven S Model.

A Systemic Approach to Improving Organizations

The Seven S model is a tool for managerial analysis and action that
provides a structure with which to consider a company as a whole, so that the
organization's problems may be diagnosed and a strategy may be developed
and implemented.

The Seven S diagram illustrates the multiplicity interconnectedness of

elements that define an organization's ability to change. The theory helped to
change manager's thinking about how companies could be improved. It says
that it is not just a matter of devising a new strategy and following it through.
Nor is it a matter of setting up new systems and letting them generate
improvements.

2|Page Seven “S”Model

 The Seven S Model has all the inter-dependent factors which are further
categorized as “Hard” or “Soft”:

"Hard" elements are easier to define or identify and management can

directly influence them: These are strategy statements; organization charts
and reporting lines; and formal processes and IT systems.

"Soft" elements, on the other hand, can be more difficult to describe,

and are less tangible and more influenced by culture.

However, these soft elements are as important as the hard elements if

the organization is going to be successful.

3|Page Seven “S”Model

 Seven “S” Model

Hard Soft
Elements Elements

Subordinates
Goal

Strategy Skill

Structure Style

System Staff

4|Page Seven “S”Model

 Strategy:

 The Seven S Model emphasis that, in practice, the development of

strategies poses less of problem than their execution.
 Strategies are a set of actions that we start with and must maintain.
 They are the plans which an organization formulates to reach identified
goals, and a set of decisions and actions aimed at gaining a sustainable
advantage over the competition.

Structure:

 The Seven S Model adds a contemporary perspective to the problem of

organizational structure.
 Structure is the organizational chart and associated information that shows
who reports to whom and how tasks are both divided up and integrated.
 In other words, structures describe the hierarchy of authority and
accountability in an organization, the way the organization's units relate to
each other: centralized, functional divisions (top-down); decentralized (the
trend in larger organizations); matrix, network, holding, etc.

5|Page Seven “S”Model

 Systems:
 This category consists of all the formal and informal procedures that allow
the organization to function, including capital budgeting, training and
accounting systems.
 Systems can overpower expressed strategies.
 A consumer goods manufacturer might find it impossible to implement a
new portfolio strategy if its management information system is not
adjusted to produce the necessary cost data by segment, because there
would be no way to compare the different segments of the business.
 Thus, it is the process through which the company gathers information and
makes decisions. If it's effective, a company can react quickly and
appropriately to changes in the marketplace.

Subordinates Goals:
 This category talks about the guiding concepts, values and aspirations, that
unite an organization in some common purpose.
 It deals with the real or practiced values and compares them to the stated
values.
 They provide a sense of stability and a sense of purpose to the
subordinates.
 A company, for example, may claim to be customer-centered but in reality
it could reward staff for high volumes of sales, encouraging staff to ignore
the customer and focus on making their numbers.

6|Page Seven “S”Model

 Skill:
 “Skills” refer to the dominant distinctive capabilities and competencies of
the personnel or of the organization as a whole.
 The term Skill refers to those activities organizations which do their best
and for which they are known.
 Strategic changes may require organizations to add one or more new skills.
 For example, Du Pont is known for research, Procter and Gamble for
Product Management. ITT for financial controls and Hewlett-Packard for
innovations and quality.

Style:
 This category is about the culture of the company.
 “Style” refers not to personality, but to the pattern of substansive and
symbolic actions undertaken by the top managers.
 It communicates priorities more clearly than words alone and may
profoundly influence the performance.
 For example, consultants have found that even oil and mineral exploration
efforts surely matters of operational skills and luck more than strategy-
benefit from Top Management attention. This is more successful in
companies where the Top level managers spend more time participating in
explorations.

7|Page Seven “S”Model

 Staff:

 “Staff” refers to the number and types of personnel within the organization
and how companies develop employees and shape basic values.
 This category, deals with the people in the organization. It involves not only
their skills but also whether or not there are enough staff members to do
the job as well as the personal and professional goals that each person has.
 Successful organizations view people as valuable resources who should be
carefully nurtured, developed, guarded, and allocated.
 Top managers devote time and energy to planning the progress and
participation of existing mangers, and use job assignment policies.
 Talented individuals are assigned mentors, put into fast-track programs,
exposed to top management, and rapidly moved into positions of real
responsibility.

8|Page Seven “S”Model

 7 S Check list:
Strategy:

 What is our strategy?

 How do we intend to achieve our objectives?
 How do we deal with competitive pressure?
 How are changes in customer demands dealt with?
 How is strategy adjusted for environmental issues?

Structure:

 How is the company/team divided?

 What is the hierarchy?
 How do the various departments coordinate activities?
 How do the team members organize and align themselves?
 Is decision making and controlling centralized or decentralized? Is this
as it should be, given what we're doing?
 Where are the lines of communication? Explicit and implicit?

Systems:
 What are the main systems that run the organization? Consider
financial and HR systems as well as communications and document
storage.
 Where are the controls and how are they monitored and evaluated?
 What internal rules and processes does the team use to keep on track?

Sub ordinates goals:

 What are the core goals?

 What is the corporate/team culture?
 How strong are the values?

9|Page Seven “S”Model

  What are the fundamental values that the company/team was built on?

Style:

 How participative is the management/leadership style?

 How effective is that leadership?
 Do employees/team members tend to be competitive or cooperative?
 Are there real teams functioning within the organization or are they
just nominal groups?

Staff:

 What positions or specializations are represented within the team?

 What positions need to be filled?
 Are there gaps in required competencies?

Skills:

 What are the strongest skills represented within the company/team?

 Are there any skills gaps?
 What is the company/team known for doing well?
 Do the current employees/team members have the ability to do the job?
 How are skills monitored?

10 | P a g e Seven “S”Model
 Key Points:
The McKinsey 7S’s model is one that can be applied to almost any
organizational or team effectiveness issue. If something within your
organization or team isn't working, chances are there is inconsistency between
some of the elements identified by this classic model. Once these
inconsistencies are revealed, you can work to align the internal elements to
make sure they are all contributing to the shared goals and values.

The process of analyzing where you are right now in terms of these
elements is worthwhile in and of itself. But by taking this analysis to the next
level and determining the ultimate state for each of the factors, you can really
move your organization or team forward.

11 | P a g e Seven “S”Model
 **Case Study**:
Sonic Scores Sega Success
In 1990 when Sega Enterprises entered the video game market in the
United States, Nintendo held between 80% and 90% of the $3.5 billion
industry.
By November 1993, however, Nintendo found itself locked in “mortal
combat” with Sega for market dominance, with every point counting, what
Sonic brought to Sega was a hook something to link the customer with the
technology through the company.
In June 1991, Sega began packaging the new “Sonic the Hedgehog” game
with its Genesis system. The character attracted an immediate following
and transformed Sega into a serious competitor virtually overnight.
A 1993 Q-Study by Marketing Evaluation Inc. placed Sonic the Hedgehog in
close competition with Arnold Schwarzenegger and Michael Jordan as the
favourite personality of boys aged six to eleven.
That same study credited Sonic as the most popular video game character;
Tails, Sonics partner in “Sonic the Hedgehog II,” came in second in the
study.
In 1986, Sega introduce its Master System, which offered superior graphics
to Nintendo’s own Nintendo Entertainment System (NES), but failed to gain
to more than a toehold in the U.S. market.
In 1989, Sega developed the Genesis system, armed with a more powerful
micro-processor chip that allowed for far superior graphics and more
sophisticated sound.
Nevertheless Nintendo was still able to hold on to 85% of the market with
its technologically inferior system.
It was not until the introduction of sonic that Sega was finally able to taste
success. Sega success was not due to Sonics popularity alone. However also
working in Sega favour was its$680 million.
Kalinske was confident that Sega could best Nintendo, so he set out to
convince Hayao Nakayama, president of Sega enterprises.
Initially, Kalinske targeted two areas of actions .First was the need for the
character icon. Hence sonic was born .
12 | P a g e Seven “S”Model
 Sonic was the brainchild of Nakayama who recognised for the need for a
company character even before Kalinske came on board.
At the same time Kalinske identified cost as a problem.
It immediately dropped the price of Genesis down $50, from $199 to $149,
to make it more competitive with the @100 NES.
In order to make Sega more attractive to other programmers, he also
lowered the royalties that Sega received sometimes as much as 15% below
that which Nintendo received.
By 1993, Sega had positioned itself as a potential market leader. Within
three years Sega’s market share had climbed from 7% to nearly 50%, while
Nintendo 90% share had dropped to just above 50%. Sega strategy can be
characterized as “angle-based”.
This means that the company approaches the customer from every angle.
To the success of Sega’s strategy in the U.S. has been its decentralized
organisational structure.
Sega recognizes that the trick to surviving and succeeding in the video-
game industry lies in software, and it is willing to do whatever is necessary
to support creativity.
Sega achieves its strategic objectives through systems in place that support
company efforts without overpowering them.
Sega’s overriding goal is to lead the way to the most sophisticated, most
exciting, most technologically advanced software and hardware, even if it
means dragging video-game players along.
The difference between the rivals was clear.
While Nintendo chose to target audience comprised of preteens and
families, Sega has targeted a more sophisticated audience of older teens
and adults.
“Sega” leaves in all the gory stuff, while Nintendo often softens the
violence. In 1993, a complication arose in this formally two player game-
new competitors.
While Sega and Nintendo continued to dominate, companies such as Atari
Commodore, and Panasonic raised the stakes by introducing even more
powerful 32-bit and 64-bit machines with even more exciting software.

13 | P a g e Seven “S”Model
 In order to buy time for development of its 64-bit system, the Saturn
system, Sega threw everything behind the 13 million 16-bit Genesis systems
already installed in U.S. household as of November 1993.
Sega bombarded the market with new support gadgets, presumably to
keep Genesis owners from straying towards the new higher-bit systems
and, the SNES.
The Sega Channels, through an alliance with Time Warner Entertainment
and Tele-Communications Inc. to be tested in January of 1994 and available
through all cable systems by early 1994, promised to add a new dimension
to game playing.
Sega Channel will begin the process of cable TV delivery of interactive
media, and it will be what Segues us into the future of true, two-way
interactively.
The Sega Channel promised to prove popular, considering that as of 1993,
70% of Sega Genesis owner subscribed to cable.
Nintendo and Sega are dead even in terms of market share, but kids know
that Sega’s got the hot new technology from CD-ROM to virtual reality,
remarked Semrad, who felt Sega would win-out, “and that’s what they are
facing now”.
In the final analysis, how Nintendo and Sega implement these ideas for new
products will determine their success.

14 | P a g e Seven “S”Model
 **Case Study**
Snapple Steals Share
When Snapple first appeared in the ready to drink iced tea market in 1988,
no one batted an eyelid.
Now only five years later, the small, entrepreneurial company’s
tremendous success has drawn soft drink giant Coca Cola and Pepsi into a
heated battle filled by millions of dollars.
Media spending in the iced tea market alone is expected to reach $60
million by the end of 1993.
The ready to drink iced tea marked has proved to be an exciting place for a
small, entrepreneurial company such as Snapple.
In 1988 when Snapple entered the market, it was wide open. Snapple
captured large share of the market, company currently holds 33%, iced tea
with 11 different flavours for under $1 per 16 ounce bottle.
In 1992 ready to drink iced tea marked climbed 50% versus the cola market,
which grew only 1 ½%.
Through 1992 joint venture with Uniliver, Pepsi gained a foothold with the
Lipton brand. Snapple can leave the expensive advertising and marketing
projects to Coca Cola and Pepsi and ride on their coattails.
Snapple has to package their iced tea in multiple packs and most probably
lower the price, which is something a marketer is not willing to do.
Another obstacle is Snapple’s inability to successfully break into the
vending machine market.
Richard Branson, entrepreneurial owner and founder of Britain’s
untraditional virgin group, has fused two dissimilar liners of work-show
business and commerce-into a single, extremely profitable enterprise.
Virgin group comprises more than 100 companies in 15 companies.
Snapple actually benefits from the increased competition because it
promises to expand the market as a whole.
Snapple’s relatively small size-only 87 employees-and the fact that the
company has no production facilities of its own have analysts already
speculating that the company will not survive the coming battle with the
heavy weights.

15 | P a g e Seven “S”Model
 He remains conservative in his life style. The system within the company is
also very supportive of empowerment.
For example, through the strong communications system, budgeting is
explained to employees, with daily graphs that display performance by area
in comparison to area budgets.
Virgin offices are extremely informal.
With 15 foot ceiling, working fireplaces, and lavish gardens, the building is
more like a home than a place of a business.
Single use plan are detail course of action that probably will not be
repeated in the same form in the future.
It outlines the major steps required to reach an objective, the organization
unit or member responsible for each step.
The order and timing of each step projects are smaller, separate portions of
programs; they are limited in scope and contain distinct directives
concerning assignment and task.
Budget statements of financial resources set aside for specific activities in a
given period of time, they are primarily devices to control an organization’s
activities, and thus are important components of programs and project.
A policy is a general guideline for decision making.
A standing plan-re-established single decision or set of decisions- can
effectively guide those activities.
Annual objectives lie at the very heart of strategy implementation. Well
defined annual objectives are clearly linked to the organization’s long term
goals, and they are measurable.
Management by objective goes beyond setting annual objectives for
organizational units to setting performance goal for individual employees.
MBO systems very enormously.
Some are designed for use in a subunit, others for organizational as a
whole. Most effective MBO programs have six elements: Commitment to
the program, Top level goal settings, Individual goals, Participative,
Autonomy in implementation of plans, Performance review.
Rewards and incentives contribute to strategy implementation by shaping
individual and group behaviour.
Well designed incentives plans are consistent with an organization’s
objectives and structure.

16 | P a g e Seven “S”Model
 Rewards -today many companies depend on their reward systems to help
them implement strategy.
Rewards and incentives play an equally important role in the broader
society. Rewards can also destroy relationship.
Reward focus on outcomes and can ignore reasons. By rewarding the
outcomes we can easily ignore the causes and the bigger system that
produces the outcome. Reward can discourage risk taking.
Manager can ignore changes in strategy that need to be made as a matter
of mind-course correction, and they will not make decisions that may have
higher payoffs but have more risk.

17 | P a g e Seven “S”Model
 References:
 www.100ventures.com
 www.chimaeraconsulting.com
 www.mindtools.com
 www.reflectlearn.org
 www.citemean.com

Books Referred:
Management by James A.F. Stoner

18 | P a g e Seven “S”Model