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McKinsey 7S Model
Lesson Manuscript

1. Concept and Philosophy of McKinsey 7S Model

A. McKinsey & Company’s Background
• A worldwide management consulting firm.
• It conducts qualitative and quantitative analysis in order to evaluate management
decisions across the public and private sectors.
• Widely considered the most prestigious management consultancy, McKinsey's
clientele includes 80% of the world's largest corporations, and an extensive list of
governments and non-profit organizations.
• Founded on 1926; 91 years ago.
• James O. McKinsey (founder of James O. McKinsey & Company)
• Marvin Bower (founder of modern McKinsey in 1939).
• Dominic Barton (key person).
• Type: Incorporated partnership
• Industry: Management Consulting
• No. of Locations: 110 offices in 120 cities in 60 countries
• Area Served: all sovereign nations
• Headquarter: USA
• Revenue: $ 8.3 billion in 2014 (very significant)
• No. of Employees: 11, 000 plus

B. Origin of 7s Framework
• It was first mentioned in “The Art of Japanese Management” by Richard Pascale
& Anthony Athos in 1981. They have been investigating how Japanese Industry
has been so successful.
• At around the same time that Tom Peters & Robert Waterman were exploring
what made a company excellent.
• The 7s model was born at a meeting of these four authors.

C. What is McKinsey 7S Model?

• It’s a management model that describes 7 factors to organize a company in a
holistic & effective way.
• Together these factors determine the way in which a corporation 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 affect all others as well.
• The model is most often used as a tool to assess and monitor changes in the
internal situation of an organization.

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D. Why shared values in the middle of the model?

• Placing Shared Values in the middle of the model emphasizes that these values
are central to the development of all the other critical elements.
• The organization's structure, strategy, systems, style, staff and skills all stem from
why the organization was originally created, and what it stands for.
• The original vision of the organization was formed from the values of the
creators. As the values change, so do all the other elements.

E. The 7s Elements McKinsey 7S Model

• The seven interdependent factors are categorized as either "hard" or "soft"
elements.
• Hard Elements: Strategy, Structure, and Systems.
• Soft Elements: Shared values, Skills, Style, and Staff.
E.1. Hard Elements
• "Hard" elements are easier to define or identify.
• Management can directly influence them.
• These are: Strategy, Structure, and Systems.
E.2. Soft Elements
• "Soft" elements, on the other hand, can be more difficult to describe.
• They are less tangible and more influenced by culture.
• These soft elements are as important as the hard elements if the organization is
going to be successful.
• These are: Shared values, Skills, Style, and Staff

1. Strategy
• Plans or course of action for the allocation of a firm’s scarce resources over time,
to reach identified goals (e.g. environment, competition, & customers).
2. Structure
• Organization’s structure, hierarchy and coordination, including division, and
integration of tasks and activities:
-centralized;
-functional divisions (top-down);
-decentralized (the trend in larger organizations);
-matrix
3. Systems
• Primary and secondary processes that the organization employs to get things
done.
• The procedures, processes, and routines that characterize how important work is
to be done:
-Operational system
-Computer system
-Human Resource System
-Financial System
4. Shared Values
• The interconnecting center of McKinsey's model.
• Core beliefs and expectations that people have in the organization.
• Organization culture practice and attitudes.
5. Style
• Unwritten yet intangible evidence of how management really sets priorities and
spends its time.
• Cultural style of the organization and how key managers behave in achieving the
organization’s goals.
• Management Styles.
6. Staff
• Numbers and types of personnel within the organization.
• Collective presence of the people in the organization & their general capabilities.
7. Skills
• Organizational capabilities; credibility, image, and influence.
• Distinctive capabilities of personnel or of the organization as a whole.
• Core Competencies.

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2. Dragonizing and Solving Organizations Problem

A. How to use the model?
• The model is based on the theory that, for an organization to perform well, these
seven elements need to be aligned and mutually reinforcing.
• So, the model can be used to help identify what needs to be realigned to improve
performance, or to maintain alignment (and performance) during other types of
change.
• Whatever the type of change- restructuring, new processes, organizational
merger, new systems, change of leadership, and so on- the model can be used
to understand how the organizational elements are interrelated, and so ensure
that the wider impact of changes made in one area is taken into consideration.
• You can use the 7S model to help analyze the current situation (Point A), a
proposed future situation (Point B) and to identify gaps and inconsistencies
between them.
• It's then a question of adjusting and tuning the elements of the 7S model to
ensure that your organization works effectively and well once you reach the
desired endpoint.

3. Using McKinsey 7S Model to Analyze an Organizations Problem

A. The 7S model can be used in a wide variety of situations where an alignment
perspective is useful:
• Improve the performance of an organization.
• Examine the likely effects of future changes within the organization.
• Align departments and processes during a merger or acquisition.
• Determine how best to implement a proposed strategy.
• Determine how best to study the strengths and weaknesses of an organization.
• Can be applied to almost any organizational or team effectiveness issue.
• Guides organizational change or improvement in terms of the strategies,
structure, and system.

References:
 Report on 7’s Mckinsey Model by Intan Jalan Elmu at www.slideshare.com
 Report on McKinsey 7s by Shreya Adhikari at www.slideshare.com
 Report on McKinsey 7-S Framework Model by Mustafa Mulla and MD Asif at
www.slideshare.com
 www.NhavinDhanuka.com
 www.McKinsey&Company.com
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Prepared by:

Marlon P. Tuiza, LPT, DPA

Professor