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*Introduction*

The McKinsey 7S Framework

“ Ensuring that all parts of your organization

work in harmony ”

How do you go about analyzing how well your organization is positioned to

achieve its intended objective? This is a question that has been asked for many

years, and there are many different answers. Some approaches look at internal

factors, others look at external ones, some combine these perspectives, and

others look for congruence between various aspects of the organization being

studied. Ultimately, the issue comes down to which factors to study.

While some models of organizational effectiveness go in and out of fashion, one

that has persisted is the McKinsey 7S framework.

It's all very well devising a strategy,

but you have to be able to implement it if it's to do any good. The Seven S

Framework first appeared in "The Art of Japanese Management" by Richard

Pascale and Anthony Athos in 1981.  They had been looking at how Japanese

industry had been so successful, at around the same time that Tom Peters and

Robert Waterman were exploring what made a company excellent.  The Seven S

model was born at a meeting of the four authors in 1978.  It went on to appear in

"In Search of Excellence" by Peters and Waterman, and was taken up as

a basic tool by the global management consultancy McKinsey: it's

sometimes known as the McKinsey 7S model.

The Seven-Ss is a framework for analyzing organizations and their effectiveness.

It looks at the seven key elements that make the organizations successful, or

not: strategy; structure; systems; style; skills; staff; and shared values.

The model shows that organizational immune systems and the

many interconnected variables involved make change complex, and that an

effective change effort must address many of these issues simultaneously.

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7-S Model – A Systemic Approach to Improving Organizations

The 7-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 7-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.

To be effective, your organization must have a high degree of fit, or internal

alignment among all the seven Ss. Each S must be consistent with and reinforce

the other Ss. All Ss are interrelated, so a change in one has a ripple effect on all

the others. It is impossible to make progress on one without making progress on

all. Thus, to improve your organization, you have to master systems thinking

and pay attention to all of the seven elements at the same time.

There is no starting point or implied hierarchy - different factors may drive the

business in any one organization.

The 7S McKinsey model

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Hard “Ss” Soft “Ss”

Strategy

Structure

Systems

Shared Values

Skills

Style

Staff

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# The 3Ss across the top of the model are described as 'Hard Ss':-

1>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. These relationships

are frequently diagrammed in organizational charts. Most

organizations use some mix of structures - pyramidal, matrix or

networked ones - to accomplish their goals.

2>Strategy

Strategies are plans an organization formulates to reach identified

goals, and a set of decisions and actions aimed at gaining a

sustainable advantage over the competition.

It is the direction and scope of the company over the long term.It is

the plan devised to maintain and build competitive advantage over

the competitors.

3>Systems

Systems define the flow of activities involved in the daily operation

of business, including its core processes and its support systems.

They refer to the procedures, processes and routines that are used

to manage the organization and characterize how important work is

to be done.

Systems in Business System:-

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Business Process Management System (BPMS)

Management information system

Innovation system

Performance management system

Financial system/capital allocation system

Compensation system/ reward system

Customer satisfaction monitoring system etc.

# The 4Ss across the bottom of the model are less tangible, more cultural in

nature, and were termed 'Soft Ss' by McKinsey. These are :-

4>Shared Values

“The interconnecting center of McKinsey's model is: Shared Values ”

Shared values are commonly held beliefs, mindsets, and

assumptions that shape how an organization behaves – its

corporate culture. Shared values are what engender trust.

Values are the identity by which a company is known throughout

its business areas, what the organization stands for and what it

believes in, it central beliefs and attitudes. These values must be

explicitly stated as both corporate objectives and individual values.

When the model was first developed, these are the core values of the

company that are evidenced in the corporate culture and the general

work ethic.

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***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 company'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 company was formed

from the values of the creators. As the values change, so do all the

other elements***

5>Style

"Style" refers to the cultural style of the organization, how key

managers behave in achieving the organization's goals, how

managers collectively spend their time and attention, and how they

use symbolic behavior.How management acts is more important 

than what management says.

Style represents the leadership approach of top management and

the company's overall operating approach.

6>Staff

"Staff" refers to the number and types of personnel within the

organization and how companies develop employees and shape

basic values. It is the company's people resources and how they are

developed, trained, and motivated.

7>Skills

"Skills" refer to the dominant distinctive capabilities and competencies of

the personnel or of the organization as a whole.

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"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.

The way the model is presented in Figure above depicts the interdependency of

the elements and indicates how a change in one affects all the others.

For example, a change in HR-systems like internal career plans and management

training will have an impact on organizational culture (management style) and

thus will affect structures, processes, and finally characteristic competences of

the organization. 

In change processes, many organizations focus their efforts on the hard S’s:-

Strategy, Structure and Systems. They care less for the soft S’s, Skills, Staff,

Style and Shared Values. Peters and Waterman in “In Search of Excellence”

commented however, that most successful companies work hard at these soft

S’s. The soft factors can make or break a successful change process, since new

structures and strategies are difficult to build upon inappropriate cultures and

values. These problems often come up in the dissatisfying results of spectacular

mega-mergers. The lack of success and synergies in such mergers is often based

in a clash of completely different cultures, values, and styles, which make it

difficult to establish effective common systems and structures. 

Use of 7-S Model:-

The 7S model can be used in a wide variety of situations where an alignment

perspective is useful, for example to help you:

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Improve the performance of a company;

Examine the likely effects of future changes within a company;

Align departments and processes during a merger or acquisition; or

Determine how best to implement a proposed strategy.

The McKinsey 7S model can be applied to elements of a

team or a project as well. The alignment issues apply,

regardless of how you decide to define the scope of the

areas you study.

How to Use the Model

Now you know what the model covers, but how can you use it?

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, a proposed

future situation 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.

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Sounds simple? Well, of course not: Changing your organization probably will not

be simple at all! Whole books and methodologies are dedicated to analyzing

organizational strategy, improving performance and managing change. The 7S

model is a good framework to help you ask the right questions - but it won't give

you all the answers. For that you'll need to bring together the right knowledge,

skills and experience.

When it comes to asking the right questions, we've developed a Mind Tools

checklist and a matrix to keep track of how the seven elements align with each

other. Supplement these with your own questions, based on your organization's

specific circumstances and accumulated wisdom.

7S Checklist   Questions :-

Here are some of the questions that you'll need to explore to help you

understand your situation in terms of the 7S framework. Use them to analyze

your current situation first, and then repeat the exercise for your proposed

situation.

Strategy:

What is our strategy?

How to 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?

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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?

Shared Values:

What are the core values?

What is the corporate/team culture?

How strong are the values?

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?

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How are skills monitored and assessed?

7S   Matrix   Questions :

Using the information you have gathered, now examine where there are gaps

and inconsistencies between elements. Remember you can use this to look at

either your current or your desired organization.

Start with your Shared Values: Are they consistent with your structure,

strategy, and systems? If not, what needs to change?

Then look at the hard elements. How well does each one support the

others? Identify where changes need to be made.

Next look at the other soft elements. Do they support the desired hard

elements? Do they support one another? If not, what needs to change?

As you adjust and align the elements, you'll need to use an iterative (and

often time consuming) process of making adjustments, and then re-

analyzing how that impacts other elements and their alignment. The end

result of better performance will be worth it.

***A recent (2008) update on the Mckinsey 7S model is a short podcast

on the creation of Mckinsey 7S model by Lowell Bryan, a director in

McKinsey's New York office, involved in creating and applying the 7-S

framework. He describes how it was introduced in the late 1970s to

address the critical role of coordination, rather than structure, in

organizational effectiveness.

McKinsey 7S model referenced in the E-consultancy, Managing an E-commerce

team report:

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Element of 7S

model

Application to digital

marketing team

Key issues from practice and

literature

1>Strategy The significance of digital

marketing in influencing and

supporting organisations' strategy

Gaining appropriate budgets and

demonstrating / delivering value and ROI

from budgets. Annual planning approach.

Techniques for using digital marketing to

impact organisation strategy.

Techniques for aligning digital strategy

with organisational and marketing strategy

2>Structure The modification of

organizational structure to support

digital marketing.

Integration of team with other

management, marketing (corporate

communications, brand marketing, direct

marketing) and IT staff

Use of cross-functional teams and

steering groups.

Insourcing vs. outsourcing

3>Systems The development of specific processes,

procedures or information systems to

support digital marketing

Campaign planning approach-

integration

Managing/sharing customer

information

Managing content quality

Unified reporting of digital

marketing effectiveness

In-house vs. external best-of-breed     

vs. external integrated technology

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solutions

4>Staff The breakdown of staff in terms of their

background and characteristics such as IT

vs. Marketing, use of

contractors/consultants, age and sex.

Insourcing vs. outsourcing

Achieving senior management buy-

in/involvement with digital   marketing

Staff recruitment and retention.

Virtual working

Staff development and training

5>Style Includes both the way in which key

managers behave in achieving the

organizations' goals and the cultural style

of the organization as a whole.

Relates to role of digital marketing

team in influencing strategy –

it is dynamic and influential or

conservative and looking for a voice

6>Skills DDistinctive capabilities of key staff, but

cacan be interpreted as specific skill-sets

of team members.

Staff skills in specific areas: supplier

selection, project management,

Content management,

specific e-  marketing approaches

(SEO,PPC,   affiliate marketing, e-mail

marketing, online advertising)

7>Superordinate

goals

The guiding concepts of the digital

marketing organisation which are also

part of shared values and culture. The

internal and external perception of these

goals may vary

Improving the perception of the

importance and effectiveness of the

digital marketing team amongst

senior managers and staff it works

with (marketing generalists and IT)

According to him McKinsey 7S model is referenced in the E-consultancy

Managing an E-commerce team report as a method of reviewing the internal

capabilities of an organisation to manage digital channels. Some of the key

issues that require management are shown in the table above.

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{The original refererence is: Waterman, R.H., Peters, T.J. and Phillips, J.R. (1980)

Structure is not organisation. McKinsey Quarterly in-house journal. McKinsey &

Co., New York.}

“ Analysis of Strategic Fit in INFOSYS

Through Mc Kinsey 7S Model “

Leadership Style :

Infosys believes that leadership is one of the most essential ingredients of

organizational success which is provided by its Chairman, N R Narayanmurthy.

Leadership is based on high business vision and predominantly supportive styles.

There is emphasis on developing leadership qualities among employees. For this

purpose, it has established “Infosys Leadership Institute”. Top management

emphasizes on open door policy, continuous sharing of information, takes inputs

from employees in decision making, and builds personal rapport with employees.

As we have seen over last few years, we have seen smooth transition from N R

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Narayanmurthy to Nandan Nilakeni and from Nandan Nilakeni to Kris

Gopalkrishnan without any adverse effects on the company outlook and each

one has proved to be an able leader taking company forward.

Staff (Human Resources) :

Since Infosys is in knowledge-based industry, it focuses on the quality of the

human resources. Out of total personnel, about 90 per cent are engineers. At

the entry level, it emphasizes on selecting candidates who find the company‟s

meritocratic culture satisfying, superior academic records, technical skills, and

high level of learn ability. The company emphasizes on training and development

of its employees on continuous basis and spends about 2.65 per cent of its

revenues on up gradation of employees‟ skills, and around 50% as

employee costs. In spite of thousands of people joining every month, Infosys has

been able to maintain its training standard mostly due to its highly matured

processes capabilities and investment in infrastructure.

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Strategy :

Infosys has adopted a client-focused strategy to achieve growth. Rather

than focusing on numerous small organizations, it focuses on limited number

of large organizations throughout world. In order to cater its clients, the

company emphasizes on custom-built softwares. Another differentiating factor

for Infosys is that it commands premium margins. Company does not

negotiate over margins beyond a certain limit and some time prefers to walk-out

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rather than compromise on quality for low-cost contracts. This has helped in

building an image for quality driven model rather than cost-differentiating model.

Increase business from existing and new clients: Infosys has focused on

expanding the nature and scope of engagements for the existing clients by

increasing the size and number of projects and extending the breadth of its

service offerings. For new clients, it provides value added solutions by leveraging

its in-depth industry expertise. It increases its recurring business with clients by

providing software re-engineering, maintenance, infrastructure management and

business process management services which are long-term in nature and

require frequent client contact.

Expand geographically: Infosys plans to establish new sales and marketing

offices, representative offices and global development centers to expand its

geographical reach. It plans to increase presence in China through Infosys China,

in the Czech Republic and Eastern Europe directly and through Infosys BPO, in

Australia through Infosys Australia and in Latin America, through Infosys Mexico.

Enhance solution set: Infosys focuses on emerging trends, new technologies,

specific industries and pervasive business issues that confront our clients. In

recent years, it has added new service offerings, such as consulting,

business process management, systems integration and infrastructure

management, which are major contributors to its growth.

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Develop deep industry knowledge: Infosys has specialized industry

expertise in the financial services, manufacturing, telecommunications,

retail,transportation and logistics industries.

Enhance brand visibility: Infosys invests in the development of its premium

brand identity in the marketplace by participating in media and industry analyst

events, sponsorship of and participation in targeted industry conferences, trade

shows, recruiting efforts, community outreach programs and investor relations.

Pursue alliances and strategic acquisitions: Infosys is known for its organic

growth (risk averse) strategy though it has strategic alliance with leading

technology providers take advantage of emerging technologies in a mutually

beneficial and cost-competitive manner.

Shared Values :

Values are important part of Infosys‟s organizational culture. In fact its

tagline depicts how much emphasis it lays on core values. The core values

are:

• Customer Delight: A commitment to surpassing customer expectations.

• Leadership by Example: A commitment to set standards in business and

transactions and be an exemplar for the industry and teams.

• Integrity and Transparency: A commitment to be ethical, sincere and

open in our dealings.

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• Fairness: A commitment to be objective and transaction-oriented, thereby

earning trust and respect.

• Pursuit of Excellence: A commitment to strive relentlessly, to constantly

improve ourselves, our teams, our services and products so as to become the

best.

Organizational Structure :

The company has adopted a free form organization devoid of

hierarchies. Everyone is known as associates irrespective of his position in

the company. Software development is undertaken through teams and the

constitution of teams is based on the principle of flexibility. A member, who

might have been team leader in one project, may be replaced by another

member of the same team for another project. This system not only helps in

creating the feeling of equality but also helps in developing project leaders.

Skills : From last year, Infosys has made it mandatory for every employee

7uto clear a predefined certifications, domain as well as technical, in order to

be eligible for appraisal. This is just one of the initiatives taken by Infosys

which signifies the efforts taken for building competencies. Apart from

internal initiatives like knowledge management, Infosys has been CMM-Level

5 certified for its process capabilities. Infosys has entered the Balanced

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Scorecard Hall of Fame for Executing Strategy for achieving breakthrough

performance results using the Balanced Scorecard (BSC).

Conclusion

“The 7-S framework of McKinsey is a Value Based Management (VBM)

model that describes how one can holistically and effectively organize a

company.”

The Seven S Factors are:-

Strategy A set of actions that you start with and must maintain

Structure How people and tasks / work are organised

Systems All the processes and information flows that link the

organisation together

Style How managers behave

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Staff How you develop managers (current and future)

Shared Values Longer-term vision, and all that values stuff, that

shapes the destiny of the organisation

Skills Dominant attributes or capabilities that exist in the

organisation

Together these factors determine the way in which a corporation operates. Managers

need to take account of all seven of the factors to be sure of successful

implementation of a strategy - large or small. They're all interdependent, so if

you fail to pay proper attention to one of them, it can bring the others crashing

down around you. Oh, and the relative importance of each factor will vary over

time, and you can't always tell how that's changing. Like a lot of these models,

there's a good dose of common sense in here, but the 7S Framework is useful

way of checking that you've covered all the bases.

Effective organizations achieve a fit between these seven elements. This

criterion is the origin of the other name of the model: Diagnostic Model for

Organizational Effectiveness.

The McKinsey 7Ss 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

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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.

Analysing 7Ss in Infosys indicate that it is an effective organization having

good fit among structure,system,strategies,shared values,style skills & staff

and this will push the organization forward for long term.

THANKING YOU

RAM GOPAL

M.B.A.

LUMBA

<DEPTT. OF BUSINESS ADMINISTRATION,UNIVERSITY OF LUCKNOW>