1
2
*Introduction*
The McKinsey 7S Framework gEnsuring
that all
parts of
your yo ur
orgg ani or anizat zatio ion n work
in
harmonyh harmony h
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 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. 1981 . They had 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 model was born at a meeting of the four 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: 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 helpe d 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.
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The 7S McKinsey model
Hard ³Ss´
Soft ³Ss´
Strategy
Shared Values
Structure
Skills
Systems
Style Staff
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# The 3Ss across the top of t of the model model are descr ibed ibed 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 competitiv competitiv e 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
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to manage the organization and characterize how important work is to be done.
Systems in Business System:y
Business Process Mana Managemen gementt System (BPMS)
y
Management information system
y
Innovation system
y
Performance
y
Financial system/capital allocation system
y
Compensation system/reward system/ reward system
y
Customer satisfaction monitor monitoring ing system etc.
managementt sys managemen ysttem
he bo ottom ttom of t of the model model are less tangibl angible, e, more cult cultura urall in # The 4Ss across the b nat nature, and were termed 'Sof t Ss' b Ss' by y McK insey. These are :-
4>Shared Values
The interconnecting center of McKinsey's model is: Shared Values Shared
values
are
commonly
held
beliefs,
mindsets,
assumptions that shape how an organization behaves
and ± its
corporate culture. culture . Shared values are what engender trust 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 corporate objectives and individu al values. When the model was first developed, these are the core values of the company that are work ethic.
evidenced in the the corporate culture and the general
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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, 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 companies develop employees employees and shape basic values. It is the company's people resources and how they are developed, trained, and motivated.
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7>Skills "Skills" refer to the dominant distinct distinctive ive capabilities and competencies of the personnel or of the organization as a whole.
"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,
management
a
change
training
in
will
HR -systems have
an
like
impact
internal on
career career
plans
organizational
and
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 Peters and Waterman in ³In 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.
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Use of 7-S of 7-S Model:Model:The 7S model can be used in a wide variety of situations where an alignment perspective is useful, for example to help you: y
Improve the performance of a company;
y
Examine the likely effects of future changes within a company;
y
Align departments and processes during a merger or acquisition; or
y
Determine
how best to implement a proposed strategy.
The McK insey 7S model model can can b bee appli applied ed to elemen ementts of a team or a project project as well well.. The ali alignmen gnmentt issues appl apply, regardlless of how you deci regard decide to def ine the scope of the areas you st study.
How to Use the the Model 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 realigned to improve performance, performance, or to maintain alignment (and performance) during other type s of change.
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Whatever the type of change 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 model to help analyze 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. Sounds simple? Well, of course not: Changing your organization p robably 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.
7 S Checklist 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: y
What is our strategy?
y
How to we intend to achieve our objectives?
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y
How do we deal with competitive pressure?
y
How are changes in customer demands de mands dealt with?
y
How is strategy adjusted for environmental issues?
Structure: y
How is the company/team divided?
y
What is the hierarchy?
y
How do the various departments coordinate activities?
y
How do the team members organize and align themselves?
y
Is decision making and controlling centralized or decentralized? Is this as it should be, given what we're doing?
y
Where are the lines li nes of communication? Explicit and implicit?
Systems: y
What are the main systems that run the organization? Consider financial and HR systems as well as communications and document storage.
y
Where are the controls and how are they monitored and evaluated?
y
What internal rules and processes does the team use to keep on track?
Shared Values: y
What are the core values?
y
What is the corporate/team culture?
y
How strong are the values?
y
What are the fundamental values that the company/team was built on?
Style: y
How participative is the management/leadership style?
y
How effective is that leadership?
y
Do
y
Are there real teams functioning within the organization or are they just
employees/team members tend to be competitive or cooperative?
nominal groups?
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Staff: y
What positions or specializations are represented within the team?
y
What positions need to be filled?
y
Are there gaps in required competencies?
Skills:
y
What are the strongest skills represented within the company/team?
y
Are there any skills gaps?
y
What is the company/team known for d oing well?
y
Do
y
How are skills monitored and assessed?
the current employees/team members have the ability ability to do the job?
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. y
Start with your Shared Values: Are they consistent with your structure, strategy, and systems? If not, what needs to change?
y
Then look at the hard elements. How well does each one support the others? Identify where changes need to be made.
y
Next look at the other soft elements. elements?
y
Do
Do
they support the desired hard
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 reanalyzing how that impacts other elements and their alignment. The end result of better performance will be worth it.
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***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 involved in creating and applying the 7 -S framework. He describes how it was introduced in the late 1970s to address the critical critical role of coordination, rather rath er than structure, structure, i n organizational effectiveness. McKinsey 7S model referenced in the E-consultancy, Managing an E-commerce team report:
Element
of
7S Application
to
model
marketing team
1>Strategy
The
si signi gnif icance
marketi marketing ng
in
digital Key issues from practice and literature of
di digita ital Gai Gaining
inf luenci uencing
appropr iate
budge budgetts
and
and demonst demonstrati rating ng / deliv deliver er ing value and ROI
suppor ting ting organi organisati sations' ons' st strat rategy from b from budge udgetts. Annual Annua l planni anning approach. Techniq Techniques ues for usi us ing digita ital marketi marketing ng t o impact mpact organi organisati sation on st strat rategy. Techniq Techniques ues for ali a lign gniing digita ital strat rategy with ith organi organisati sationa onall and marketi marketing ng st strat rategy
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2>Structure
The
modi modif icati cation on
of Int Integrati egration on
of
organiz organizaationa tionall struct ructure to suppor t management management, digita ital marketi marketing. ng.
team
wit with h
marketi marketing ng
other
(corporat (corpora t e
communi communicati cations, ons, brand brand marketi marketing, ng, di direct rect marketi marketing) ng) and IT st s taff Use of cross-functi cross-func tiona onall teams and steer ing groups. Insourci Insourcing vs. out outsourci sourc ing
3>Systems
The dev development opment of speci specif ic processes, Campai Campaign pl planni anning approach procedures or i or informati nforma tion on syst systems to integrati egration on suppor t digita ital marketi marketing ng Managi Managing/shar ing cust customer informati nforma tion on Managi Managing cont content ent qualit uality y Uni Unif ied
repor ting ting
of
di digita ital
marketi marketing ng effectiv effectiveness eness In-house vs. ext external ernal bes bestt-of- breed breed vs. ext external erna l
int egrat egrat ed
technol echnology
sol solutions tions 4>Staff
The breakdown breakdown of st s taff in terms of Insourci Insourcing vs. out outsourci sourcing eir b r background ackground and charact charac ter istics tics such IT
vs.
Marketi Marketing, ng,
use
of
Achi Achieving senior management management buy ving seni buy-in/i n/involvemen lvementt
ntract ractors/consult ors/consultan antts, age and sex.
with ith
digita ita l
and
ret ret enti ention. on.
marketi marketing ng Staff
recruit recruitmen mentt
Vir tual ual work ing Staff dev development opment and trai raining 5>Style
Incl Includes bo both the way in whi which key nagers beha behav ve
in
achi achieving ving
Rel Relates to rol role of di digita ital marketi marketing ng
the team in inf luenci uencing st strat rategy ±
ganiz ganizaations' tions' goal goa ls and the cult cultura urall style
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organizaation whole. the organiz tion as a whol
dynamic and inf luenti uentiaal or it is dynami conser vative tive and look ing for a voice
6>Skills
Distinc tinctiv tivee capa bilities bilities of key st staff, b aff, bu ut Staff sk ills ills in speci specif ic areas: suppli supp lier er can be erpreted as speci spec if ic sk ill-se selecti ection, on, be int erpret ill-setts sel team mem bers. bers.
project project
Cont Content ent marketi marketing ng aff ilia iliate
management management,
management management,
speci specif ic ee-
approaches
(SEO, PPC,
marketi marketing, ng,
e-mail e-ma il
marketi marketing, ng, onli online ne adv adver tis tising) 7>Superordinate The gui guiding concept concepts of the digita ital
Improvi Improving ng the percepti perception on of the
rketi rketing ng organi organisati sation on whi which are al a lso
impor tance and effectiv effectiveness eness of the
goals
r t of shared values and cult culture. ure. The
digita ital
marketi marketing ng t eam amongst amongst
ternal ernal and ext external ernal percepti perception on of these
seni senior managers and st s taff it works
als may vary
with ith (marketi (marketing ng generali genera lissts 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. {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.}
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A naly
i of St S trat gi Fit in in IN I NFOSYS
roug
Kin y S
o l
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. arayanmurthy.
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 ³ Infosys
Leadership
Institute ´. Top management Institute´.
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 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, industry , it focuses on the quality of the human resources. Out of total personnel, about 90 per cent are engineers. At
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the entry level, it emphasizes on selecting selecting candidates who find the company s meritocratic culture satisfying, superior academic records, technical technical skill s, 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. world . In order to cater its clients, the company emphasizes on custom-built custom -built softwares. Another differentiating factor for Infosys is that it commands premium margins . Company does not negotiate over margins beyond a certain certain limit and some some time prefers to walk -out 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 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 le veraging 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.
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Expand geographically: Infosys plans to establish new sales and marketing offices, representative offices and global gl obal development development centers to expand e xpand its geographical reach. It plans to increase presence in China through Infosys China, in the Czech Republic and Eastern Eastern Europe dir ectly and through Infosys BPO, in Australia through Infosys Australia Aust ralia 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 infrastructu re management, which are major contributors to its growth.
Develop
deep industry knowledge: Infosys has specialized industry
expertise in the financial services, manufacturing, te lecommunications, retail,transportation and logistics industries.
Enhance brand visibility: Infosys invests in the development of its p remium brand identity in the marketplace by participating in media and industry analyst 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 acquisitions : Infosys is known for its organic growth (risk averse) strategy though it has strategic alliance with leading
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technology providers take advantage of emerging technologies in a mutually beneficial and cost-competitive manner.
Shared Values :
Values are important part of Infosyss 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 e xemplar for the industry and teams. Integrity and Transparency: A commitment to be ethical, sincere and open in our dealings. 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
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constitution of teams is based on the principle of flexibility. A member, who might have been team leader in one p roject, 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 Level
CMM-
5 certified for its process capabilities. Infosys has entered the
Balanced Scorecard Hall of Fame for Executing Strategy for achieving breakthrough performance results using the Balanced Scorecard (BSC). (BSC) .
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Conclusion ³The
7-S
framework of of McKinsey McKinsey is a Value Based Management (VBM)
model that describes how one can holistically and effectively organize a company .´ .´
The Sev Seven S Fact Factors are:-
set of acti actions ons tha hatt you st star t wit ith h and must must ma maiintain Strategy A set
people and tasks / work are organi organised Structure How peopl
nformati tion on f lows tha hatt li link nk tthe Systems All the processes and informa organiisa organ sati tion on toge ogetther
managers beha ehav ve Style How managers b
develop managers (current (current and fut future) Staff How you dev
Longer-tterm vi vission, and all all tha hatt values st stuff, tha hatt Shared Values Longershapes the desti destiny ny of t of the organi organisa sati tion on
Domiinan nantt att ttr r ibu ibutes or capa biliti bilities es tha hatt ex exiist in the Skills Dom organiisa organ sati tion on
Tog oge eth ther er th thes ese e facto factors rs
determine th the e wa way y in wh whiich a corp corpo orat atiion ope perrat ates es . Ma Man nag agers ers
need nee d to take take accou accoun nt of all all seven of the the facto factors rs to be be sure of of ssucc uccess essfu full implementat implemen tatiion of a strat ate egy - large or sm sma all. They' y're re all in intter erd depen epend den ent, t, so if you fail fail to pay pr pro oper att atten enttion to one one o f th them em,, it can can brin ring g the the oth others ers crashin ing g
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down dow n arou oun nd you. you. Oh, an and the the rel relat ative ive imp impo orta tan nce of of e each factor factor will vary over over time ime,, an and you can ca n't al alway wayss tell how that's that' s cha chan ngin ing g. Like a lot of these these mod odels els,, there th ere''s a good dose do se of comm commo on sense in here ere,, but the the 7S Frame mewo worrk is use sefu full way of che check ckin ing g that you've you've co covere vered d all all th the e ba bases. ses. Eff ective ctive organiz ganizat atiions achieve ach ieve a f it be between tween these these seven element elements. This crit riterio erion is the the orig rigin of the the other other name of the the model: odel: Diagn agnostic Model Model for for Organiz ganizat atiional Eff ectiveness. ctiveness. The
McKinse McKinsey y 7Ss model odel is one that can ca n be applied pplie d to alm almo ost an any
organiz ganizat atiional or team eff ectiveness ctiveness issu iss ue. If s If someth methin ing g wi within thin your your organiz ganizat atiion or team isn't isn't wor working, ing, chan chances are there there is inco inconsis nsisttency ency between tween some of the the element elements ident entif ied ied by this this classic ssic model. odel. Once these these inco inconsis nsisttenc encies are revea revealed, led, you can ca n wo worrk to ali alig gn the the int interna ernal element elements to make ake sure the they are are all con contribut ributin ing g to the the share hared d goals goa ls and values. The
proc process ess of an analyzing zing where where you are are right right now in terms of these these element elements is
worrthwhile wo thwhile in and of i of itself self . But by takin taking g this this analysis to the the next next level and determining ermining the the ultimat imate e state tate for for each of the the factors factors,, you can can rea really lly move your your organiz ganizat atiion or team for forwar ward.
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.
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THANKING YOU
RAM GOPAL M.B.A. LUMBA
LUCKNOW>
