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McKinsey’s

7S Framework for Strategic Management

By:
UJJAL SAHU
MBA (2016-18)
CENTRAL UNIVERSITY OF ORISSA

Contents: • Introduction • Structure is not Organisation • The Seven Independent Elements • Application • Starbucks and 7S • Limitations • Conclusion .

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Peters. . merger. new approach. It was developed by Robert H. • The McKinsey name in the theory comes from McKinsey and Co. • The main focus of this theory is organizational change like restructuring. • The 7S framework was first formulated in the book “In Search of Excellence” and later presented in June 1980 in a journal article titled “ Structure is not Organisation”. Waterman Jr and Thomas J.INTRODUCTION • This theory is mainly an organizational analysis tool used to access and monitor the internal changes in the organization. change of leadership and so on.

Robert H. Peters. Waterman Jr Thomas J. .

Systems and most importantly subordinate goals/shared values. Structure.e. and it is also not solely a strategy shift even if strategy is critical. Rather it involves addressing many more equally significant elements one of which is structure. • In the face of different complexities involved in decision making a single blunt element like structure fail to prove as a master tool in managing organization change. • Organizational change is the interaction between seven elements i. Staff. • Thus effective organizational change is not just structural change. Skills. Strategy. . Style.STRUCTURE IS NOT ORGANISATION • Diagnosing and solving organization problem does not include only restructuring it. although it is essential.

Style and Shared Values. Staff. They are – Strategy. • Hard elements are those elements which are easier to identify and define. • The shape of diagram is essential as it shows no hierarchy thus refuting any prioritization and making the framework dynamic in application. . Structure and System. • Soft elements are those which are difficult to identify and often have a cultural aspect to them.Skill.THE SEVEN INDEPENDENT ELEMENTS • There are multiple elements apart from strategy and structure which play an important role in effecting an organizational change and all are needed to be dealt with equal importance • The diagram of the framework conveys the notion that it is difficult rather impossible to effect a change in one element without affecting others. These are. • Failure in execution of a change arises from under valuation and under analysis of other S’s while focusing one.

• STRATEGY : Strategy is the plan and determination of the methodology to be employed to achieve the organization objective. • SKILLS : These are the competencies and beliefs possessed by the people working in the organization. .• STRUCTURE : Structure is the framework on which the organization stands and determines its hierarchies. • STAFF : These are the people of the organization and their general characteristics and capabilities. It determines who reports to whom. • SYSTEM : System is the standard operating procedures which are followed in different types of day to day activities of the organization for smooth functioning of the same. • SHARED VALUES : Shared values are the core values which an organization adheres to and is in the centre of any change which occurs in it. • STYLE : It is the way the leadership of the organization functions and leads the path ahead.

STRATEGY • What is our strategy? • How do we intend to achieve our objective? • How do we deal with competitive pressure? • How are changes in customer demands dealt with? • How is strategy adjusted for environmental issues? .APPLICATION The 7S framework equip us with an analysis tool to compare the present situation with that of a predicted future and take necessary steps to bridge the gaps as and when they might appear. This is done easily through a set of questions and finding their answers for every element in the framework.

given what we're doing? • Where are the lines of communication? Explicit and implicit? Systems: • What are the main systems that run the organization? • 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? .Structure: • How is the organization 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.

• How strong are the values? • What are the fundamental values that the organization 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 organization? • Are there any skills gaps? • What is the organization known for doing well? • Do the current employees/team members have the ability to do the job? • How are skills monitored and assessed? .

Washington in 1985. The company objective is to “establish Starbucks as the most recognized and respected brand of the world”. Africa.STARBUCKS AND THE 7S Starbuck is a coffee retailer created in Seattle. As of 2014 it has expanded its business all over the world with 21. American Continent and Europe. Australia.366 outlets spread across countries of Asia. .

CSR. . • Structure: Although Starbucks has a regular structure of human resources. marketing. be able to reinforce the Starbucks experience through non-retail operations and a firm and complete knowledge of coffee. • Shared Goal: The shared goal of the company is to leverage the Starbucks experience and maintain the quality uncompromised so as to be the finest purveyor of coffee in the world. roasting and purchasing thus maintaining a standard for the customers to rely upon.• Strategy : Starbuck’s strategy to become the most recognised and respected brand in the world is to expand aggressively and selectively pursue different ventures to leverage the brand value by improving the existing products and introducing new one. • Skills: The skills required by staff is to be friendly and knowledgeable. public affairs but the corporate culture is loosely structured and the employees are referred to as partners so as to build trust and facilitate new ideas. • Systems: Starbucks has a very intricate system in place for training.

• Style: The style of the organisation is innovative. • Staff: Staff of the organization is the real strength of it. in addition the employee turnover is very low as they are offered numerous benefits and incentives. flexible. All this when coupled with the strong vision embedded in the minds of the employees makes Starbucks one of the leading coffee retailers of the world. . Its one of the best customer friendly staff of the world. and team oriented. The major role in the success of good staffing is flexible working environment which empowers innovative thinking.

• We have to depend on other techniques and research for further course of action.LIMITATIONS This framework though highly useful has following limitations: • There is no provision to explain the action triggering mechanism after the analysis is done. • The points highlighted are very generic in nature with regards to the organisations and lack specific directions for different departments of the it . • The conclusions drawn fall short of being actionable thus making it an incomplete tool. • There are no guidelines for follow up action after the analysis has been done.

Thus the out look of different aspects of organisation as a hierarchy is changed to that of a synchronous framework which works in conjunction to achieve the specified objectives.CONCLUSION The McKinsey’s 7S Framework of management provides managers with a very potent tool for analysis of the organisation. . As highlighted by Fortune about 90% of well planned changes fail to achieve objective due to overemphasis on one aspect and under emphasis of other and this theory address that issue. Though it has its own set of lacunae it still suffices many needs of the organization and the changes within which would have otherwise been neglected.

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