The McKinsey 7S Model: What It Is and How To Use It

Managing strategy alignment across several business units becomes increasingly difficult as organisations adapt to constant changes.

The McKinsey 7S Model is a strategic tool that firms use to manage complexity and create consistent alignment during times of transition.

In this post, we will walk you through the fundamental ideas of the McKinsey 7S Model and demonstrate how to apply them in reality using a real-life scenario. You will also receive a template to assist you in performing your own 7S Analysis.

TL;DR

The 7S Model is a strategic tool that may help you identify organisational gaps, inconsistencies, and alignment concerns.

The framework separates organisations into seven groups and illustrates how crucial parts interact with one another.

The 7S Model’s “hard” and “soft” parts are equally crucial for implementing change.

Pros: The 7S Model helps you understand how change initiatives affect the whole organisation.

Cons: It does not investigate external factors and their effects on organisations.

What Is McKinsey’s 7S Model?

The McKinsey 7S Model is a change management tool that assesses organisational design, alignment, and performance. It provides a simpler approach to finding organisational gaps, inconsistencies, and conflicts. It is also beneficial for planning different sorts of change initiatives in complicated situations.

The 7S Model, as the name indicates, consists of seven components, each of which begins with a “S.”

These seven components are classified as “hard” and “soft” parts. Both are equally crucial in facilitating effective transformation projects.

Hard elements

Hard elements are tangible, easy to identify, and can be directly impacted by management. 

Structure

Strategy

Systems

Soft elements

Soft elements are intangible and primarily driven by the organization’s corporate culture.

Skills

Style

Staff

Shared Values

Seven Elements of the McKinsey 7S Model

Let us examine the various components of the McKinsey 7S Model in further depth.

1. Structure.

This is how the organisation is structured for decision-making, ownership, and leadership. It encompasses hierarchy, the line of command, and accountability among role players.

2. Strategy.

The company’s approach to strategic planning and implementation ensures success, sustainability, and a competitive edge.

3. System

Systems refers to the procedures, infrastructure, and workflows used inside an organisation.

4. Skills 

An organization’s skills refer to its employees’ competencies and capabilities that aid in meeting business objectives.

5. Style.

Style refers to how individuals in an organisation function and communicate. This includes interpersonal business partnerships, management styles, and codes of conduct.

6. Staff 

Staff refers to human resources and talent management in corporate choices such as recruiting, training, retention, and incentives.

7. Shared Values.

These are the shared goals and values that serve to shape an organization’s culture and align the other parts inside it. They have an impact on employee, customer, and workplace experiences both within and outside of your organisation.

How Do I Use the McKinsey 7S Model? (In Seven Steps)

1. Examine each component of the 7S model.

Here’s how you should approach it step by step:

Begin in the centre and investigate Shared Values. This stage should assist you in determining whether you have a clear concept of where your organisation intends to go in the future.

Enter the Hard components (Strategy, Structure, and System).

Finish with soft elements (skills, staff, and style).

Strategy:

How should we go to tackle the unique business problem?

What are our strategy and priorities?

How will we meet our strategic objectives?

How can we compete in the marketplace? What are our competitive abilities?

How does the organisation handle changes in client demand or the business environment?

Structure:

How is our organisation organised?

How are reporting and working connections organised (hierarchical, flat, siloed, etc)? Who reports to whom?

How do our personnel align with the strategy?

How do our teams coordinate and collaborate towards common goals?

What is our decision-making process? Do centralization, empowerment, or decentralisation accomplish it?

How does the organisation share information, both formally and informally?

Systems:

Can we implement the plan using the current business system, or do we need to create a new one?

How do we monitor progress and performance?

What internal processes and rules do we have in place to keep things on track?

Shared values:

What principles assist us attain our goals?

What motivates us to behave the way we do?

What do we envision for the future? What is our mission for getting there?

What are our basic values? How do we incorporate them into our regular activities?

Skills:

What are our strongest organisational skills? What are our weaknesses?

How will we fill the skills gap? What skills are required?

How do we monitor, assess, and improve skills?

Is the existing employee’s skill set suitable for the job?

Style:

What leadership style and cultural characteristics will enable us to attain a strategic goal?

What are our existing management strategies?

How are our staff reacting to this?

Staff

Is there anything we can do to help our teammates grow?

What are the current personnel requirements?

Are there any gaps in essential skills or resources?

What are our plans for meeting those needs?

Remember that you may already be aware of some of the difficulties in your organisation. However, certain issues may be less visible.

This activity might help you obtain a deeper grasp of all the issues that affect alignment and organisational performance.

2. Identify areas that are not aligned with your vision and strategy.

Review your results and utilise them to identify organisational gaps and inconsistencies. Make a list of the existing issues.

“If you aim to reach the stars, you must first understand the vast expanse that lies between you and them.” – Dr PV Siddharth, CEO, GOLDEN GATE PROPERTIES.

In addition, consult with other important stakeholders to gather their feedback on various business areas and procedures inside your organisation.

“When you engage others and seek their input, they become more committed to bringing the vision to life.” – Adithi Reddy, COO, CULLINAN CREATIVE CONCEPTS.

3. Define your intended state.

The next step is to establish and describe the ideal alignment for the organisation. Examine each “S” and ask yourself the following question: “What do we need to change in each element so that we can execute our strategy?”

This will most likely need extra study and talks with external experts to determine what an optimum organisational design might look like and what hurdles could stand in its way.

Remember that your “ideal” condition should be guided by your company’s long-term strategic goals, talks with key stakeholders, and other internal evaluations.

Once completed, go over everything to verify it is consistent with your company’s vision and strategy.

4. Create your change management strategy.

The 7S Model analysis is meaningless without being accompanied by a change management action plan. Your organisation need a clear road plan to reach where it needs to go. Without it, you’ll either lose out on possibilities for progress or remain static.

As part of this process, establish your strategic objectives, important projects or initiatives, and key performance indicators (KPIs). Co-create an action plan with the owners who will be accountable for carrying it out. This collaborative approach is vital for gaining buy-in and maintaining momentum.

Strategic planning might be difficult based on your organization’s size and existing practices. 

5. Carry out your plan.

Now it’s time to put your plans into action. Execution is the most important phase in the transformation process.

Getting it correctly will lead to significant improvements and assist your organisation in meeting key milestones. Getting it incorrectly will result in delays, poor results, and failure.

However, strategy implementation in a complicated corporate context can be challenging. Especially if you do not have the necessary tools to coordinate activities, maintain accountability, and manage change projects. 

6. Evaluate your development of the goals you established.

Monitoring progress is critical if you want your change programme to have the most impact.

Continuously evaluate the success of your teams and projects to ensure that your organisation is aligned and on track.

7. Adapt your ideas and strategy as required.

Any effective plan will evolve, iterate, and adapt. Don’t be hesitant to adjust your plans and strategy as you go.

Using insights, expertise, and fresh information to enhance your approach is critical. Plans must be updated or refocused as your organisation works towards its objectives.

“The True North should not change that much, that frequently, but the components of the pillars that make up for the solution might evolve.” 

McKinsey’s 7S Model Example: Chick-fil-A

Chick-fil-A is a renowned fast-food restaurant chain with over 2000 locations in the United States, Canada, and the United Kingdom. Here’s how a McKinsey 7S Model may look for Chick-fil-A:

Structure

A private, family-owned fast-food franchise.

Fully-owned subsidiaries that supply franchisee restaurants.

Individual Chick-fil-A locations are owned and operated by franchisees.

Franchise owners (Operators) oversee the day-to-day operations of their businesses.

Strategy

Chick-fil-A’s growth strategy focuses on market development. Franchising allows them to grow into new areas with their existing products. They also target worldwide expansion by opening new sites outside of the United States, such as in Canada and the United Kingdom. In addition, they intend to expand into other areas, including Asia.

System

Franchise and licencing companies work with corporate offices to manage large-scale strategic projects.

Corporate influence over food production and distribution routes.

All potential franchise owners go through a comprehensive evaluation procedure.

Shared values

Chick-fil-A’s corporate brand strongly reflects Christian and family values. For example, all Chick-fil-A locations are closed on Sundays.

Chick-fil-A’s basic principles play an important part in influencing its culture, work, and customer experience:

“We are better together”

“We’re here to serve.”

“We are purpose-driven.”

“We pursue what’s next.”

These ideals guide their presence and approach to the fast-food market. And it turns out to be worth the cost. Chick-fil-A is one of America’s most beloved fast-food companies, with a reputation for offering excellent customer service.

Skills

The corporation invests extensively in franchise owner development through training, support, and investments.

They also give opportunity for employees to advance and take on new responsibilities. For example, in 2019, Chick-fil-A provided employees with $15.3 million in college scholarships.

Style

Chick-fil-A is well-known in the fast-food sector for its distinct management style and faith in franchisees.

Known for its servant-leadership management approach.

The corporate headquarters is called the “Support Centre.”

Franchisees are referred to as “Operators,” and staff as “Team Members.”

Staff

Chick-fil-A employs more than 170,000 Team Members, Operators, and Staff. Here’s how

Corporate functions include strategy, licencing, business development, marketing, compliance, and human resources.

Franchise owners are responsible for business management, operations, and human resource management.

Restaurant employees are responsible for food preparation, front-of-desk service, customer relations, cleaning, and team management.

Now, let’s see the 7S Model in action…

The above example demonstrates that Chick-fil-A’s operations are coordinated and efficient. But what happens if Chick-fil-A decides to expand into a new area with a new product? For argument, disregard the fact that a diversification strategy like this would be a daring and dangerous move according to the Ansoff matrix.

Using the 7S Model, they may discover that they lack the necessary management personnel to guide them through this change. In terms of personnel, they will need to employ individuals with the necessary skills and expertise to fill these gaps. Looking at Skills, they could even determine that franchise owners and restaurant personnel would need extra training because the new product demands new processes and workflows. 

Strategy is another thing they should consider.

Their strategy has to alter, and it may necessitate a new approach to strategic planning. They may also realise that their existing strategy execution technique is insufficiently rapid and must be altered if they are to outperform competitors and remain relevant.

A McKinsey 7S Framework requires executives to do their study and identify deficiencies that might lead to a disastrous strategy implementation. As a leader, you do not want to be among the 90% of initiatives that fail.

Please keep in mind that the above example is only one of many possible outcomes. You should do your study and implement the approach in your organisation.

What Are the Benefits of the McKinsey 7S Model?

The main advantages of the 7S model framework are:

It demonstrates the broader effects of transformation on organisations.

Simplifies the process of planning and carrying out change projects.

During times of transition, it aids in the alignment of various business unit segments.

Useful for a variety of transformation projects.

As with every strategy framework, it has several disadvantages:

What are the disadvantages of the McKinsey 7S model?

The downsides of the 7S Model include:

It requires much study and benchmarking to be utilised properly.

Ignores how the external environment affects enterprises.

When Should You Use the McKinsey 7S Model?

The McKinsey 7S Model is a simplified approach to understanding organisational structures and how they interact with one another. It is useful for detecting significant organisational factors that influence performance, such as gaps, inconsistencies, and misalignment.

The 7S Model is an excellent strategic tool for assessing organisational design and change management in complicated situations. It may be used for a wide range of organisational transformation efforts, including:

Diversity, Equity, and Inclusion (DEI) Initiatives

Innovation

Digital Transformation

M&A-driven restructuring and market development.

This methodology can help organisations that are going through a transition, reinvention, or reorganisation improve their strategic planning and execution.

McKinsey 7S Model with strategy execution.

7S Model Analysis That’s not enough. Yes, you gain insights into business areas that require improvement or change inside the organisation. But that’s only the start.

You must first develop and implement an action plan to bridge the gap between misaligned elements and your strategy. This is the only way to build a well-oiled machine that generates business outcomes. And you’ll need the necessary tools to measure and monitor performance.