McKinsey 7-S Model

The 7-S Model

The 7-S-Model is better known as McKinsey 7-S. This is because the two persons who developed this
model, Tom Peters and Robert Waterman, have been consultants at McKinsey & Co at that time. They
published their 7-S-Model in their article “Structure Is Not Organization” (1980) and in their books “The Art of Japanese Management” (1981) and “In Search of Excellence” (1982).
The model starts on the premise that an organization is not just Structure, but consists of seven
elements:

Those seven elements are distinguished in so called hard S’s and soft S’s. The hard elements (green
circles) are feasible and easy to identify. They can be found in strategy statements, corporate plans,
organizational charts and other documentations.
The four soft S’s however, are hardly feasible. They are difficult to describe since capabilities, values
and elements of corporate culture are continuously developing and changing. They are highly
determined by the people at work in the organization. Therefore it is much more difficult to plan or to
influence the characteristics of the soft elements. Although the soft factors are below the surface, they
can have a great impact of the hard Structures, Strategies and Systems of the organization.

Description

The Hard S’s
Strategy	Actions a company plans in response to or anticipation of changes in its external environment.
Structure	Basis for specialization and co-ordination influenced primarily by strategy and by organization size and diversity.
Systems	Formal and informal procedures that support the strategy and structure. (Systems are more powerful than they are given credit)
The Soft S’s
Style / Culture	The culture of the organization, consisting of two components: · Organizational Culture: the dominant values and beliefs, and norms, which develop over time and become relatively enduring features of organizational life. · Management Style: more a matter of what managers do than what they say; How do a company’s managers spend their time? What are they focusing attention on? Symbolism – the creation and maintenance (or sometimes deconstruction) of meaning is a fundamental responsibility of managers.
Staff	The people/human resource management – processes used to develop managers, socialization processes, ways of shaping basic values of management cadre, ways of introducing young recruits to the company, ways of helping to manage the careers of employees
Skills	The distinctive competences – what the company does best, ways of expanding or shifting competences
Shared Values / Super ordinate Goals	Guiding concepts, fundamental ideas around which a business is built – must be simple, usually stated at abstract level, have great meaning inside the organization even though outsiders may not see or understand them.

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.
If one element changes then this will affect 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.
The 7-S Model is a valuable tool to initiate change processes and to give them direction. A helpful
application is to determine the current state of each element and to compare this with the ideal state.
Based in this it is possible to develop action plans to achieve the intended state.