McKinsey 7S Model

This is a management tool designed to analyse and understand the key organisational structures within a company in order to assess its potential for effective change. The model examines seven key areas of the company and the relationships of each of these elements to each other. The elements are grouped into two sub-categories of 'hard elements' and 'soft elements': The hard elements represent un-shifting company traits, those which are relatively stable and simple to define such as company strategy, structure and systems. The soft elements, on the other hand, represent more complex traits of the company which are influenced by culture, environment and individuals. These could be shared values, skills, style and staff. The seven elements A simplified description for each of the elements can be given as:

Strategy: the plan devised to maintain and build competitive advantage over the competition.Strategy is a plan or course of action in allocating resources to achieve identified goals over time. Unlike tactic, strategy is well thought and often rehearsed. It transforms the organisation from the present position to the new position described in the objectives, subject to constraints of the capabilities. Structure: the way the organization is structured and who reports to whom. Structure is the skeleton, the form of shape, of organisations. It dictates the way it operates and performs. Traditionally, businesses are structured with divisions, departments and layers, in which the lower layers answer to upper layers. Today, the flat structure, where the work is done in teams of specialists, are more common. The idea is to make the organisation more flexible and devolve the power by empowering the employees and eliminate the middle management layers Systems: the daily activities and procedures that staff members engage in to get the job done. Systems are routine processes and procedures followed within an organisation to implement the strategy and to run day-to-day affairs. These processes are mainly designed to achieve maximum effectiveness. Traditionally, the higher management makes the most decisions. Increasingly, the organisations are using innovation and new technology to make decision-making process quicker. Shared Values: called "superordinate goals" 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. Shared value refers to the significant meanings or guiding concepts that organisational members share . These values and common goals keep the employees working towards a common destination as a coherent team. The organisations with weak values and common goals often find their employees following their own personal goals that may be conflicting with others

Style: the style of leadership adopted.Style is the way in which key managers behave in achieving organisational goals, that is the management style. It includes the dominant values, beliefs and norms which develop over time and become relatively enduring features of the organisational life. Different from the traditional businesses in which strict adherence to the upper management and procedures was expected from the lower-rank employees, the recent businesses have been more open, innovative and friendly with fewer hierarchies and a smaller chain of command. Staff: the employees and their general capabilities.Staffs are personnel categories within the organization, such as engineers, sales persons, etc. Unlike traditional organisations, new leading organisations put more emphasis on hiring the best staff. They provide their staff with rigorous training and monitoring support, and give incentive for their staff to achieve professional excellence. This forms the basis of these organisations strategy and competitive advantage over their competitor Skills: the actual skills and competencies of the employees working for the company.

Advantages
Understanding a system change and the affects to the organisation as a whole. Planning for a process change- A smaller change will result in a new balance of the 7s model Creating strategic and fundamental culture change Align departments and processes during acquisition/merger Diagnostic tool for understanding organizations that is ineffective. Guides organizational change. Combines rational and hard elements with emotional and soft elements. Managers must act on all Ss in parallel and all Ss are interrelated.

For Assignment use

Strategy: What is our strategy?

How do 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? 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? How are skills monitored and assessed?

Example
Telenor (First 3 S Example) I did only the first 3 S for Telenor analysis. They were strategy, structure and system. Telenor Group is the incumbent telecommunications company in Norway, with headquarters located at Fornebu, close to Oslo. Telenor Group is mostly an international wireless carrier with operations in Scandinavia, Eastern Europe and Asia, working predominantly under the Telenor brand. It is ranked as the sixth largest mobile phone operator in the world, with more than 172 million subscribers. In addition, it has extensive broadband and TV distribution operations in four Nordic Countries. Wikipedia, as of August 5, 2010. As on August 5, 2010, two of Telenor strategies were to capture growth in three regions (Asia, Central-Eastern European and Nordic), and to undertake Merger and Acquisition (M&A) activities. These strategies were understandable, considering the condition of the economy (global financial crisis) and the commoditized telecommunication service (less ARPU), while telecommunication company required a high fixed-asset. But anyway I am not talking about the industry. I looked at the structure of the Telenor organization (as of August 5, 2010). Assuming that the link may be broken in the future, I describe the structure. The highest position was, of course, the CEO, Mr. Jon F. Baksaas. The groups under him were: Asia, Center-Eastern European, Nordic, Finance, Communication and Corporate Responsibility, Human Resources, and Business Development and Research. The Asia, Central-Eastern European and Nordic group showed the merger-and-acquisition-and-consolidation-ready structure. When there was a need for Telenor to acquire a new company, Telenor could easily put the company under the regional group. Telenor could also remove the company with ease. Conversely, Telenor could do the same for its consolidation effort. In addition to that, this structure explained that Telenor closely monitored the performance of these three regions, showing how serious Telenor was to capture growth in Asia, Central-Eastern European and Nordic. Realize that if the structure was created based on product groups, it would be more difficult for the management to look at the performance of each region (poor finance team needs to burn more candles at night).

The last but not least was system. I looked at this Accenture-Telenor case study. Accenture is a consulting company, providing management and IT consulting service. Up to 98 percent of all wholesale customer orders are now processed online. ; only two hours of training on the system is necessary in order to use the portal effectively. , Telenor has equipped the wholesale customers with a toolkit to diagnose the faulty lines resulting in cost reduction for Telenor Networks More complex inquiries can be automatically escalated to the appropriate team for rapid, seamless dissemination and resolution. As orders were processed online, Telenor could closely monitor and track the performance of the three regions. The IT system would aggregate individual countries revenue contribution into regional level, allowing high-level managers to foresee business risks in advance. Additionally, the availability of the IT system allowed Telenor to fasten the integration of newly acquired companies. The IT system could improve the learning curve of staffs joining Telenor.