PGDM (Agriculture)

PGDM-722 6
7S Framework
for

analyzing organizations

NH Rao

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Learning Objectives

background 7S framework Implementation

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Background

from Structure is not organization (Waterman et al, 1980) The notion that structure follows strategy (get the strategy right and the structure follows) looked like an important addition to the organizational tool kit ; yet strategy rarely seemed to dictate unique structural solutions. Moreover, the main problem in strategy had turned out to be execution: getting it done. And that, to a very large extent, meant organization. So the problem of organization effectiveness threatened to prove circular.

90 percent of carefully planned strategies don't work

The challenge to the manager is how to organize better. His goal is organization effectiveness. . the subject is much more complex than any of our past prescriptive models have allowed for. Diagnosing and solving organizational problems means looking not merely to structural reorganization for answers but to a framework that includes structure and several related factors.

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Criteria and companies studied by Waterman et al

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8 attributes of excellent companies

1. A bias for action : solve problems and challenges in a relatively short time through cross functional teams (customers or suppliers may also participate). 2. Close to the customer: listen to the customer and use as input for continuous improvements and new product and service development. 3. Autonomy and entrepreneurship: employees - not only people in R & D are expected to be creative and innovative in their daily jobs. 4. Productivity through people: providing a framework for people to give ideas for waste reduction/productivity growth i.e. respect, involvement and empowerment.

5. Hands-on, value driven: companys philosophy, vision and values are the main guidelines and more important than resources 6. Stick to the knitting: excellent companies stay close to the business they know. 7. Simple form, lean staff: underlying structural forms and systems are elegantly simple and top-level staffs are lean. 8. Simultaneous loose-tight properties: both centralized and decentralized autonomy down to the shop floor, but fanatic centralists around the few core values

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7s framework from Structure is not organization (Waterman et al, 1980)

Our assertion is that productive organization change is not simply a matter of structure, although structure is important. It is not so simple as the interaction between strategy and structure, although strategy is critical too. Our central idea is that organization effectiveness stems from the interaction of several factors--some not especially obvious and some under-analyzed. Our framework for organization change, graphically depicted in the exhibit, suggests several important ideas Our claim is that effective organizational change is really the relationship between structure, strategy, systems, style, skills, staff, and something we call superordinate goals.

The shape of the diagram is significant. It has no starting point or implied hierarchy.

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Aligning the 7S
For an organization to operate effectively, each of the seven factors of the 7S framework must be aligned and connected.

misaligned organization
Each of the 7S factors is working independently against each other

aligned organization
all the 7S factors are aligned and support each other high performing organization

The 7S framework forces us to concentrate on interactions and fit. The real energy required to redirect an institution comes when all the variables in the model are aligned. "When all seven needles are all pointed the same way, you're looking at an organized company."

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Application of 7S
The 7S model can be used in a wide variety of situations where an alignment perspective is useful, for example: Determine how best to implement a proposed strategy Improve the performance of a company Examine the likely effects of future changes within a company

Align departments and processes during a merger or acquisition

The 7S model can also be applied to teams or projects. The alignment issues apply, regardless of the areas of application

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The 7 elements
Strategy: plan for achieving sustainable competitive advantage by delivering greater value than competition: positioning and plan of activities difficult for competitors to replicate; prepared in response to changes in external environment Structure: divides plan and authority into tasks and then provides coordination between tasks tradeoff between specialization and integration functional (HR, marketing, operations effective for small organizations) divisional (geography, market segment, country) matrix divisional + functional (products) network (small temporary teams) Systems: procedures and processes for managing organizations (budgeting, planning, MIS, performance management, accounting, information management, etc.) Style: patterns of behaviour and actions by top managers; decision making style Staff : people, background, competencies recruitment, training, career growth Skills : organizational competencies people, practices, systems, technology Super-ordinate goals/shared values: core values that are widely shared in the organization; guiding principles; help focus attention and provide a sense of purpose Placing Shared Values in the middle of the model emphasizes that they are central to the development of the other 6 elements as they all stem from why the organization was originally created, and what it stands for.

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Hard and soft elements of the 7S framework

Hard Elements Strategy Structure Systems Soft Elements Shared Values Skills Style Staff

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 are more difficult to describe, and are less tangible and more influenced by culture. However, these soft elements are as important as the hard elements for success of the organization

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Using the 7s model

Basis: all 7 elements must be aligned for effective organizational performance assess the current situation (Point A) develop a strategy to reach a proposed future situation (Point B) identify gaps and inconsistencies in the elements between the two situations adjust and tune the elements of the 7S model to ensure that the organization works effectively and well once you reach the desired endpoint

The 7S model is a good framework to ask the right questions but it won't give all the answers.

Need is to bring together the right knowledge, skills and experience to arrive at the answers

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applying the 7s framework to organizations what to look for

7s framework Indicative questions element
Strategy Structure
Sources of competitive advantage (cost, quality, service, technology) key strategic priorities (new markets, new products, better service) structural form functional, divisional, matrix, network, SBU decision hierarchy centralized/decentralized coordination between structural components communication explicit/implicit alignment between components key systems (HR, financial, communication, information)& controls internal rules and procedures are systems suitable for running the business business activities the firm is distinctively good at skill gaps and skills to unlearn recruitment and people development management team characteristics where are the strongest/weakest leaders decision-making process (participatory, top down, analytical) teams/groups; competitive/cooperative; how top managers spend time shared understanding of purpose, vision, values what types of issues receive top management attention peoples understanding of the company is different

Systems

Skills Staff

style

Shared values

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Summary
7 elements/factors influence organizational effectiveness all 7 are interconnected managers tend to ignore the interconnections & focus on only one or two factors it is often difficult to progress on one factor without adjusting the others there is no natural starting point for a change effort hard elements are relatively easier to change than soft elements

Start with Shared Values: Are they consistent with structure, strategy, and systems? If not, what needs to change?
Then look at the hard elements. How well does each one support the others? Identify where changes need to be made. Next look at the other soft elements. Do they support the desired hard elements? Do they support one another? If not, what needs to change? Adjust and align the elements iteratively making adjustments, and then re-analyzing how that impacts other elements and their alignment

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Thank You

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