Strategic planning is a part of strategic management. It helps in ascertaining the future outcome of change and taking decisions, to get the desired results.
A poor implementation may lead to the failure of strategic planning.
In this regard, McKinsey – a US-based consulting company has introduced the 7S Framework.
McKinsey 7S Framework
Popular business consultants Robert H.Waterman, Jr. and Tom Peters are the people behind the development of this model.
The framework gives an understanding of the way an organization works. Also, it helps in the effective formulation of plans for improvement. It supplies the organization with the required assessment.
Here, 7S stands for:
- Strategy
- Structure
- System
- Style
- Staff
- Skills
- Superordinate Goals
This model acts as a tool to ascertain and look for changes in the company’s internal situation. The model is based on the notion that –
For effective performance of the organization, the alignment and mutual reinforcement of these 7 elements is pertinent.
The framework states that the primary drive to change does not rely on the structure only. Instead, one can understand it via the complex relationship present between the 7S.
As per the framework, there exist many factors that have the potential to influence the organization’s ability to change. Further, an interconnection is present amidst these factors. So to achieve change changes should be made in all the variables.
One should note that the 7S framework has no implied hierarchy. Also, it is difficult to highlight which of the 7S is causing change, at a particular point of time.
Objectives of 7S Model
The objective of 7S model is to:
- Improve the company’s performance
- Examine the possible impact of future changes within the organization.
- Align company’s processes and departments at the time of merger or acquisition
- Ascertain the best way for strategy implementation.
Now we will discuss the 7S in the upcoming sections:
Super-Ordinate Goal
Super-ordinate Goal is just like the purpose of the company. It includes the collection of values and ambitions apart from the predefined objectives of the company.
We can consider them as the basic ideas, depending on which the organization is formed. To be specific, they are the foremost values of the concern. They also give broad notions, to direct future actions.
These goals do not have much importance for the external parties. However, it is vital to the internal parties.
Structure
The structure represents the long-lasting organizational arrangement and relationships. Also, it makes up the layout of the organizational structure.
It determines the following:
- Formal Relationships
- Communication Channels
- Roles to be performed
- Rules
- Procedures
It carries out three main functions:
- Minimizing external uncertainty: The management can remove this by forecasting, research, and planning.
- Minimizing internal uncertainty caused by unpredictable, random, and dynamic human behavior. the management can use control mechanisms to reduce them.
- Coordination of activities: The management can attain this by means of:
- Departmentalization
- Specialization
- Division of labor
- Delegation of authority.
McKinsey 7S Framework considers this structure as superstructure. With the help of an organizational chart, coordination between organizational tasks is depicted.
System
The system implies the rules and procedures, routines, be it formal or informal that prioritize work. It includes:
- Production
- Planning and control systems
- Costing
- Finance
- Capital budgeting
- Recruitment
- Training and Development
- Planning and Budgeting
- Performance Evaluation
Changes in the structure of the organization take place due to changes in systems. These changes can be of varying degrees.
Style
Style refers to the way in which an organization carries out its business. this is often used by the top management to introduce change. Every organization differs from one another in its style.
An organization’s style is reflected by way of patterns of actions that the top managers take over a period of time.
They can influence the lower-level management of the organization. Further, the study of style communicates the managerial process. That is to say, whether the management process is in its evolution phase or it is having a conventional outlook.
Staff
Staff implies the workforce. It represents the pool of people who need development, challenges, and encouragement. Also, the organizations must ensure that the staff is capable of contributing to the achievement of goals.
Come let us understand its important aspects:
- Choosing people with merit for various positions.
- Developing skills and abilities in staff, who can undertake challenging tasks or assignments.
- Encouraging the staff to give their best to achieve the goals.
Skills
Skills imply the major attribute of the organization. It represents the distinctive competencies of the organization.
For example
Hindustan Lever is famous for its marketing skills, while IBM is well known for its customer service.
These skills are developed over a period of time. Also, these are the outcome of numerous factors. So, it is pertinent to develop new skills, to implement a new strategy.
Strategy
Strategy is the approach. It is the long-term master plan that gives direction and determines the scope of the organization. Also, It indicates the path which the firm has selected to achieve what it intends.
Wrap Up
McKinsey 7S Framework helps in determining the issues in strategy implementation, along with the strategy formulation.