Instructions for using the 7S McKinsey model to develop businesses

In today’s context, effective organizational management and development requires a comprehensive and strategic approach. One of the popular tools used to evaluate and improve organizations is 7S McKinsey  model. 

What is 7S Mckinsey model?

7S  McKinsey model is a popular strategic management tool. Developed by consulting group McKinsey & Company in 1980. This model focuses on seven important factors that need to be considered to understand and promote organizational development. These elements are divided into two groups: hard elements and soft elements.
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Hard factor
  • Strategy: Overall plan to achieve the organization’s goals.
  • Structure: Includes how the organization is built and the power structure.
  • Systems: Processes, regulations and information systems.

Soft factor

  • Shared Values: The core values ​​and culture of the organization.
  • Skills: Skills and abilities of employees.
  • Style: Leadership style and way of working of the organization.
  • Staff: Employees and employees of the organization.

7 factors in 7S Mckinsey model 

7S McKinsey’ model includes the following 7 important elements

Strategy

Strategy refers to the overall plan an organization uses to shape and achieve its goals. A good strategy usually includes the following elements:
  • Goals and objectives: Clearly define the organization’s goals and objectives in the long and short term.
  • Environmental analysis: Carefully evaluate the external and internal factors affecting the organization. Including both opportunities and challenges.
  • Planning: Develop detailed plans to achieve set goals and objectives. Include specific steps and resources needed.
  • Competitive positioning: Determining how the organization will differentiate and compete in the market. Or your industry.
  • Innovation: Encourage and support creativity and innovation in the organization’s activities and products.

Structure (Organizational structure)

It is one of seven important factors that organizations need to consider to achieve performance and success. Organizational structure refers to the way an organization is organized. And make arrangements to carry out activities and achieve goals. An effective organizational structure often includes the following elements:
  • Division of responsibility and power: Clearly define the tasks, responsibilities and power of each department and individual in the organization.
  • Organizational structure: Determines how the departments and units within the organization are organized and linked together. Including management level and functional structure.
  • Degree of decision centralization: Determine the degree of centralization or decentralization of decisions in the organization.
  • Flexibility: The degree to which the organizational structure can adapt and adjust to meet environmental requirements and changes.
  • Size: The size of the departments and units within the organization, as well as the overall size of the organization.

Systems

Play a role in ensuring that activities are carried out effectively and in accordance with organizational goals. Below are some system-specific elements that businesses need to consider
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  • Workflow system: This is the series of steps that employees must follow to complete a specific task. This process can range from defining requirements, assigning tasks, to testing and evaluating results.
  • Regulations and policies system: Are the instructions and rules that employees must follow when operating in the organization. They may be related to issues such as information security, human resource management, or product quality.
  • Information systems: Includes the software and technology infrastructure an organization uses to manage information and data. This may include ERP (Enterprise Resource Planning) systems. CRM (Customer Relationship Management) system. And other tools to support business management and operations.

Shared Values ​​(Shared Values)

Shared Values ​​are core principles, beliefs and values. It is something that all members of the organization share and believe in. This is an important factor that helps form and maintain organizational culture. As well as shaping the way employees work with each other and with customers. Some points to note about common values ​​include:
  • Awareness and commitment: Shared values ​​reflect the consistency and commitment of all members of the organization. They behave according to common principles and beliefs. This creates a sense of consensus and support for the organization’s goals and mission.
  • Shaping organizational culture: Shared values ​​are responsible for shaping and creating organizational culture. They create a work environment where employees feel expected, motivated, and in tune with each other.
  • Guidance for action: Shared values ​​are often the basis for guiding action and decision making within an organization. They define what is considered important and right. Help members act consistently and appropriately.
  • Drive innovation and creativity: Shared values ​​can drive innovation and creativity. By encouraging employees to seek new and groundbreaking approaches to achieving organizational goals.

Style (Leadership style)

Leadership style affects organizational culture and the way employees work together. This includes the way leaders communicate, make decisions, motivate and promote personal development within the organization. Here are some common leadership styles:
  • Directional Leadership: Directional leadership focuses on defining clear goals. And guide employees to work in that direction. They are often the ones who direct and shape the organization’s long-term strategy.
  • Collaborative Leadership: Collaborative leadership respects the opinions of everyone in the organization. They promote collaboration and teamwork. They often create an environment where people feel valued and encouraged.
  • Inspirational Leadership: Inspirational leadership creates a dynamic and motivating environment. They often set high goals and promote creativity and innovation within the organization.
  • Managerial Leadership: Managerial leadership focuses on managing the day-to-day operations of the organization. They are often organizers, able to manage time and resources effectively.
  • Socially responsible leadership: Socially responsible leadership focuses on building an organization that has a positive impact on the community and the environment. They often set goals related to sustainability and social responsibility.

Staff (Human Resources)

Human resources are one of the most important resources of an organization. And plays a decisive role in the success of that organization. Some important points related to personnel factors.
  • Recruitment and selection: The process of recruitment and selection of personnel is important. To ensure that the organization has talented, skilled people who fit the organizational culture.
  • Development and training: Investing in employee development and training helps improve their capacity and performance. This can include courses, seminars, in-house training programs and other learning opportunities.
  • Performance appraisal: Providing proper feedback and assessment of employee performance helps them improve and develop. This may include goal setting, periodic evaluation, and ongoing feedback.
  • Performance management and promotion: Systems and policies related to performance management and promotion. Helps ensure that employees are fair and recognized for their contributions to the organization.

Skills

The Skills element refers to the skills and abilities of employees in the organization. It plays an important role in ensuring that the organization has people with sufficient skills. From there, they perform their work well and achieve their set goals. Aspects of the skills factor include:
  • Technical skills: These are specific skills related to each employee’s work field. For example, in the field of engineering, technical skills may include knowledge of programming, technical skills, or knowledge of project management.
  • Soft skills: Besides technical skills, soft skills are also very important. These are non-professional skills such as communication, teamwork, time management, and problem solving.
  • Leadership skills: In some cases, employees may need leadership skills to lead a work team. Or take on management positions.
  • Self-study and self-development skills: In a rapidly changing world, this is a very important factor. Employees need to be able to self-learn and adapt to changes.
  • Skills development: Organizations need to provide opportunities and resources to develop skills for employees. Through training, support from management and policies to encourage personal development.

Benefits of the 7S McKinsey model

When applying the McKinsey 7S model, businesses can receive benefits such as inclusion
  • Comprehensive assessment: The 7S model looks at the organization from many different perspectives. From organizational structure and strategy to culture and human resources. 
  • Determine the relationship: By analyzing the relationship between factors. The 7S model helps businesses understand how each factor affects each other and business performance.
  • Identify strengths and weaknesses: By analyzing various factors. Businesses can identify their strengths and weaknesses. 
  • Supports strategic management: The 7S model helps strategic management by creating a framework. To ensure that fundamental elements such as strategy, organizational structure and systems are all consistent and supportive of each other.
  • Enhance organizational efficiency: By considering and adjusting factors according to the 7S model. Organizations can optimize their operations and increase performance.
  • Support during change: By considering each factor. Organizations can better understand how changes will affect entire systems and employees.

Limitations of the 7S McKinsey model

  • Comparing an organization’s current strategy with that of an organization that is performing much better or is much larger can be misleading. Because the 7s model does not consider factors such as risk management, opportunities and rewards when making comparisons. 
  • Mckinsey’s 7s model also does not take appropriate consideration of the environment, culture and other factors within the organization. 
  • The McKinsey 7s framework requires practitioners to have profound knowledge. They must understand the business environment and the company to implement it properly. Without proper knowledge about the competitive conditions of the market. There will be no way to predict whether the planned changes will be profitable.

Process of applying and implementing the McKinsey 7S model

Step 1: Analyze the current business situation

To successfully apply the 7S model. First of all, you need to find out the current status and situation of the business. Relate to the 7 factors listed above and analyze them thoroughly. 
You can follow and answer the suggested questions below to check the status of your business

1.1. Strategy

– What are your company’s strategic goals?
– How do you use your resources and capabilities to get there?
– What makes you stand out from your competitors?
– How do you compete in the market?
– How do you plan to adapt in the face of changes in the market?

1.2. Structure

– What is the organizational structure of your business?
– Who makes the decisions? Who reports to whom?
– Are decisions made at the highest levels of management at headquarters or the parent company? Or is it done at lower levels in the management system?
– How is information shared throughout your company?

1.3. System

– What are the activities of your business?
– How do you track work progress?
– What are the processes and rules that teams in your business follow to stay on track?

1.4. Skill

– What are your business’s core competencies that create competitive advantage? 
– Does your business have any skills gaps?
– Do personnel have the skills to do their jobs?
– What do you do to monitor, evaluate and improve HR skills?

1.5. Staff

– How many employees does your business have?
– What does your business require from an employee at the present time?
– Are your personnel lacking any skills compared to what your business requires?
– What do you need to do to solve them?

1.6. Style

– What is the management style like in your business?
– How do employees get acquainted with your business’s management style?
– Are your employees competitive or cooperative at work?
– What products, tasks, and behaviors will be rewarded by leaders?

1.7. Shared value

– What is the mission and vision of your business?
– What is the ideal and actual value of your business?
– What are the core values ​​of your business?
– How does the company incorporate these values ​​in its daily operations?

Step 2: Determine the goals that the business wants to achieve

Determine the business goals you want to achieve in the future. And optimize organizational design with the help of senior management. This will make it easier for you to set goals. And come up with a solid action plan to execute the strategies.
Because at first, most likely, you still won’t know what you want to achieve. So you will have to collect data and have a broader view of the market. By studying competitors and how they react to organizational changes.

Step 3: Build an action plan (Action Plan)

In this step, businesses need to determine which items need to be designed and rearranged. And how will your company do it or with what options? The result of this step is an action plan. It details more specific steps to achieve the desired goal.

Step 4: Implement the action plan

Whether or not action plans are successful depends on who implements them. So you need to make sure you assign tasks to the right employees. So that they can maximize their strengths, thereby helping businesses achieve success. Besides, you can also hire experts to advise and guide you through the above process.

Step 5: Check and adjust the 7 factors in the model accordingly

The 7 factors listed in McKinsey’s 7S model are subject to frequent change. So checking and reviewing them periodically is a necessary activity. Because each change in one factor will affect all the remaining factors. This forces you to rebuild a new model and organization.

Example of a business applying the 7s model 

  • Strategy: McDonald’s has gained a significant market share through its cost leadership approach.
  • Structure: McDonald’s focuses on flat structure. Employees work as a close-knit team. And easy access to senior management for inquiries. 
  • Systems: McDonald’s is known for continuously innovating to reduce wait times. And make its entire supply chain and production more efficient. Such as the new McDonalds app and self-ordering kiosks.
  • Shared Values: McDonald’s aims for high integrity. Serving a wide range of customers. Hire employees from different backgrounds. Encourage teamwork and finality. Bring some profits back to the community with core values ​​such as Service, Inclusion, Integrity, Community and Family.
  • Style: McDonald’s promotes a participative leadership style among seniors with employees at different levels. To seek their feedback to improve operations and resolve conflicts.
  • Staff: With more than 210,000 employees. McDonald’s is one of the largest employers in the world.
  • Skills: McDonald’s regularly trains to provide a great customer experience and receive employee feedback.

Summary

Hope you have clearly understood the McKinsey 7s model through the article above. As well as having the right choice for the model that is suitable for the business you are developing. The 7s model, if applied properly, will bring great results to the company. . If your business needs training or guidance on using analytical tools to plan business strategies, please contact Apexcorp immediately.
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