IT Strategy

McKinsey’s 7-S Strategy Framework

May 1, 2008 by Raj Sheelvant

McKinsey introduced the 7-S framework for strategy in the late 1970s, The framework maps seven interrelated factors that influence an organization’s ability to change—shared values, skills, staff, strategy, structure, style, and systems—and shows how these forces interact. Unlike Porter’s Framework, 7-S Framework emphasizes coordination more strongly; 7-S suggests that they can make significant progress in any of their parts only if they progress in the others. As seen in the diagram, the interrelations between these elements are equally important compared to the elements themselves. They all work together.

The 7-S Framework helps organizations to perform their self assessment. It’s like holding up a mirror and that enables each organization to find their blind spots. Thus, 7-S Framework acts as an excellent tool to help diagnose existing problem. Since it was proposed in 1970s, in today’s rapidly changing business world, the question is – How relevant is it today?

 Let me go through each of these 7 elements  

1. Style:  Its Organization’s Culture. Understanding your corporate culture in the context of national culture and how that aids or acts as a barrier for growth has become more important because of globalization. A whole new field ‘Cultural Intelligence’ has been evolving lately to address style in the era of globalization.
2. Skills: These are both institutional and individual skills relevant for the organizations’ growth. Globalization has made skill acquisition strategies and Outsourcing strategies a high priority.
3. System: These are Business Processes (how work is done) within the organization.  Identifying core business processes is more relevant today as organizations can focus on it while outsourcing contextual business processes.
4. Structure: This is about authority and relationship between the executives and the individual contributors. Globalization and rise of Social Media (aka Web 2.0) is challenging the existing ’structure’.  
5. Staff: These are ‘people’ within the organization. The focus lately is on ‘Diversity’ and ability to achieve ‘Economies of Scope’ leveraging diversity.
6. Strategy: All the activities the organization does to gain competitive advantage. Due to globalization and hyper competition, strategy is not static anymore. Now, when the growth in the competitive landscape has become unpredictable, the trick is to figure out how to evolve an organization around strategy when strategy itself keeps evolving.
7. Shared Value: This is Social mission or the super ordinate goals the company is pursuing. Today, no global organization can get away without addressing sustainability issue. Embedding social mission into the organizations’ brand has become vitally important. Marketing department within the organization is now challenged to create an enduring brand that cannot be tainted by environmental, social and human rights.

I think 7-S Framework is more important today. The important aspect of 7-S framework is its simplicity. These elements allow organizations to step back and look at its position in the global competitive environment holistically. It acts as a complement to Porter’s strategy framework.

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