The McKinsey 7S Framework is a management model developed by well-

known business consultants Robert H. Waterman, Jr. and Tom Peters (who also developed the MBWA-- "Management By Walking Around" motif, and authored In Search of Excellence) in the 1980s. This was a strategic vision for groups, to include businesses, business units, and teams. The 7S are structure, strategy, systems, skills, style, staff and shared values.

The model is most often used as a tool to assess and monitor changes in the internal situation of an organization.

The model is based on the theory that, for an organization to perform well, these seven elements need to be aligned and mutually reinforcing. So, the model can be used to help identify what needs to be realigned to improve performance, or to maintain alignment (and performance) during other types of change.

Whatever the type of change – restructuring, new processes, organizational merger, new systems, change of leadership, and so on – the model can be used to understand how the organizational elements are interrelated, and so ensure that the wider impact of changes made in one area is taken into consideration.

OBJECTIVE OF THE MODEL (To analyze how well an organization is positioned to achieve its intended objective)

Usage

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

Determine how best to implement a proposed strategy

The Seven Interdependent Elements

The basic premise of the model is that there are seven internal aspects of an organization that need to be aligned if it is to be successful

"Hard" elements are easier to define or identify andmanagement can directly influence them: These arestrategy statements; organization charts and reportinglines; and formal processes and IT systems."Soft" elements, on the other hand, can be moredifficult to describe, and are less tangible and moreinfluenced by culture. However, these soft elements are AS IMP AS HARD IF ORGANZN IS GOIN 2 MEK PROFIT

EXAMPLE: STARBUCKS

Hard Elements

Strategy. Starbucks has to be concentrating on the quality of its products at the same time

offering excellent level of customer services. The main strategy for the company is to

increase revenues through effectively positioning Starbucks stores as ‘third place’

environment.

Structure. Flat management structure needs to be achieved through de-layering.

Specifically, the positions of assistant managers need to be eliminated within the stores,

after which there will be only three levels of management – store manager, shift manager

and customer assistants, thus considerable amount of costs can be saved and

organisational efficiency can be increased.

Systems. Rather than daily roles among customer assistant being appointed by shift

supervisors, the rotation system of duties needs to be introduced that will reduce the

potential of conflicts among the workforce, and the work process would be more interesting.

 

Soft Elements

Shared values. Currently effective set of values are being promoted by management at

Starbucks, however, more effective initiatives and programs need to be devised that would

ensure these values being shared and appreciated by all members of the workforce.

Skills. Necessary training and development programs need to be organised in a systematic

manner and thus it has to be ensured that all members of the workforce are equipped with

skills necessary to achieve a high level of customer satisfaction.

Style. Management style within stores should be changed from Laissez Faire to

inspirational management.  In this way a greater number of the workforce can be effectively

motivated for higher performances with less financial resources.

Staff. Only capable and promising candidates need to be employed by Starbucks and

employees have to be provided growth potential.

ADL MATRIX

Part of thinking about strategy involves thinking about the state of your industry; understanding

how your organization fits into it; and, from this, figuring out your best way forward.

 

While there are many tools that help you do this, you can get particularly useful insights with the

Arthur D Little (ADL) Matrix. Developed in the late 1970s by the highly respected Arthur D Little

consulting company, it helps you think about strategy based on:

 

Using the ADL Matrix

If your business unit has a strong market presence and a newly emerging product line, you'll

likely want to aggressively push its position and capture as much market share as you can. But

this strategy does not apply so well to business lines with dominant competitive positions in

declining markets. In this instance, you're better off putting your energy into new, growing

markets and simply maintaining your current market position in the declining industry.

 

The ADL Matrix addresses these unique needs by recommending general strategies for different

combinations of competitive position and industry maturity.

The ADL Matrix is often associated with strategic planning at business unit level. However it

works equally well when applied to product lines, or at the level of an individual product.

Industry Maturity

There are four categories of industry maturity (also referred to as the industry life cycle):

 

1. Embryonic: The introduction stage, characterized by rapid market growth, very little

competition, new technology, high investment and high prices.

 

2. Growth: The market continues to strengthen, sales increase, few (if any) competitors exist,

and company reaps rewards for bringing a new product to market.

 

3. Mature: The market is stable, there�s a well-established customer base, market share is

stable, there are lots of competitors, and energy is put toward differentiating from competitors.

 

4. Aging: Demand decreases, companies start abandoning the market, the fight for market

share among remaining competitors gets too expensive, and companies begin leaving or

consolidating until the market�s demise.

 

Competitive Position

The five categories for competitive position are as follows:

 

1. Dominant: This is rare and typically short-lived. There�s little, if any, competition, usually a

result of bringing a brand-new product to market or having built an extremely strong reputation

in the market (think Microsoft).

 

2. Strong: Market share is strong and stable, regardless of what your competitors are doing.

 

3. Favorable: Your business line enjoys competitive advantages in certain segments of the

market. However, there are many rivals of equal strength, and you have to work to maintain your

advantage.

 

4. Tenable: Your position in the overall market is small, and market share is based on a niche, a

strong geographic location, or some other product differentiation. Strong competitors are

overtaking your market share by building their products and defining clear competitive

advantages.

 

5. Weak: There is continual loss of market share, and your business line, as it exists, is too small

to maintain profitability.