Published on: August 23, 2020
McKinsey’s 7-S Framework

Would your project management office like to increase your effectiveness while organizing and performing projects? If your team is interested in setting new project management standards, then one management model you will want to understand is McKinsey’s 7-S Framework. This change management model is used to locate organizational problems, adopt new strategies for completing goals, improve performance, and align all business elements to achieve business interconnectedness.

As you can tell, the benefits you receive by studying and implementing the 7-S framework can benefit your company as a whole and, more specifically, improve the performance of your organization’s PMO. Here is the background information that you should know about the McKinsey 7s model and the steps you can take to incorporate these ideas into your own office.

Background on McKinsey’s 7-S framework

Here’s a brief history of McKinsey’s 7s model. In 1926, James O. McKinsey, professor of accounting at the University of Chicago, created a management consulting firm called McKinsey & Company. Decades later, in 1980, Robert H. Waterman, Jr., and Tom Peters, two of the business partners at the time, along with Julien Phillips authored a journal titled Structure Is Not Organization. This journal introduced the world to the McKinsey 7-S Framework and was written during a two-day retreat.

A couple of years after creating the journal, Waterman, and Peters extended their ideas further, by creating a book titled In Search of Excellence. This book popularized the McKinsey 7-S framework, especially in the United States, as it focused on successful American businesses instead of Japanese management practices that were popular to study at the time.

The Basis of the 7-S Framework

If you work in a company with a traditional organizational structure, then you likely have dedicated teams that focus on specific tasks individually to complete a project. However, if you ask any successful PMO person why their business succeeds, you will quickly understand that success is dependent on several factors besides an organization’s structure.

With that in mind, the 7-S framework argues that seven elements are crucial to the success of any business. And if these elements do not align, it will be challenging to implement organizational changes with any significant measure of success. So, what exactly are these seven business elements, and why are they so important?

The Hard Elements of the Mckinsey 7s model

The 7-S framework centers around three elements that businesses often focus on, referred to as hard elements. The hard elements are:

  • Structure
  • Strategy
  • Systems.

These are the aspects of a company that are tangible. They are relatively easy to define, measure and control.

The Soft Elements of the McKinsey 7s model

In addition to the hard elements are four soft elements. These organizational elements are intangible. They are more challenging to define and are often based on corporate culture. The soft elements are:

  • Skills
  • Staff
  • Style
  • Superordinate goals (also referred to as Shared Values).

Tom Peters and Robert Waterman put a great emphasis on these so-called Soft elements.

Seven Interconnected Elements crucial to achieving organizational effectiveness

McKinsey 7-s Framework: A New View of Organization

McKinsey 7-s Framework: A New View of Organization (Robert H Waterman Jr. Thomas J. Peters and Julien R Phillips)

The interconnectedness is important. It is difficult to make significant progress in one area without making progress in other areas as well. Organizations in search of excellence must develop change strategies that boost operational effectiveness in each of the seven elements.

Although these factors are interconnected, the authors of the 7-S framework suggest that many essential organizational elements are not considered or analyzed in most companies while deciding how to improve performance. By codifying the model, Tom Peters and Robert Waterman emphasized the importance of assessing and developing capabilities in all seven areas. Here is a concise summary of each business element:

The Seven S’s of the McKinsey 7-S Framework

  • Structure – How an organization divides and coordinates tasks.
  • Strategy – How an organization plans for or reacts to external changes.
  • Systems – The formal and informal procedures that move the business forward.
  • Style – How members of an organization behave and spend their time.
  • Staff – People in the organization and how they are developed, managed and guarded.
  • Skills – Skills and competency are the attributes that an organization does better than the competition.
  • Superordinate Goals / Shared Value – The foundation of ideas, shared value, and aspirations that an organization is built on.

How to Utilize the McKinsey 7-S Framework in Your PMO

Now that you understand the fundamentals of McKinsey’s 7-S framework, it is time to discover how you can use this model with your organization and your PMO. There are two main steps to implementing this model, with the first step being a review of your business and the second involving an analysis of each 7-S element. Here is a simple step-by-step process for you to follow:

First, start by assessing each of the seven business elements, while looking for areas that are not aligned. By answering these questions, you will notice areas of consistency, conflicts, and gaps.

Structure:

  • How is your organization structured?
  • What are the working relationships in your organization?
  • What are the reporting relationships in your organization?
  • How do you approach decision making in your organization?
  • In what ways does your organization share information internally?

Strategy:

  • What would you like to accomplish with your current strategy?
  • How will you use your resources to achieve your strategy?
  • What is unique about your organization’s strategy?
  • How will your strategy adapt to changing external factors?
  • Does your strategy allow you to compete with your competitors?

Systems:

  • Which systems does your organization have in place?
  • What are the system controls that you have established?
  • How can you monitor and track your business outcomes?
  • What rules have you set to help your organization stay on track?

Style:

  • How does your organization’s leadership behave?
  • How do your employees react to the organization’s leadership?
  • How do you reward your employees, and for which actions?
  • How do your employees work? (In competition, collaboration, cooperatively, etc.)

Staff:

  • What size is your organization?
  • What are your current staffing needs?
  • Does your team have the resources they need to maximize their capabilities?
  • How are you addressing those needs?

Skills:

  • Do those in your organization have the skills necessary to implement your strategy?
  • Which skills does your organization excel at?
  • Which skills does your organization lack?
  • How do you monitor and track the skill level of members in your organization?

Superordinate Goals / Shared Values:

  • What are your organization’s mission and vision?
  • How is your organization achieving your mission and vision each day?
  • What OKRs are used within your business?
  • What are the ideals of your organization?
  • What are the ideas, values, and aspirations that you built the organization on?

After locating the strengths and weaknesses you find in your organization by answering the above questions, it is time to make changes. Develop action plans to develop across the seven elements, taking care to focus on the soft elements as much as the hard. Check out some of our other Management Models to get some ideas on how to implement your change program.

In Conclusion

The McKinsey 7-S framework helps you increase the efficiency of your organization, and how your PMO supports it. By determining what your business does well in these seven elements, you can change your business practices to address commonly overlooked aspects of your organization. As time goes on, you will want to repeat the 7-S framework process. This will help your organization’s leaders and employees understand how much your business has changed and highlight areas of opportunity that your team members can improve in the future.

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