McKinsey’s 7-S Framework

Does your PMO want to increase its effectiveness while organising and running projects? If your team is setting new project management standards, one management model worth understanding is McKinsey’s 7-S Framework. This model is used to locate organisational problems, set new strategies for completing goals, improve performance, and align all business elements so the organisation works as one interconnected system.

The benefits of studying and applying the 7-S framework extend across the whole organisation, and specifically improve how a PMO performs. Below is the background you need on the McKinsey 7-S model, and the practical steps for putting these ideas to work in your own PMO.

Background on McKinsey's 7-S Framework

James O. McKinsey, a University of Chicago accounting professor, founded McKinsey & Company in Chicago in 1926, decades before the 7-S framework existed. The framework itself came later: in 1977, the firm’s then managing director, Ron Daniel, set two McKinsey consultants, Tom Peters and Robert H. Waterman Jr., the task of working out why organisational change so often failed to stick. Peters published early findings in 1978.

By 1980 the pair had been joined by fellow McKinsey consultant Julien Phillips and two academics, Richard Pascale and Tony Athos, at a two-day retreat in San Francisco, where they pulled the ideas into a single framework. Athos pushed for every element’s name to start with the letter S, purely so the model would stick in people’s minds; Peters later called that a move of near genius, arguing that without the alliteration the framework would not have lasted.

Waterman, Peters and Phillips set the result down that June in Business Horizons, under the title ‘Structure Is Not Organization‘ (Waterman, R.H., Peters, T.J. and Phillips, J.R. (1980). ‘Structure Is Not Organization’. Business Horizons, 23(3), pp.14–26). Two years later, Peters and Waterman’s book In Search of Excellence: Lessons from America’s Best-Run Companies (Harper & Row, 1982) carried the framework to a much wider audience, built around case studies of successful American companies.

The seventh element changed name in that book too. ‘Superordinate Goals’ in the 1980 article became ‘Shared Values’, the term still used today, though both labels are still seen side by side.

The Basis of the 7-S Framework

If you work in an organisation with a traditional structure, you likely have dedicated teams that focus on specific tasks individually to complete a project. However, ask any successful PMO why their organisation succeeds, and you will quickly find that success depends on several factors besides structure.

With that in mind, the 7-S framework argues that seven elements are crucial to the success of any organisation. If these elements do not align, it is challenging to make organisational change stick. So, what exactly are these seven elements, and why do they matter?

The Hard Elements of the McKinsey 7-S Model

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

These are the tangible aspects of an organisation. They are relatively easy to define, measure and control.

The Soft Elements of the McKinsey 7-S Model

In addition to the hard elements are four soft elements. These are intangible, harder to define, and often rooted in organisational culture. The soft elements are:

Seven Interconnected Elements Crucial to Achieving Organisational Effectiveness

McKinsey 7-S Framework: A New View of Organization (Robert H. Waterman Jr., Tom Peters and Julien R. Phillips)

The interconnectedness is important. It is difficult to make significant progress in one area without making progress in the others as well. Organisations in search of excellence must develop change strategies that improve effectiveness across all seven elements.

Although these factors are interconnected, the framework’s authors argue that many organisations overlook or fail to analyse several of them when deciding how to improve performance. By setting the model down on paper, Tom Peters and Robert Waterman emphasised the importance of assessing and developing capability in all seven areas. Here is a concise summary of each element:

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

Structure – How an organisation divides and coordinates tasks.
Strategy – How an organisation plans for, or reacts to, external change.
Systems – The formal and informal procedures that move the business forward.
Style – How members of an organisation behave and spend their time.
Staff – The people in an organisation and how they are developed, managed and retained.
Skills – The skills and competencies an organisation does better than its competitors.
Shared Values (Superordinate Goals) – The ideas, shared values and aspirations an organisation is built on.

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

Now that you understand the fundamentals of McKinsey’s 7-S framework, it is time to see how you can use this model in your PMO. There are two main steps: first, review your organisation; second, analyse each 7-S element. Here is a simple step-by-step process to follow. Start by assessing each of the seven elements, looking for areas that are not aligned. Answering these questions will surface consistency, conflicts and gaps.

Structure

How is your organisation structured?
What are the working relationships in your organisation?
What are the reporting relationships in your organisation?
How do you approach decision-making in your organisation?
In what ways does your organisation 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 organisation's strategy?
How will your strategy adapt to changing external factors?
Does your strategy allow you to compete with your competitors?

Systems

Style

Staff

Skills

Shared Values (Superordinate Goals)

What are your organisation's mission and vision?
How is your organisation achieving that mission and vision day to day?
What OKRs are used in your organisation?
What are your organisation's ideals?
What are the ideas, values and aspirations your organisation was built on?

After locating the strengths and weaknesses you find by answering these questions, it is time to make changes. Develop action plans across all seven elements, taking as much care over the soft elements as the hard. See our other Management Models for ideas on how to run your change programme.

Limitations

The framework has no built-in starting point or sequence. It states that seven elements need to align without saying which to examine first, so the weight given to each in any review is a judgement call, not a rule.

It also has no agreed way to measure the soft elements. Two reviewers can genuinely disagree about whether an organisation’s Shared Values are strong, because the model gives no scale to test it against, only a name for what to look at.

The framework’s own credibility was dented by the book that made it famous. Business Week’s November 1984 cover story, ‘Oops! Who’s Excellent Now?’, reported that many of the companies held up as models in In Search of Excellence had since posted below-average financial results. A later academic study, Aupperle, Acar and Booth (1986), tested the ‘excellent’ firms against a comparison group of 1,000 companies on standard financial measures, and found no statistical evidence they were superior. None of that invalidates the seven elements as a diagnostic. It is a reason to treat the framework as a set of good questions rather than a proven predictor of performance.

The model is also static. It names what to check without saying how those elements should shift over time, or respond to a changing external environment. Pairing it with an outward-looking tool such as SWOT Analysis is worth doing for that reason alone.

Revisit the Seven Elements Regularly

The McKinsey 7-S framework helps increase the efficiency of an organisation, and how a PMO supports it. By working out what the organisation does well across these seven elements, you can change practices to address commonly overlooked aspects of the organisation. Repeat the 7-S review as time goes on. It will help leaders and staff see how much the organisation has changed, and highlight where the team can still improve.