mckinsey 7s framework case study pdf

The Easy Guide to the McKinsey 7S Model

Updated on: 10 January 2023

Although invented in the late 1970s, the McKinsey 7S model still helps businesses of all sizes succeed. A conceptual framework to guide the execution of strategy. 

In this guide, we’ll walk you through the 7S of the McKinsey Framework and how to apply it to evaluate and improve performance. 

McKinsey 7-S Model Definition 

The McKinsey 7S model is one of the most popular strategic planning tools .  Businesses commonly use it to analyze internal elements that affect organizational success. 

The model recognizes 7 of these elements and considers them to be interlinked, therefore it’s difficult to make significant progress in one area without making progress in other areas as well. Accordingly, to be successful, the organization should ensure that all these elements are aligned and reinforced.

The model divides these 7 elements into two categories;

Hard elements – Strategy, Structure, Systems (these are easier to be identified and defined and can be directly influenced by the management)  

Soft elements – Shared Values, Skills, Style, Staff (these are harder to be defined because they are less tangible, but are just as important as the hard elements) 

You can use the framework 

• To successfully execute new strategies
• To analyze how different key parts of your organization work together
• To facilitate changes in the organization 
• To help align processes during a merger or acquisition
• To support management thinking during strategy implementation and change management

The 7 Elements of the McKinsey 7-S Framework 

• Shared values

Let’s dig into these elements in more detail. 

Strategy 

A strategy is a plan the company develops to maintain its competitive advantage in the market. It consists of a set of decisions and action steps that need to be taken in response to the changes in the company’s external environment which includes its customers and competitors. 

An effective strategy would find external opportunities and develop the necessary resources and capabilities to convert the environmental changes into sources of new competitive advantage. 

The structure is the organizational chart of the company. It represents how the different units and divisions of the company are organized, who reports to whom and the division and integration of tasks. The structure of a company could be hierarchical or flat, centralized or decentralized, autonomous or outsourced, or specialized or integrated. Compared to most other elements, this one is more visible and easier to change. 

Systems 

These are the primary and secondary activities that are part of the company’s daily functioning.  Systems include core processes such as product development and support activities such as human resources or accounting. 

Skills are the skill set and capabilities of the organization’s human resources . Core competencies or skills of employees are intangible but they a major role in attaining sustainable competitive advantage. 

The most valuable strategic asset of an organization is its staff or human resources. This element focuses on the number of employees, recruitment, development of employees, remuneration and other motivational considerations. 

This refers to the management style of the company leadership. It includes the actions they take, the way they behave, and how they interact.  

Shared Values

Shared values are also referred to as superordinate goals and are the element that is in the core of the model. It is the collective value system that is central to the organizational culture and represents the company’s standards and norms, attitudes, and beliefs. It’s regarded as the organization’s most fundamental building block that provides a foundation for the other six elements. 

How to Use the McKinsey 7-S Model

The model can be used to do a gap analysis or to determine the gap between what the company is currently doing and what it needs to do to successfully execute the strategy. 

Step 1: Analyze the current situation of your organization

This is where you need to understand the current situation of the organization with regard to the 7 elements. Analyzing them closely will give you a chance to see if they are aligned effectively.

The following checklist questions will help you explore your situation. 

Strategy  

• What’s the objective of your company strategy? 
• How do you use your resources and capabilities to achieve that?
• 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 changing market conditions?
• What’s your organizational structure ?
• Who makes the decisions? Who reports to whom? 
• Is decision-making centralized or decentralized?
• How do the employees align themselves to the strategy?
• How is information shared across the organization?
• What are the primary processes and systems of the organization? 
• What are the system controls and where are they?
• How do you track progress?
• What are the processes and rules the team sticks with to keep on track? 
• What are the core competencies of the organization? Are these skills sufficiently available? 
• Are there any skill gaps?
• Are the employees aptly skilled to do their job? 
• What do you do to monitor, evaluate and improve skills? 
• What is it that the company is known for doing well? 
• How many employees are there? 
• What are the current staffing requirements? 
• Are there any gaps in the required resources? 
• What needs to be done to address them?
• What is the management style like? 
• How do the employees respond to this style?
• Are employees competitive, collaborative or cooperative? 
• What kind of tasks, behaviors, and deliverables does the leadership reward? 
• What kind of teams are there in the organization? Are there real teams or are they just nominal groups? 
• What are the mission and vision of the organization? 
• What are your ideal and real values? 
• What are the core values the organization was founded upon? 
• How does the company incorporate these values in daily life? 

Step 2: Determine the ideal situation of the organization 

Specify where you ideally want to be and the optimal organizational design you want to achieve, with the help of the senior management. This will make it easier to set your goals and come up with a solid action plan to implement the strategy. 

Since the optimal position you want to be in is still not known to you, you will have to collect data and insight through research on the organizational designs of competitors and how they coped with organizational change. Answering the questions above are just the starting point. 

To understand what your organization is best at, use the Hedgehog Concept by Jim Collins

Step 3: Develop your action plan

Here you will identify which areas need to be realigned and how you would do that. The result of this step should be a detailed action plan listing the individual steps you need to take to get to your desired situation, along with other important details such as task owners, timeframes, precautions and so on.

Step 4: Implement the action plan 

Successfully executing the action plan is depended on who executes it. Therefore you need to make sure that you assign the tasks to the right people in your organization. Additionally, you can also hire consultants to guide the process. 

Step 5: Review the seven elements from time to time

Since the seven elements are subjected to constant change, reviewing them periodically is essential. A change in one element will affect all the others, which will require you to implement a new organization design. Review the situation frequently to stay aware of the remedial action you might want to take.

Advantages and Disadvantages of McKinsey 7-S Model 

• Considers 7 elements of strategic fit, which is more effective than the traditional model that only focuses on strategy and structure
• It helps align the processes, systems, people, and values of an organization
• Since it analyzes each element and the relationship between them in detail, it ensures that you miss no gaps caused by changed strategies
• Helps organizations identify how they should align the different key parts of the organization to achieve their goals

Disadvantages

• It requires the organization to do a lot of research and benchmarking, which makes it time-consuming
• It only focuses on internal elements, while paying no attention to the external elements that may affect organizational performance.
• It requires the help of senior management which may not be readily available depending on how busy they are

To analyze and understand the performance or the functioning of the organization use Weisboard’s six box model framework.

What’s Your Take on the McKinsey 7-S Model? 

The McKinsey 7S model is a proven framework for helping organizations understand how to get from their current situation to the situation they prefer to be in. 

Maybe you are a big fan of the McKinsey 7S model. Maybe you prefer another strategy framework that has worked well for you. We’d love to hear what you feel about the subject; give your feedback in the comments section below. 

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McKinsey 7S Model

Definition of the McKinsey 7S Model

McKinsey 7S model is a tool that analyzes company’s organizational design by looking at 7 key internal elements: strategy, structure, systems, shared values, style, staff and skills, in order to identify if they are effectively aligned and allow the organization to achieve its objectives.

What is the McKinsey 7S Model

McKinsey 7S model was developed in the 1980s by McKinsey consultants Tom Peters, Robert Waterman and Julien Philips with help from Richard Pascale and Anthony G. Athos. Since its introduction, the model has been widely used by academics and practitioners and remains one of the most popular strategic planning tools.

It sought to present an emphasis on human resources (Soft S), rather than the traditional mass production tangibles of capital, infrastructure and equipment, as a key to higher organizational performance.

The goal of the model was to show how 7 elements of the company: Structure, Strategy, Skills, Staff, Style, Systems, and Shared values, can be aligned together to achieve effectiveness in a company.

The key point of the model is that all the seven areas are interconnected and a change in one area requires change in the rest of a firm for it to function effectively.

Below you can find the McKinsey model, which represents the connections between seven areas and divides them into ‘Soft Ss’ and ‘Hard Ss’. The shape of the model emphasizes the interconnectedness of the elements.

The model can be applied to many situations and is a valuable tool when organizational design is at question. The most common uses of the framework are:

• To facilitate organizational change.
• To help implement a new strategy.
• To identify how each area may change in the future.
• To facilitate the merger of organizations.

In the McKinsey model, the seven areas of organization are divided into the ‘soft’ and ‘hard’ areas. Strategy, structure and systems are hard elements that are much easier to identify and manage when compared to soft elements.

On the other hand, soft areas, although harder to manage, are the foundation of the organization and are more likely to create a sustained competitive advantage.

Strategy is a plan developed by a firm to achieve sustained competitive advantage and successfully compete in the market. What does a well-aligned strategy mean in the 7S McKinsey model?

In general, a sound strategy is one that’s clearly articulated, long-term, helps to achieve a competitive advantage, and reinforced by a strong vision, mission, and values.

But it’s hard to tell if such a strategy is well-aligned with other elements when analyzed alone. So the key in the 7S model is not to look at your company to find the great strategy, structure, systems and etc. but to look if it’s aligned with other elements.

For example, a short-term strategy is usually a poor choice for a company, but if it’s aligned with the other 6 elements, then it may provide strong results.

Structure represents the way business divisions and units are organized and includes the information on who is accountable to whom. In other words, structure is the organizational chart of the firm. It is also one of the most visible and easy-to-change elements of the framework.

Systems are the processes and procedures of the company, which reveal the business’ daily activities and how decisions are made. Systems are the area of the firm that determines how business is done and it should be the main focus for managers during organizational change.

Skills are the abilities that a firm’s employees perform very well. They also include capabilities and competencies. During organizational change, the question often arises of what skills the company will really need to reinforce its new strategy or new structure.

Staff element is concerned with what type and how many employees an organization will need and how they will be recruited, trained, motivated and rewarded.

Style represents the way the company is managed by top-level managers, how they interact, what actions do they take and their symbolic value. In other words, it is the management style of the company’s leaders.

Shared Values

Shared Values are at the core of McKinsey’s 7S model. They are the norms and standards that guide employee behavior and company actions and thus, are the foundation of every organization.

The authors of the framework emphasize that all elements must be given equal importance to achieve the best results.

Using the McKinsey 7S framework

As we pointed out earlier, the McKinsey 7S framework is often used when organizational design and effectiveness are in question. It is easy to understand the model but much harder to apply it to your organization due to a common misunderstanding of what should well-aligned elements be like.

We provide the following steps that should help you to apply this tool:

Step 1. Identify the areas that are not effectively aligned

During the first step, your aim is to look at the 7S elements and identify if they are effectively aligned with each other. Normally, you should already be aware of how 7 elements are aligned in your company, but if you don’t, you can use the checklist from WhittBlog to do that.

After you’ve answered the questions outlined there, you should look for the gaps, inconsistencies, and weaknesses between the relationships of the elements. For example, you designed a strategy that relies on quick product introduction, but the matrix structure with conflicting relationships hinders that, so there’s a conflict that requires a change in strategy or structure.

Step 2. Determine the optimal organizational design

With the help of top management, your second step is to find out what effective organizational design you want to achieve. By knowing the desired alignment, you can set your goals and make the action plans much easier.

This step is not as straightforward as identifying how seven areas are currently aligned in your organization for a few reasons.

First, you need to find the best optimal alignment, which is not known to you at the moment, so it requires more than answering the questions or collecting data.

Second, there are no templates or predetermined organizational designs that you could use and you’ll have to do a lot of research or benchmarking to find out how other similar organizations coped with organizational change or what organizational designs they are using.

Step 3. Decide where and what changes should be made

This is basically your action plan, which will detail the areas you want to realign and how you would like to do that. Suppose you find that your firm’s structure and management style are not aligned with the company’s values. In that case, you should decide how to reorganize the reporting relationships and which top managers the company should let go or how to influence them to change their management style so the company could work more effectively.

Step 4. Make the necessary changes

The implementation is the most important stage in any process, change or analysis and only the well-implemented changes have positive effects. Therefore, you should find the people in your company or hire consultants that are the best suited to implement the changes.

Step 5. Continuously review the 7S

The seven elements: strategy, structure, systems, skills, staff, style and values are dynamic and change constantly. A change in one element always has effects on the other elements and requires implementing a new organizational design. Thus, continuous review of each area is very important.

Example of McKinsey 7S Model

We’ll use a simplified example to show how the model should be applied to an existing organization.

Current position #1

We’ll start with a small startup which offers services online. The company’s main strategy is to grow its share in the market. The company is new, so its structure is simple and made of a few managers and bottom-level workers who undertake specific tasks. There are a very few formal systems, mainly because the company doesn’t need many at this time.

So far, the 7 factors are aligned properly. The company is small and there’s no need for a complex matrix structure and comprehensive business systems, which are very expensive to develop.

McKinsey 7S Example (1/3)

Current position #2

The startup has grown to become a large business with 500+ employees and now maintains a 50% market share in the domestic market. Its structure has changed and it is now a well-oiled bureaucratic machine.

The business expanded its staff and introduced new motivation, reward and control systems. Shared values evolved and now the company values enthusiasm and excellence. Trust and teamwork have disappeared due to so many new employees.

The company expanded and a few problems came with it. First, the company’s strategy is no longer viable. The business has a large market share in its domestic market, so the best way for it to grow is either to start introducing new products to the market or to expand to other geographical markets. Therefore, its strategy is not aligned with the rest of the company or its goals. The company should have seen this but it lacks strategic planning systems and analytical skills.

Business management style is still chaotic and it is a problem of top managers lacking management skills. The top management is mainly comprised of founders who don’t have the appropriate skills. New skills should be introduced to the company.

McKinsey 7S Example (2/3)

Current position #3

The company realizes that it needs to expand to other regions, so it changes its strategy from market penetration to market development. The company opens new offices in Asia, North and South America.

The company introduced new strategic planning systems and hired new management, which brought new analytical, strategic planning, and, most importantly, managerial skills. The organization’s structure and shared values haven’t changed.

Strategy, systems, skills and style have changed and are now properly aligned with the rest of the company. Other elements like shared values, staff and organizational structure are misaligned.

First, the company’s structure should have changed from a well-oiled bureaucratic machine to a division structure. The division structure is designed to facilitate operations in new geographic regions. This hasn’t been done and the company will struggle to work effectively.

Second, new shared values should evolve or be introduced in an organization because many people from new cultures come to the company and they all bring their own values, often very different than the current ones. This may hinder teamwork performance and communication between different regions. Motivation and reward systems also have to be adapted to cultural differences.

McKinsey 7S Example (3/3)

We’ve shown a simplified example of how the McKinsey 7S model should be applied. It is important to understand that the seven elements are much more complex in reality, and you’ll have to gather a lot of information on each of them to make any appropriate decision.

The model is simple, but it’s worth the effort to do one for your business to gather some insight and find out if your current organization is working effectively.

• GE McKinsey Matrix
• Elaboration Likelihood Model of Persuasion
• The Johari Window Model
• Business Model Canvas (BMC)

5 thoughts on “McKinsey 7S Model”

For sure this article is one of the most useful and complete guidelines on 7S model.

Thanks Alireza Nami

Hello! Thanks for this. The article has explained comprehensively well how the 7S McKinsey framework works. 🙂 The case studies illustrated clearly how alignment should be investigated.

Thank so much. Tina Saulo

Can we adopt McKinsey 7S Model for gap analysis of data generation system or simply for data gap analysis of SDGs?

Very well explained. Very simple to follow.

Wanted to know how does McKinsey 7S Model differentiate from EFQM Model.

Excellent and accessible insight on the application of the model

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McKinsey 7-S Framework

Making every part of your organization work in harmony.

By the Mind Tools Content Team

Do you know how well your organization is positioned to achieve its goals? Or what elements influence its ability to implement change successfully?

Models of organizational effectiveness go in and out of fashion, but the McKinsey 7-S framework has stood the test of time.

The model was developed in the late 1970s by Tom Peters and Robert Waterman, former consultants at McKinsey & Company. They identified seven internal elements of an organization that need to align for it to be successful. [1]

In this article, we'll explore the seven elements in detail, and learn how it can be used to improve performance or manage change in organizations by ensuring that they all work in harmony.

Also, we provide a worked example and a downloadable template that you can use to apply the model.

When to Use the McKinsey 7-S Model

You can use the 7-S model in a wide variety of situations where it's useful to examine how the various parts of your organization work together.

For example, it can help you to improve the performance of your organization, or to determine the best way to implement a proposed strategy.

The framework can be used to examine the likely effects of future changes in the organization, or to align departments and processes during a merger or acquisition. You can also apply the McKinsey 7-S model to elements of a team or a project.

The Seven Elements of the McKinsey 7-S Framework

The model categorizes the seven elements as either "hard" or "soft":

The three "hard" elements include:

• Structures (such as organization charts and reporting lines).
• Systems (such as formal processes and IT systems.)

These elements are relatively easy to identify, and management can influence them directly.

The four "soft" elements, on the other hand, can be harder to describe, and are less tangible, and more influenced by your company culture. But they're just as important as the hard elements if the organization is going to be successful.

Figure 1, below, shows how the elements depend on each other, and how a change in one affects all the others.

Figure 1: The McKinsey 7-S Model

Figure reproduced with permission from McKinsey & Company, www.mckinsey.com. Copyright © 2016. All rights reserved.

Let's look at each of the elements individually:

• Strategy: this is your organization's plan for building and maintaining a competitive advantage over its competitors.
• Structure: this is how your company is organized (how departments and teams are structured, including who reports to whom).
• Systems: the daily activities and procedures that staff use to get the job done.
• Shared Values: these are the core values of the organization and reflect its general work ethic. They were called "superordinate goals" when the model was first developed.
• Style: the style of leadership adopted.
• Staff: the employees and their general capabilities.
• Skills: the actual skills and competencies of the organization's employees.

The placement of Shared Values in the center of the model emphasizes that they are central to the development of all the other critical elements.

The model states that the seven elements need to balance and reinforce each other for an organization to perform well.

Using the McKinsey 7-S Model

You can use the model to identify which elements of the 7-S' you need to realign to improve performance, or to maintain alignment and performance during other changes. These changes could include restructuring, new processes, an organizational merger, new systems, and a change of leadership.

To apply the McKinsey 7-S Model in your organization, follow these steps:

• Start with your shared values: are they consistent with your structure, strategy, and systems? If not, what needs to change?
• Then look at the hard elements – your strategy, structure and systems. How well does each one support the others? Identify where changes need to be made.
• Next, look at the soft elements – shared values, skills, (leadership) style, and staff. Do they support the desired hard elements? Do they support one another? If not, what needs to change?
• As you adjust and align the elements, you'll need to use an iterative (and often time-consuming) process of making adjustments, and then re-analyzing how that impacts other elements and their alignment. The end result of better performance will be worth it.

Figure 2 shows a template matrix that you can use to help with your analysis. You can click on the image to download it as a PDF worksheet.

We've also developed a checklist of the right questions to ask, which you can find in the next section. Supplement the questions in our checklist with your own questions, based on your organization's specific circumstances and your own knowledge and experience.

Figure 2: The McKinsey 7-S Matrix Template

You can use the 7-S model to help analyze your current situation (Point A in the worksheet), your proposed future situation (Point B in the worksheet), and to identify gaps and inconsistencies between them.

To examine where you are now (Point A), use the data that you've learned from your checklist questions to fill in the worksheet grid, putting a tick in any box where the two cross-referenced elements work together well. If the two elements aren't working well together, put a cross.

Point B is an agreed endpoint in the future (in six months or a year, for example). When you reach Point B, revisit the worksheet and fill it in again. If your changes have worked, you'll have a grid full of ticks. If not, you may need to make further adjustments.

The 7-S model is a good framework to help you ask the right questions, but it won't give you all the answers. For that, you'll need to bring together the right people with the right knowledge, skills and experience. Our article, Setting up a Cross-Functional Team , can help you to do this.

Checklist Questions for the McKinsey 7-S Framework

The following questions are a starting point for exploring your situation in terms of the 7-S framework. Use them to analyze your current situation (Point A) first, and then repeat the exercise for your proposed situation (Point B).

• What is our strategy?
• How do we intend to achieve our objectives?
• How do we deal with competitive pressure?
• How are changes in customer demands dealt with?
• How is strategy adjusted for environmental issues?
• How is the company/team divided?
• What is the hierarchy?
• How do the various departments coordinate activities?
• How do the team members organize and align themselves?
• Is decision-making centralized or decentralized? Is this as it should be, given what we're doing?
• Where are the lines of communication? Explicit or implicit?
• What are the main systems that run the organization? Consider financial and HR systems, as well as communications and document storage.
• Where are the controls and how are they monitored and evaluated?
• What internal rules and processes does the team use to keep on track?

Shared Values:

• What are your organization's core values?
• What is its corporate/team culture like?
• How strong are the values?
• What are the fundamental values that the company/team was built on?
• How participative is the management/leadership style?
• How effective is that leadership?
• Do employees/team members tend to be competitive or cooperative?
• Are there real teams functioning within the organization or are they just nominal groups?
• What positions or specializations are represented within the team?
• What positions need to be filled?
• Are there gaps in required competencies?
• What are the strongest skills represented within the company/team?
• Are there any skills gaps?
• What is the company/team known for doing well?
• Do the current employees/team members have the ability to do the job?
• How are skills monitored and assessed?

Example: The McKinsey 7-S Framework in Action

Whitehawk Electronics is a startup with five staff. As a new venture, it is still based firmly on the vision and values of its founder, Alix, and its elements all align. It sells into one market, and uses off-the-shelf IT and accounting systems.

As time goes on, the business grows, employing 30 staff, and diversifying into different markets. New customer requirements demand new skills in marketing, technology, product development, and financial management.

Alix carries out a 7-S analysis. She finds that Whitehawk's developing sales strategy no longer aligns with its small-business skill set.

The rapid influx of new staff members, along with changes in technology, means that some staff don't have the necessary systems skills. Worse still, they're unclear on the organization's values and sense of purpose.

Alix uses the analysis to introduce onboarding and learning programs, bringing all Whitehawk's key elements back into alignment.

For other, similar approaches, see our articles on the Burke-Litwin Change Model , and the Congruence Model . You may also find our articles on the Change Curve , Impact Analysis and Lewin's Change Management Model useful.

You can apply the McKinsey 7-S framework to almost any organizational or team effectiveness issue. The 7-S' refer to:

• Shared values.

If something within your organization or team isn't working, chances are there is inconsistency between one or more of these seven elements.

Once you reveal these inconsistencies, you can work to align these elements to make sure they are all contributing to your organization's shared goals and values.

The process of analyzing where you are right now, in terms of these elements, is worthwhile in itself. But for it to be truly effective, you'll also need to determine the desired future state for each factor. This will help you make changes and improve performance so that all seven factors are aligned across your organization.

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[1] Waterman, R. H. and Peters, T. (1982). ' In Search of Excellence ,' New York: Harper and Row.

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