SSSSSSSush! A time-tested Organizational DiagnosticTool

1. Background

Developed around 1978, the 7-S framework first appeared in a book called The Art of Japanese Management by Richard Pascale and Anthony Athos, and also featured in In Search of Excellence by Thomas Peters and Robert Waterman. McKinsey has adopted the 7-S model as one of its basic analysis tools.

2. Benefits of the 7-S framework

The 7-S framework is a useful diagnostic tool for understanding the inner workings of an organisation. It can be used to identify an organisations strengths and sources of competitive advantage, or to identify the reasons why an organisation is not operating effectively. As such, the 7-S framework is an important analysis framework for mangers, consultants, business analysts and potential investors to understand. The 7-S framework provides a guide for organisational change. The framework maps a group of interrelated factors, all of which influence an organisation’s ability to change. The interconnectedness among each of the seven factors suggest that significant progress in one area will be difficult without working on the others. The implication of this is that, if management wants to successfully establish change within an organisation, they must work on all of the factors, and not just one or two.

3. McKinsey’s 7-S framwork explained

The 7-S framework describes seven factors which together determine the way in which an organisation operates. The seven factors are interrelated and, as such, form a system that might be thought to preserve an organisation’s competitive advantage. The logic is that competitors may be able to copy any one of the factors, but will find it very difficult to copy the complex web of interrelationships between them.

1. Shared values (also called Superordinate Goals) refer to what an organisation stands for and believes in. This includes things like the long term vision of the organisations, its charitable ideals, or its core guiding principles. 
2. Staff refers to the number and type of people employed by the organisation.
3. Skills refers to the learned capabilities of staff within the organisation.
4. Style refers to the way things are done within the organisation, that is, the work culture.
5. Strategy refers to the plans an organisation has for the allocation of its resources to achieve specific goals.
6. Structure refers to the way in which an organisation’s business units relate to each other. For example, a company may use a centralised system where all key decisions are made at the head office.
7. Systems are the practices and procedures that an organisation uses to get things done, e.g. financial systems, information systems, recruitment and performance review systems, etc.

As a consultant, you will need to ask targeted questions to identify the organisation’s strengths and weaknesses on each of the above factors.

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