7S model

7S model for strategic planning and analysis was created by the McKinsey & Company. This model was proposed by Peters and Waterman in 1984, and takes into account following intangible characteristics of the organization:

• Shared values - the rules of conduct and philosophy widely known in the organization, which all employees are driven by,
• Strategy - followed by the organization,
• Structure - the formal relationship between the parts that make up the organization. It relates to the relations between business levels, branches and departments,
• Systems - that carry out specific activities, processes, or are used to solve problems in a company,
• Staffing - which means the recruitment of new employees, requirements planning and competences of already employed workers,
• Skills - capabilities of the organization and the skill level presented by members of the organization,
• Style - the treatment of members of the organization in mutual contacts and above all management style.

7S model is not a recipe for building a perfect strategy, but it is a stimulus to rethink the internal activities of the company that affect its future development.

Examples of 7S model

• Structure: The structure of an organization refers to the way it is organized and how decisions are made. A good example of this is the Toyota Production System, which is based on the idea of creating small, autonomous teams that are responsible for their own decisions. This type of structure allows for greater efficiency and flexibility within the organization.
• Strategy: Strategy is the company's plan for achieving its goals. For example, Amazon's strategy is to provide customers with a wide selection of products at low prices, while also offering exceptional customer service. This is reflected in the way they structure their organization, with each department focusing on different aspects of the customer experience.
• Systems: Systems refer to the processes, tools, and software used to manage the organization. Examples of systems used by companies include enterprise resource planning (ERP) software, customer relationship management (CRM) software, and business intelligence (BI) software.
• Shared values: Shared values refer to the beliefs and values that the organization holds. For example, Google has the core value of "Do the right thing," which guides their decisions in all areas of the business.
• Style: Style refers to the way decisions are made and how employees interact with each other. For example, Apple has a hierarchical structure, with the CEO making the major decisions and all other employees following their lead.
• Staff: Staff refers to the people within the organization and their individual skills, knowledge, and experience. For example, a company may have a team of software engineers that specialize in developing new products, or a team of customer service representatives that are knowledgeable about the company's products.
• Skills: Skills refer to the capabilities of the organization. For example, a software company may have a strong coding team that is able to develop new products quickly and efficiently.

Advantages of 7S model

The 7S model created by McKinsey & Company provides a comprehensive view of an organization and can be used as an effective tool for strategic planning and analysis. The advantages of this model include:

• Clarity: The 7S model clarifies the structure of the organization and makes it easier to understand the relationship between different elements. It also helps identify areas of strength and areas of improvement.
• Alignment: It can be used to ensure that all elements of the organization are working together in harmony. It helps to ensure that organizational objectives and goals are aligned with the strategies and tactics of the organization.
• Focus: The 7S model helps to focus on the core processes and activities that are most important for achieving the organization's goals and objectives. This can help to streamline the organization's resources and efforts and maximize efficiency.
• Insight: The 7S model can help to provide insight into the organization's culture and environment, which can be helpful in making decisions about how to move forward.
• Flexibility: The 7S model can be used to assess and analyze an organization's performance in different situations, which can help to identify areas of potential improvement. It is also flexible enough to be adapted to different organizations and contexts.

Limitations of 7S model

The 7S model by McKinsey & Company proposed by Peters and Waterman in 1984 takes into account the intangible characteristics of the organization. However, the model is not without its limitations. These include:

• It is heavily reliant on subjective and qualitative data, which can be difficult to measure and interpret accurately.
• The model is not comprehensive enough to cover all aspects of an organization, as it does not take into account external factors such as industry trends or customer feedback.
• The model does not consider inter-relationships between elements, making it difficult to identify and address systemic problems.
• It is difficult to maintain consistent alignment between the elements of the model.
• The model does not provide a tangible plan of action or recommendations for implementation.

Other approaches related to 7S model

The 7S model for strategic planning and analysis created by McKinsey & Company, proposed by Peters and Waterman in 1984, takes into account following intangible characteristics of the organization. Other approaches related to this model are:

• The 4A Model - this model proposes that organizations need to focus on four areas: Action, Alignment, Alignment and Accountability. This model emphasizes the importance of having a clear strategy and strong leadership in an organization.
• The 4P Model - this model suggests that organizations should focus on four key areas: Purpose, People, Performance, and Profit. This model emphasizes the importance of creating a strong purpose, aligning people and processes with that purpose, and measuring performance against that purpose.
• The 8C Model - this model focuses on eight key areas: Culture, Context, Competencies, Capabilities, Current Situation, Customer Expectations, Change, and Continuous Improvement. This model emphasizes the importance of understanding the context of the organization, developing necessary competencies and capabilities, understanding customer needs and expectations, and creating a culture of continuous improvement.

In summary, the 7S model developed by McKinsey & Company is one of several approaches for strategic planning and analysis. Other approaches related to this model include the 4A Model, 4P Model, and 8C Model. Each of these models emphasizes different aspects of the organization and provides insights into how to best plan and analyze for success.

7S model — recommended articles

Strategic management principles — Organizational diagnostics — Administrative management — Change management model — Strategic management — Burke-Litwin model — Knowledge gap strategy — Importance of strategic management — Management by culture — Accounting theory

References

• Waterman, R. H., Peters, T. J., & Phillips, J. R. (1980). The 7-S framework. Chapter, 6, 309-314.
• Waterman Jr, R. H. (1982). The seven elements of strategic fit. The Journal of Business Strategy, 2(3), 69.
• Kaplan, R. S. (2005). How the balanced scorecard complements the McKinsey 7-S model. Strategy & Leadership, 33(3), 41-46.
• Hanafizadeh, P., & Ravasan, A. Z. (2011). A McKinsey 7S model-based framework for ERP readiness assessment. International Journal of Enterprise Information Systems (IJEIS), 7(4), 23-63.