Frameworks, Methods & Contexts

FMC Toolkit

© K.E. Homa

Proprietary Material

Professor Ken HomaGeorgetown University

The 7S+2 FrameworkMcKinsey’s 7S’s plus 2 more

WorldMacro

IndustryMeso

CompanyMicro

Situation Analysis

The McKinsey 7S Framework is a useful structure for initial company level analysis.

A starting point for most cases is a situation analysis that is typically done at 3 levels ...

Let’s start with some history …

McKinsey 7-S Framework

• A classic, dating back to late 1970’s *

• Original intent: analytical and reportingframework for organizational design studies

• Breakthrough thought: “organization” is more than structure (i.e. who reports to who) and defined roles and responsibilities

• Specifically, identified 7 organizational elements that must be synchronized …

Background

* Original article “Structure is Not Organization”

Superordinate Goals (mission, goals, metrics)

Strategy (corporate, business, product / market)

Skills (competencies – unique, generic )

Staff (depth, bandwidth, empowerment)

Style (culture, leadership, buy-in)

Systems (processes - formal & informal)

Structure (fixed or virtual, alliances)

The Original Formulation

McKinsey 7-S Framework

: “Structure is Not Organization”, Waterman, Peters & Phillips, Business Horizons, 23,3 June 1980.

McKinsey 7-S Framework“Shape of the diagram is significant …”

• Multiplicity of factors, interconnectedness

• Importance of execution & “soft” variables

• No starting point or implied hierarchy.

“ A priori, it isn't obvious which of the seven factors will be the driving force in changing a particular organization at a particular point in time.

In some cases, the critical variable might be strategy. In others, it could be systems or structure.”

• Sometimes strategy drives organization, sometimes organization drives (or limits) strategy.

McKinsey 7-S FrameworkAccording to co-author Tom Peters* …

Shared Values

The only significant alteration was “Superordinate Goals" morphing into “Shared Values“ … intended to capture the essence of an organization’s corporate culture.

A Brief History of the McKinsey 7-S Model

McKinsey 7-S FrameworkSome users distinguish between “hard”

and people-oriented “soft” S’s …

Hard

Soft

More specifically …

McKinsey 7-S FrameworkSome users distinguish between “hard”

and people-oriented “soft” S’s …

Click to view a 5 minute video on the 7-S Framework

McKinsey 7-S FrameworkFor a quick recap of current thinking …

With due respect to McKinsey’s thinking, let’s make a couple of changes to the classic 7-S framework and extend it …

First, the classic framework treats all 7 S’s as being concurrently inter-connected … that is, all of the S’s are created equal with respect to sequence and causality.

Specifically, Peters says that Strategy sometimes drives the other S’s … and sometimes, the other organizational S’s drive (or constrain) Strategy.

Using a sports analogy, you can create an offensive game plan geared to your existing players or you can acquire players that fit your desired game plan.

The former (tailor the game plan to the players) is a short-run approach; the latter (building a team to execute the plan) is a longer-run approach

McKinsey 7-S FrameworkAbout the ‘S’ is for Strategy …

Since Strategy is a longer-run game, it makes sense to pull the Strategy S out of the “all equal” pack … treating it as the long-run driving force that it is.

McKinsey 7-S FrameworkAbout the ‘S’ is for Strategy …

SkillsCore Comps

SystemsProcesses

StructureRoles & Resp.

StyleCulture

StaffPeople

Strategy

SharedValues

McKinsey 7-S Framework *

* Adapted by K.E. Homa

Adapted from the McKinsey 7-S Framework

Next, let’s resurrect one of the classic* S’s -- Superordinate Goals (SOGs) –and add it as an 8th ‘S’ … think, mission, strategic goals, operating objectives

* Note: Originally, “Superordinate Goals” was one of the 7 S’s… Over time, SOGs morphed to the softer “Shared Values”

McKinsey 7-S FrameworkAbout the ‘S’ is for Superordinate Goals …

SkillsCore Comps

SystemsProcesses

StructureRoles & Resp.

StyleCulture

StaffPeople

Strategy

SOGsSuperordinate

Goals

SharedValues

McKinsey 7-S Frameworkplus SOGs *

* Adapted by K.E. Homa

Adapted from the McKinsey 7-S Framework

Finally, let’s add an ‘S’ is for “Scorecard” to explicitly consider performance and results, and close the loop against objectives …

How did McKinsey miss that one ?

McKinsey 7-S FrameworkHow about an ‘S’ is for Scorecard?

SkillsCore Comps

SystemsProcesses

StructureRoles & Resp.

StyleCulture

StaffPeople

Strategy

SOGsSuperordinate

Goals

ScorecardPerformance

SharedValues

McKinsey 7-S Frameworkplus SOGs & Scorecard*

* Adapted by K.E. Homa

We’ll refer to the modified framework as the McKinsey 7S+2 Framework …

SkillsCore Comps

SystemsProcesses

StructureRoles & Resp.

StyleCulture

StaffPeople

Strategy

SOGsSuperordinate

Goals

ScorecardPerformance

SharedValues

McKinsey 7S + 2 Framework

* Adapted by K.E. Homa

Question: how to use this (or any) framework in initial fact-gathering?

Frameworks and fact-gathering …

• Frameworks codify prior work & thinkingTip: Don’t reinvent wheels … leverage prior work

• Typically, frameworks are summary level end-products,i.e. simplified representations that recap main ideas

• For data gathering, just transform a framework into a template that can be used for recording findings

• Bottom line: Templates derived from frameworks can be efficient data gathering tools

– Synchronized to end product– Consideration of all factors– Appropriate “level of abstraction”

For example, here’s what the 7S+2 Framework looks like as a data recording template…

McKinsey 7S+2 FrameworkData Gathering Template

Staff

Systems

Structure

Style

Skills

Strategy

SuperordinateGoals (SOGs)

Scorecard

Shared Values

McKinsey 7S+2 FrameworkData Gathering Template

Staff

Systems

Structure

Style

Skills

Strategy

SuperordinateGoals (SOGs)

Scorecard

Shared Values

• Summarize conclusions for each of the S’s

• Identify any S’s that seem out-of-sync

• Dive deep on the most pivotal S’s

McKinsey 7-S FrameworkTakeaways

• An enduring, classical framework

• Key idea: “Structure is not organization”… there are 7 inter-connected S’s

• For ‘7S +2’: Strategy elevated as a driver, hard Superordinate Goals resurrected, and Scorecard added for closure.

• Valuable tool for diagnosing and designing organizations … and for initial fact-gathering when doing a situation analysis.

Frameworks, Methods & Contexts

FMC Toolkit

© K.E. Homa

Proprietary Material

Professor Ken HomaGeorgetown University

The 7S+2 FrameworkMcKinsey’s 7S’s plus 2 more