What will happen in theory of a company is able to align its strategy and structure?
11 MIN READ Show
Making Every Part of Your Organization Work in HarmonyDo 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] Do you know the seven key elements of your organization? 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 ModelYou 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 FrameworkThe model categorizes the seven elements as either "hard" or "soft":
The three "hard" elements include:
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 ModelFigure reproduced with permission from McKinsey & Company, www.mckinsey.com. Copyright © 2016. All rights reserved. Let's look at each of the elements individually:
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 ModelYou 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:
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 TemplateYou 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. Tip: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. Get the Free NewsletterLearn essential career skills every week, plus get a bonus Essential Strategy Checklist, free! Read our Privacy Policy Checklist Questions for the McKinsey 7-S FrameworkThe 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). Strategy:
Structure:
Systems:
Shared Values:
Style:
Staff:
Skills:
Example: The McKinsey 7-S Framework in ActionWhitehawk 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. Key PointsYou can apply the McKinsey 7-S framework to almost any organizational or team effectiveness issue. The 7-S' refer to:
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. Download Worksheet Why is it important for an organization to have alignment between its strategy and structure?Aligned organizations result in quicker decisions and reduced time to execution. Organization alignment also allows employees to focus on performing work rather than on figuring out who is supposed to do what and who needs to be consulted when making decisions.
How does structure align with strategy?The organization structure needs to support the strategy and its execution. When possible, management must ensure that the organization structure is clear, decentralized and formalized. When the existing structure does not meet these requirements, it is a hindrance to strategy implementation and needs to be changed.
How does strategy affect a company's structure?Strategy shifts structure
A company's strategy can cause the structure to change or shift. As a business creates specific goals, marketing strategies and market analysis, it may need to change its structure. For example, a company whose goal is to open a new location may need to adjust its teams and department sizes.
What is organizational structure and strategy?Strategy is how your organization goes about its work is its strategy (vs. your strategic plan document). This includes the plans that set out how your organization will use its major resources to meet specific goals. Structure is the way the pieces of your organization fit together to meet a common goal.
Does structure follow strategy or does strategy follow structure?The maxim: “Structure follows Strategy.” That is to say, all aspects of an organization's structure, from the creation of divisions and departments to the designation of reporting relationships, should be made while keeping the organization's strategic intent in mind.
How does a strategy is being shape over the course of the business?Whichever approach is chosen, a strategy's success hinges on the development and alignment of three propositions: (1) a value proposition that attracts buyers; (2) a profit proposition that enables the company to make money out of the value proposition; and (3) a people proposition that motivates those working for or ...
|