Today's blog is a methodology deep dive, looking at some professional examples of the McKinsey 7-S Framework of organisational effectiveness.
This framework was put forward as a valuable tool for helping organisations understand complexity in cases where a standard functional organisation chart wasn't really explaining the important interrelationships. It was introduced in the late 1970s and focuses on an organisation's ability to coordinate being a critical factor in it's effectiveness.
The 7-S model is considered relevant to change management because it provides seven interrelated factors - all styled to start with the letter "S" as a mnemonic for ease of remembering: strategy, structure, systems, shared values, skills, style, and staff. It is said that by looking at these elements together, organisations gain a holistic view of their operations.
The model emphasises the alignment between the factors such that over-
achieving progress in one area may put the organisation out of kilter if the other factors aren't also addressed. It posits that for successful change, all seven elements must work in harmony. Therefore the 7-S Model helps identify gaps, inconsistencies, and conflicts within an organisation, and, by assessing how well these factors align, leaders can pinpoint the areas that need improvement during change initiatives.
It therefore provides a structured approach for mapping out change initiatives in complex environments, and can potentially help to understand how changes in one area might impact the entire system. By offering a comprehensive view of an organisation’s various dynamics, change managers can potentially use the model to validate impacts identified locally and assess them for organisational impact.
So, what are the 7-S, and are they commonly encountered on regular change management assignments?
Strategy | This refers to the plan developed by a company to achieve sustained competitive advantage and successfully compete in the market. |
Structure | The organisational structure defines how roles, responsibilities, and reporting relationships are distributed within the company. It encompasses aspects like hierarchy, departments, and divisions. |
Systems | These are the formal processes and procedures that govern how work is done within the organisation. Systems include performance management, communication channels, and decision-making processes. |
Shared values | These are the core beliefs and guiding principles that shape the organisation’s culture. Shared values influence decision-making, behavior, and overall organisational identity. |
Skills | Refers to the capabilities and competencies of the organisation’s workforce. It includes both technical skills (expertise in specific areas) and soft skills (communication and teamwork). |
Style | The leadership style and organisational culture play a crucial role. It encompasses the behaviour, values, and norms exhibited by leaders and employees. A consistent style fosters alignment. |
Staff | This element focuses on the people within the organisation. It considers factors like recruitment, training, development, and retention. Staff alignment ensures that the right people are in the right roles. |
A Change Manager's audit against the McKinsey 7-S Framework
So does a regular change manager encounter the 7-S elements in typical change management assignment? Let's take an audit and provide an example of each.
Strategy: In an assignment with an international FMCG company, the data and reporting governance changes being implemented at team level had been defined and were being progressively handed over to business as usual functions (BAU) for everyday operation. Towards the end of this assignment, the Data Director - apologetically - asked for assistance with structuring various ideas, conversations and agreements into the organisation's data strategy. The Data Director's request was apologetic because they didn't think developing strategy was a change management task, and they felt they were asking for something outside of the change manager's remit. In fact, the development of this strategy went on to have more longevity and potentially created more impactful, longer-lasting change than did the previous 10-month assignment.
Structure: Starting from about 5 - 6 years ago, a new responsibility was being edged into the change management ask: the Target Operating Model. Naturally being able to articulate the target state has always been a change management responsibility, but leading the design of the target state has not. Since around 2018, I've lead the development of five separate operating models, and it is now a commonplace inclusion in change role descriptions.
Systems: Undeniably change managers work with changes to systems, and they work with internal systems in order to support the communication, training and engagement needs of programs. On a CRM implementation for a large government agency, the implementation of the over-the-shoulder training system became almost a new project in its own right, certainly to the point where coordinating changes to systems, as proposed by the McKinsey model, was demonstrably relevant.
Skills: Another undeniable core business for change managers is assessing and uplifting the capabilities and competencies of people in the organisation in line with the changes they will be asked to adopt. Two recent projects generated requests for an entire capability model for individuals that would sit alongside, and help to drive, the organisational maturity framework.
Staff: Certainly the need to hire a great team to implement change projects has come across my desk regularly, but in a BAU capacity, recruitment, induction, development and retention have not been core change management functions. However, I have needed to liaise with workforce relations and Human Resources departments closely on many assignments, especially in the public sector. So, while this probably will not sit in the change manager's purview, it is highly relevant and recommended for change managers to seek out and forge the right relationships to ensure generalised staff impacts are covered off by the BAU People and Culture teams.
Style: The leadership style and culture of a large public sector technology program was so impactful that it was the number one challenge and issue faced by most members of the program team on a daily basis. The difficulty this organisation had with style specifically was significant enough to see this organisation now in it's thirty-sixth year of attempting to replace its core operating technology.
Shared values: Clarity about shared values is increasingly more important with the migration of social media styles of communication and networking into corporate life. One international FMCG company was especially good at regularly communicating and engaging with staff, but still erred on the side of over-inclusiveness where all opinions on what the mission was and how to execute it were acceptable. The communication and engagement channels we commonly encounter in change management need to be used to assist organisational clarity rather than proliferating various views that might not be dead on target.
In conclusion, it was relatively easy to find examples where the McKinsey 7-S model has factored in to change management assignments. Each element individually has been on the table and combinations of elements also within direct scope. But in some ways this takes us back to the famous elephant metaphor in which we only know the element we're touching.
Taking it to where McKinsey intended, both research and practical experience highlight a strong correlation between not using a coordinated approach and the failure of change projects. Coordination matters, and the McKinsey 7-S model provides a great framework for change managers to look beyond the individual project impacts and increase the likelihood of success by opening conversations about coordinating and embedding local changes into the global organisation.
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