7S: Organisational analysis through success factors

The 7S Method is a practical framework for analysing seven elements of an organisation: Strategy, Structure, Systems and Processes, Corporate Culture, Employees, Skills, and Shared Values.

Overview of the 7S Model

Organisations are complex systems with many interconnected elements, both economically and socially. For a well-functioning organisation, all areas must be seen together and be considered in full context.

The 7S Model provides a framework for analysing seven elements of an organisation: Strategy, Structure, Systems and Processes, Corporate Culture, Employees, Skills, and Shared Values.

It allows for a clear representation of relationships and a structure for targeted implementation of organisational development measures.

It belongs to the early models of strategic management that consider not only hard, measurable factors but also soft, intangible factors such as corporate culture and shared values when shaping business success..

Introduction and the seven elements of the 7-S Model in Management

The 7S Model, also known as the “McKinsey 7 S,” was developed by consultants Tom Peters and Robert Waterman at McKinsey & Co. in the 1980s and originated in the English-speaking world. It includes the following factors that form the 7S Framework:

Strategy: The company’s long-term direction and competitive positioning.

Structure: The company’s long-term direction and competitive positioning.

Systems: The internal processes, operations, and information systems necessary for implementing the strategy and operating the company.

Skills: The skills, core competencies, and unique abilities of the company as a whole, often referred to as corporate skills, set the company apart from its competitors.

Staff: The company’s staff with their skills, knowledge, and competencies, as well as personnel development and employee retention.

Style: The company’s culture and leadership style, as well as employee behaviour.

Shared Values: Corporate mission and how the organisation views itself, rooted in shared values. The collective values within the company serve as the central principles and beliefs that are shared within the organisation, shaping its identity and actions.

The 7S Model identifies both hard and soft factors that collectively influence a company’s success. Hard factors like strategy, structure, and systems are critical for the company’s effectiveness and efficiency, while soft factors like shared values, skills, leadership style, and staff reflect the human factor and internal management concept. Successful companies are able to effectively align these factors.

Strategy: Company alignment and positioning

Applying the “7S” method involves ensuring that all these factors are aligned with each other. An effective strategy requires clear alignment. The strategy sets the company’s course, defines its goals, and outlines how it intends to achieve them.

Alignment means that all parts of the company are oriented toward the same strategy and common goals. Company structures should support the strategy and enable the right distribution of tasks and responsibilities. Systems and processes should also be aligned with the strategic goals and function efficiently to support strategy implementation.

Structure: Organisational structure and hierarchies

The organisational structure should be flexible enough to adapt to changes in strategy. As the company grows, explores new markets, or encounters new business opportunities, the organisational structure must be able to keep up with these changes.

Overall, the 7S Method can help companies critically reconsider and adjust their organisational structure and hierarchy. By creating a clear structure that supports strategic goals and a suitable hierarchy that facilitates efficient communication and collaboration, companies can strengthen their competitiveness and ensure long-term success.

Systems: Management processes and information systems

When applying the 7S Method, it’s important to ensure that management processes are aligned with the company’s strategic goals. This means that processes should be designed to facilitate the implementation of the strategy. For example, strategic planning should be reevaluated regularly to ensure that the company’s goals and actions are on the right track.

Information systems also play a crucial role in supporting strategy implementation. The 7S Method emphasizes designing information systems to efficiently enable data collection, processing, and analysis. By using appropriate information systems, companies can gather valuable information to make informed decisions and monitor performance.

It’s also important to ensure that management processes and information systems are integrated. This allows for smooth information flow and effective collaboration between different areas of the company. Good integration ensures that the right information is available to the right people at the right time to make decisions and take action.

Skills: Core competencies and unique abilities of the company

The 7S Model encourages companies to strengthen and develop their core competencies to support their strategic goals. This may involve identifying and deploying talents strategically, offering training programs to further educate employees, or forming partnerships to gain access to specific resources.

Furthermore, companies should analyse their unique abilities and ensure that they align with their strategy. Unique abilities are specific strengths and areas of expertise that allow a company to stand out from competitors. These could be specialised technical knowledge, exceptional customer service, or unique creative abilities.

Personnel: Competencies, development, and employee retention

According to the 7S Method, companies should analyse the competencies of their staff and ensure that they align with the company’s strategic goals. This includes identifying the required skills and competencies to effectively implement the strategy. For example, if a company is pursuing digital transformation, skills in technology and digital innovation are of great importance.

The 7S Method emphasises the importance of employee development. Companies should ensure that their employees have the opportunity to enhance their skills and competencies. This can be achieved through training and development programs, mentoring, or providing resources and tools for competency development. Targeted employee development helps to align staff competencies with the company’s strategic requirements.

The 7S Method also underscores the significance of employee retention. To achieve their strategic goals, companies need to attract, retain, and motivate talented employees. This can be achieved through a positive corporate culture, appropriate compensation structures, opportunities for career development, and recognition of performance. Strong employee retention contributes to the stability and continuity of the company.

Style: Corporate Culture and Leadership Style

The 7S Method suggests that companies should consciously shape their corporate culture to achieve optimal alignment with strategic goals. This may involve promoting open communication and collaboration, nurturing trust and respect, and creating a culture of continuous improvement. A positive corporate culture can enhance employee motivation, engagement, and creativity.

Leadership style plays a key role in shaping corporate culture. The 7S Model emphasises the importance of a leadership style that aligns with the strategy and supports employees in achieving strategic goals. A transformational leadership style that inspires, motivates, and drives a shared goal can effectively support strategy implementation.

Shared Values: Shared values and company vision

When using the 7S Method, it’s important to ensure that the leadership style and corporate culture align with the strategic direction. The leadership style should reflect the desired values and principles of the strategy and encourage employees to identify with the strategic goals.

The 7S Model suggests that companies should consciously shape their corporate culture to achieve optimal alignment with strategic goals. A positive corporate culture can promote collaboration, engagement, and employee motivation. This can be achieved by promoting open communication, trust, teamwork, and continuous improvement.

Application for analysis and optimization of companies

The 7S Method also considers a company’s management processes and information systems. By analysing and optimising these processes, companies can increase their efficiency and ensure that they have the right information at the right time to make informed decisions.

Another important aspect of the “7S” method is the examination of the skills and competencies of personnel. By identifying strengths and weaknesses, companies can invest strategically in employee development and ensure that the necessary skills are in place to achieve strategic goals.

Conclusion and Outlook: Importance of the 7S Model for modern management

The outlook for the 7S Method in modern management is promising. Given the rapidly changing business environment and the increasing importance of agility and adaptability, the 7S Model offers companies a proven method to analyse and strategically optimise their organisation.

In the future, the 7S Method will continue to play a crucial role in management as companies seek holistic approaches to improve their performance. By continuously applying the 7S Model, companies can further enhance their strengths, adapt to changing market conditions, and succeed in the future.

Frequently asked questions and answers

What is the 7S Model?

The 7S Model is a model of strategic management developed by consultants Tom Peters and Robert Waterman. It consists of seven success factors divided into hard and soft factors that collectively influence a company’s success.
The hard factors include strategy, structure, and systems, while the soft factors represent shared values, skills, leadership style, and personnel. Each element influences the others, and a change in one element can affect all other elements.

Where is the 7S Model applied?

The 7S Model is applied in various areas and industries as it provides a comprehensive framework for organisational analysis and planning. It is used by both large and small companies to review and improve their strategies and organisational structure. Consulting firms also frequently use the model to assist clients in developing corporate strategies.
A practical way to apply the 7S Model is to identify the current state of each element and describe what the ideal state looks like. Based on this, measures can be developed to achieve the desired state, considering the interactions between the different elements.

How does the 7S Model help in corporate planning?

The 7S Model assists in corporate planning by providing a structure for considering the various factors that can influence a company’s success. By distinguishing between hard and soft factors, the model enables a holistic view and systematic analysis of the different elements. This helps identify weaknesses and potentials in the company to plan and implement appropriate measures.
Organisations that work effectively maintain a balanced alignment among all seven elements of the 7S Framework. Often, companies focus exclusively on hard factors like strategy and structure during change processes, neglecting soft factors such as leadership style and shared values. However, the most successful companies also prioritise optimal alignment of the soft factors, as they often have a crucial impact on positive outcomes in corporate planning.
The model also helps in planning and implementing changes within a company by showing how the various factors interact with each other and how a change in one factor can impact the others.

Sources

Sztuka, Achim (o. J.): 7-S Modell von McKinsey, in: manager-wiki, [online] http://www.manager-wiki.com/strategie-grundlagen/33-swot-analyse [20.03.2023]

Wiehle, Hartmut (2019): Die 7S – ein ganzheitlicher Blick auf eine Organisation, in: values4change, [online] https://www.v4ch.de/werte-und-kultur/7s-modell/ [20.03.2023]

Das 7-S-Modell (o. J.): in: managementportal, [online] https://managementportal.de/Ressources/7S%20Modell.htm [20.03.2023]