An organization is faring poorly with respect to its competition. Multiple board discussions have taken place on how to fix the problem but whenever a change is made, it seems like something else goes wrong. It is hard to make changes because other things fall out of balance.
Luckily, there is an OD method called McKinsey 7S that can address such problems of the business world. This article, inspired by ‘The Organization Alignment Exercise’ by Michael Beer and John J. Gabrarro, gives a brief overview of the Model and discusses four steps that can help you achieve your organizational goals.
McKinsey 7s Model Overview
The McKinsey 7S Model helps us look at all the critical elements in an organization, examine their interdependences, and come up with solutions which take each of those into account. The elements that make the backbone of the McKinsey 7 S Model are: Strategy, Style, Shared Values, Staff, Structure, Skills, and Systems.
With this Model, you can start with any element first and tackle the other elements as you move along. For this process, we have started with Strategy because it sets the direction of where your organization is headed and is a critical factor in this case. The steps below identify the questions that need to be asked at each step in the alignment process to ensure that you get the results you need.
Step 1: Select one S and examine it closely.
You can start with any S given your particular situation–In the real world, you may have a Staff , Style, Shared Values, Systems, Skills, or Structure issue which is more critical. Our problem deals with Strategy so we would ask questions similar to those below to learn what about our Strategy is misplaced.
Sample questions to ask:
· What is our organization’s competitive advantage and how does it add value for its customers?
· What are our organization’s Key Success Factors (KSFs)?
· How are we currently implementing our the organization’s strategy? Are we clear about our goals?
Because we started with Strategy, we would like to learn more about the KSFs related to our organization. Key success factors determine what the organization needs to do to support its goals. In this case, perhaps the organization prides itself on its customer service but the staff has a high turnover and this is one of the reasons why it is faring poorly in the marketplace. Therefore, the key success factor for this organization might be retaining the trained customer service staff. Similar to the Strategy related introspection, an in-depth analysis will also need to be done regarding the other Ss to learn more about them.
Step 2: Learn more about the factors affecting KSFs related to your organization
In step 1, we said that retention of the customer service staff was a key success factor for this organization. For retention to occur, we need to look at the areas or aspects which will support the retention process.
Sample questions to ask:
· What competencies can we build on or need to develop to ensure retention e.g. managerial, employee, marketing and technical?
· How do we improve the coordination among the major functions or departments to implement retention?
· Do we have the necessary committment from managers and senior leaders to achieve retention?
· What communication methods do we use to manage retention issues within our organization?
Step 3. Examine the gaps between the Strategy, KSFs and the other 7S elements
In this step, we need to identify which of the 7S elements are misaligned with Strategy and the KSFs because those are the ones that will affect the growth of the organization. If our Strategy is to compete through good customer service and retention of trained customer service staff is a key success factor, we should identify how the other 7S elements need to coordinate to help us achieve our goals. Our knee jerk reaction might be to pay people more to attract top talent but then we risk affecting our Systems, Shared Values, or some other 7S. In other words, we need to achieve balance among the 7S in our quest for achieve our Strategy. In addition to learning about the gaps, we should also learn more about how things are done within our organization.
Sample questions to ask:
· Which 7S elements do not work well with each other and are not in sync with Strategy and the KSFs( e.g. retention in this case)?
· How effective is/are the function(s) that are essential to ensure retention? If they are not effective, what needs to change?
· How effective is the coordination of teamwork across functional units to help improve retention? If it is poor, what do we need to do to make it better?
· How well does our leadership team and team agree on managing resources? How can we ensure agreement among them?
· Have individuals contributed their actual views to us? If not, how do we get this information?
Step 4. Move to align the 7 S elements
Once we have the gaps identified, we can begin to align the 7S elements to achieve our goal of providing exemplary customer service. We may find that retaining trained customer service staff may be done through improving Skills and providing training to the Staff and Supervisors. Perhaps the Systems or reward policies need to be reviewed overall rather than approaching them in an ad hoc manner. It could also be that the Shared Values in the organization need to be molded towards developing a customer service attitude across the board. If we had just focussed on Systems and ignored Skills and Shared Values (which were also necessary in this case), we would probably have had difficulty in our attempt to provide exemplary customer service and achieve competitive advantage.
In addition to these insights, a review of our existing work, and decision about the implementation plan will be helpful.
Sample questions we can ask at this stage:
· Have we identified the 7S elements that affect the execution of the key activities, interdependencies, development of key competencies, and commitment?
· How will the organization function after these changes are made? We should be descriptive and clear in our vision about the future.
· What are the potential barriers towards implementing the model? How will we tackle any resistance?
· How will we evaluate the outcomes and make changes?
Once our gaps have been identified and we have reviewed the 7S process, we can begin to align the 7S elements and achieve our goals.
The McKinsey 7S model helps us consider the interdependencies among various organizational elements and assists us in taking appropriate action for better solutions. Consider applying the McKinsey 7S Model in your organization to align the necessary organizational elements–it is possible that this time round, change will go more smoothly.
Reference: Organizational Alignment Exercise by Michael Beer and John J. Gabrarro. Harvard Business School, Rev. December 10, 2003
Originally published on Institute of Organization Development Website: http://www.instituteod.com