The McKinsey 7S Framework Model for Program Management

McKinsey’s 7S Framework provides an established and proven model for assessing an organization’s readiness to successfully deliver objective results. A strategy may seem sound, but if the right elements within the organization are not in sync, it will be difficult to implement effectively.

Used for over 30 years, the McKinsey 7S Framework Model is focused on coordination across domains, rather than on setting a rigid organizational structure. It is most effective for challenges in larger organizations, but is applicable to smaller organizations as well.

Basics of the McKinsey 7S Framework Model

The McKinsey 7S Framework Model is depicted at right. The blue circles are ‘hard’ elements – like hard skills – which are more well-defined and thus more straightforward to achieve. The green circles are less rigidly defined – like soft skills – and thus more elusive to measure explicitly.

The purple circle in the middle, Shared Values, is the common and consistent core that holds the other six together. Here is further explanation of each of the seven elements:

1. Strategy – a thoroughly considered formal business plan that produces competitive advantage in alignment with company mission and values
2. Structure – how the company is organized, decision-making responsibility, and accountability, all at least partially depicted in the org chart
3. Systems – business and technical infrastructure that supports the processes, decisions, and activities that get the work of the organization done
4. Style – way of working that establishes a code of conduct, common way of communicating, and consistent way of doing business from top to bottom of the organization
5. Staff – all human resources activities, including recruiting, hiring, initiating, training, supporting, and rewarding employees
6. Skills – the core capabilities and competencies that enable employees to execute on plans and achieve objectives
7. Shared Values – the foundational mission and values that underly and align the other 6 elements of the 7S model to maintain a cohesive and effective organization

Lines connect each of the circles, showing that all are interconnected, and a change in one affects the others. That’s where the complexity – and value – lies.

It’s a 5-step Process

The model is implemented in a Five Step Process – a process which is pretty simple to lay out, but more challenging to implement.

1. Understand current situation – Are the elements of the 7S model aligned? Identify inconsistencies or gaps. What might need to change? This needs to involve all relevant internal stakeholder groups.
2. Determine desired situation – Develop an organizational design that fills the gaps and fixes the inconsistencies identified in the first step. The proposed design needs to support achievement of strategic objectives.
3. Determine action plan to reach desired situation – Devise a plan for implementing each facet of the changes between the current and desired state. The plan may include changes to the strategy, the hierarchical structure, the systems and flow of information, capabilities of personnel, and ways of working.
4. Execute action plan – Put together a series of projects with clear lines of responsibility and empowerment to implement the changes. While support of stakeholders, especially executive sponsors, is critical, it is also critical to deploy the right resources, separate from operational resources, to implement changes as required.
5. Perform periodic review of situation – The action plan needs to include a timeline with expectations over time. Periodic review includes progress toward optimization of the organization over time and needs to be agile with the ability to make adjustments as required.

A couple of things jump out when looking at this process.

• Implementing the 5-step process is part of an ongoing program – and not a project. It does not have a well-defined end point. It has an indefinite time frame, and thus does not meet the definition for a project.
• The process is iterative, and not serial. It does not simply proceed from step 1 through to step 5. In reality, as depicted by the various backward turning arrows in the diagram, progress can mean returning to any prior step at any time. For example, new information may become available that alters the understanding of the current situation. Similar learning along the journey can necessitate a return to any of the steps.

Beyond the 5-step process, let’s further explore the challenges of using the whole McKinsey 7s framework method.

The McKinsey 7S Framework in Practice

Using the framework will depend on the industry, size, and complexity of the organization. Here are some pros and cons to consider:

Pros:

• Shows wider impacts of any change – Changes to one element reflect changes to other elements
• Gaps and misalignment are revealed – Helps the organization work out what needs to do to get to target
• Facilitates realignment – Helps measure alignment of departments, processes, and ‘soft’ issues on ongoing basis

Cons:

• Can be complicated – Requires strong team competence just to do
• Needs strong executive support – For organization-wide initiatives, but can used ‘locally’ on a program or project
• Internally focused – There is no consideration for business environment, stage of business, competition etc.

In short, the model helps to manage alignment across the organization by looking at some key domains, but it does not consider external environment and other related external factors, which are in the domain of strategy. As a result, I consider it to be more of an implementation framework than a strategy framework.

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I recommend these strategy resources on FlevyPro (paid links):

McKinsey’s 7S Framework 6-slide PowerPoint deck $25

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Implications for Project, Program, and Portfolio Managers

The McKinsey 7S framework model provides a unique tool to improve the success rate of projects. Here’s how:

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I recommend these PM templates (paid link):

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• Program Managers – Doing the work required by the 7S model can improve the chances of success in any strategically driven program. It can also more closely align the program with the organizational objectives. Program success requires the same overall organizational synchronization and harmony as the organization as a whole.
• Portfolio Managers – Synchronizing across projects – prioritizing, ordering, and selecting – will benefit from input that synchronizes the strategic elements across the organization. Some projects may actually be detrimental, or poorly timed, based on 7S input.
• Project Managers – Projects will be more likely to be executed within a harmonized internal environment where a 7S analysis is in play. This means that it is ‘primed’ for the change that the project was designed to bring.

By looking holistically at the various organizational elements as part of the 7S model, projects and programs are more primed for success.

Note that there will be projects and programs to make changes to the organization where needed, and other projects aimed at implementing the strategy.

Conclusion

The McKinsey 7S Framework is a robust model that has been proven for decades. While it is intended to be used at the corporate level, it can be used also in business units or even departments, as long as those units are sufficiently autonomous. It can also be used at the project and program level, and can clearly contribute to higher success rates on project, programs, and portfolios.

The following are related resources (these are paid links):