Q 1. What do you understand by the word 7 S Model? What are its implications and possible uses?

Answer: Organisational effectiveness (getting the same output for less resources or more output for same
quantum of resources at a given point of time) can be maintained and improved by using the Tom Peters 7-S
Model. It can be useful in a wide variety of situations where an alignment perspective is useful like improving
the performance of the company, examining the effect of introduction of GST on various sectors, assigning our
monetary resources in a way that will get us the maximum return etc.

The 7-S model consists of 7 different elements namely:

a. Hard elements: They are easier to define or identify and management can directly influence them.
These are strategy statements; organizational structure and formal processes and systems.
b. Soft elements: They can be more difficult to describe, less tangible and more influenced by culture.
However, these soft elements are as important as the hard elements if the organization is going to be
successful. These elements include Style, Staff, Skills and Subordinate goals.
(i) Strategy Statements: Strategy is a plan developed by a firm to achieve sustained competitive
advantage and successfully compete in the market. In general, a sound strategy is the one thats
clearly articulated, is long-term, helps to achieve competitive advantage and is reinforced by
strong vision, mission and values. But its hard to tell if such strategy is well-aligned with other
elements when analysed alone. So the key in 7s model is not to look at your company to find the
great strategy, structure, systems and etc. but to look if its aligned with other elements. For
example, short-term strategy is usually a poor choice for a company but if its aligned with other 6
elements, then it may provide strong results.
(ii) Organisational Structure: Structure represents the way business divisions and units are
organized and includes the information of who is accountable to whom. In other words, structure is
the organizational chart of the firm. It is also one of the most visible and easy to change elements
of the framework.
(iii) Systems and processes: Systems are the processes and procedures of the company, which reveal
business daily activities and how decisions are made. Systems are the area of the firm that
determines how business is done and it should be the main focus for managers during
organizational change.
(iv) Style: Style represents the way the company is managed by top-level managers, how they interact,
what actions do they take and their symbolic value. In other words, it is the management style of
companys leaders.
(v) Staff: Staff element is concerned with what type and how many employees an organization will
need and how they will be recruited, trained, motivated and rewarded.
(vi) Skills: Skills are the abilities that firms employees perform very well. They also include
capabilities and competences. During organizational change, the question often arises of what
skills the company will really need to reinforce its new strategy or new structure.
(vii) Subordinate Goals: They are the norms and standards that guide employee behavior and company
actions and thus, are the foundation of every organization.

The steps or tools used to apply this model to the organisational design and effectiveness are as follows:

Step 1. Identify the areas that are not effectively aligned: During the first step, the main aim is to look at the
7-S elements and identify if they are effectively aligned with each other. Then we should look for the gaps,
inconsistencies and weaknesses between the relationships of these elements.

Step 2. Determine the optimal organization design: With the help from top management, one needs to find
out what effective organizational design one wants to achieve. By knowing the desired alignment one can set
ones organisational and functional goals and make the action plans. This is not to find out how these elements
are currently aligned in the organisation but one needs to find the best optimal alignment, which is not known to
anyone at that moment, so it requires answering to several macro questions or collecting data. Also, there are no
templates or predetermined organizational designs that one could use. One will have to do a lot of research or
benchmarking to find out how other similar organizations coped with organizational change or what
organizational designs they are using to implement similar strategies in similar conditions.
Step 3. Decide where and what changes should be made: This is basically the action plan, which will detail
the areas that one wants to realign and how would one like to do that. It deals with the changes to be made in
any of these 7-Ss to make the organisation more effective.

Step 4. Make the necessary changes: The implementation is the most important stage in any process, change
or analysis and only the well-implemented changes have positive effects.

Step 5. Continuously review the 7s: The seven elements i.e. Strategy, Structure, Systems, Skills, Staff, Style
and Subordinate goals are dynamic and change constantly. A change in one element always has effects on the
other elements and requires implementing new organizational design. Thus, continuous review of each area is
very important.

Let us consider the example of McDonalds applying this 7-S model in their business:

a. Strategy: McDonalds pursues business strategy of cost leadership and an aggressive international
market expansion. The company is able to operate with low operational costs due to economies of scale
enjoyed to an enormous extent. Moreover, along with operating company-managed restaurants,
McDonalds capitalizes on the high level of brand awareness via franchising.
b. Structure: McDonalds structure has been subjected to modifications by new CEO and President Mr.
Steve Eastbrook in July 2015 to increase the focus on global operations under which the markets are
divided into four segments namely USA, high growth markets, international lead markets and
foundational markets, the head of each segment directly reporting to the CEO and President.
c. Systems. Due to the size and scope of the business, McDonalds organizational systems including
finance, employee recruitment and selection and IT systems can be assessed as complex. McDonalds
systems within the restaurants refer to day-to-day activities engaged by the workforce to serve visitors.
These are routinely modified in order to increase the speed and quality of preparing foods and serving
clients in its restaurants.
d. Skills: McDonalds employs people with the skill to deliver services at the earliest and with a sense of
gratitude to the customers. They possess the competencies and capabilities of satisfying the customers.
e. Values: The shared goals of the employees and the company determine the success of the organisation.
These corporate values guide the employees towards valued behaviour.
f. Staff: The working staff at McDonalds are developed, trained and motivated to deliver the valued
services to their customers not only at takeaway counters but also at the kiosks.
g. Style: The leadership approach of the top management and companys overall operating approach
determine the style with which the organisation operates and leads their employees to work towards the
corporate vision and mission.

Whatever the type of change restructuring, new processes, organizational merger, new systems, change of
leadership, and so on the model can be used to understand how the organizational elements are interrelated,
and so ensure that the wider impact of changes made in one area is taken into consideration.

Thus, the 7-S Model of McKinsey is a Value based management (VBM) model that describes how one can
holistically and effectively organise a company. Together these factors determine the way in which a corporate
organisation operates. This is a handy model for taking a snapshot and comparing that to the desired state or
improvement. It visually shows how everything is linked and understanding the larger implications of change
can be very revealing. It is much like how a general doctor can help diagnose a patients situation, but the fine-
tuned skill of a surgeon can be used to make the specific, desired change.