McKinsey 7S Framework

History

In 1977 McKinsey director Ron Daniel launched two projects; the first and major one, the Business Strategy project, was allocated to top consultants at McKinsey's New York City corporate HQ and was given significant resources. It was headed by Frederick Gluck, and despite promise, the project could not manage to effectively implement the new strategies. The second project, was related to the problem of implementation: organizational effectiveness. This project was headed by Cleveland-based James Bennet.

Peters states that directly after graduating with a PhD from Stanford, and returning to McKinsey, Daniel handed him a "fascinating assignment." Motivated by the new ideas coming from Bruce Henderson's Boston Consulting Group, Peters "was asked [by Daniel] to look at 'organization effectiveness' and 'implementation issues' in an inconsequential offshoot project nested in McKinsey's rather offbeat San Francisco office." While Daniel's first project was focused on Business Strategy, this second project was concerned with Organization, which Peters defined as involving "the structure-and-people side." This "Organization" project was seen as less important, according to Peters in a Fast Company interview.

Despite being described as "marginal," the project "had an infinite travel budget that allowed [Peters] to fly first class and stay at top-notch hotels and a license from McKinsey to talk to as many cool people as [he] could all around the United States and the world." Peters admits that "There was no carefully designed work plan. There was no theory that I was out to prove. I went out and talked to genuinely smart, remarkably interesting, first-rate people." In addition to Karl Weick and Einar Thorsrud, Peters notes that Douglas McGregor's theory of motivation known as Theory X and Theory Y was directly influential on the direction of the project.

In a 1978 article, "Symbols, Patterns and Settings," Peters argued that "shifting organizational structure" and "inventing new processes" - structure and system, respectively - were only two tools of organizational change. Peters then outlines eight "mundane" tools that every manager has at their fingertips. He described this article as a "tentative presentation" and "the first public expression of these ideas."

In 1979 McKinsey's Munich office requested Peters to present his findings to Siemens, which provided the spur for Peters to create a 700-slide two-day presentation. Word of the meeting reached the US and Peters was invited to present also to PepsiCo, but unlike the hyper-organised Siemens, the PepsiCo management required a tighter format than 700 slides, so Tom Peters consolidated the presentation into eight themes. These eight would form the chapters of In Search of Excellence.

In 1980, Waterman joined Peters, and, along with Waterman's friend Tony Athos and Richard Pascale - both academics - came together at a two-day retreat in San Francisco to develop what would become known as the 7-S Framework, the same framework that would organize In Search of Excellence. In June 1980, Peters published an op-ed in the Manager's Journal section of the Wall Street Journal titled "The Planning Fetish." In this article, he "stressed the importance of execution and dismissed the whole idea of strategy." As strategy was McKinsey's main operation at the time, this was seen as a "frontal assault" on the company, leading Mike Bulkin, the head of the New York office, to demand that Daniel fire Peters.

The primary "innovative" theme that under-girded what would become In Search of Excellence was that "structure is not organization." This also happened to be the title of a 1980 journal article authored by Bob Waterman, Tom Peters, and Julien Phillips in which they argue that the "picture of the thing is not the thing...An organizational structure is not an organization." This article also introduced what would become the McKinsey 7-S Framework.

In December 1981, Peters left the company, after agreeing to a fifty percent royalty split with McKinsey. Later co-author Waterman stayed at the firm for three more years, but received no royalties from In Search of Excellence

In Search of Excellence

The work of Peters, Waterman, Athos, and Pascale leading up to the widely successful In Search of Excellence, not only elaborated the eight themes that would form each chapter, but also the 7 Ss which frame the different ways in which the firms profiled in the book were "excellent."

The Art of Japanese Management

Athos and Pascale, although not named as co-authors of the 1982 publication of In Search of Excellence, published their own study in 1981 titled The Art of Japanese Management. This book used the 7S Framework to compare the Japanese firm Matsushita with the American company ITT. Just as Peters emphasized throughout his writing, the important distinction between American and Japanese management was not the so-called "hard" technical aspects of organization, but rather the "soft" cultural aspects.

Objective

(To analyze how well an organization is positioned to achieve its intended objective)

Usage

The Seven Interdependent Elements

Hard Elements

Soft Elements

Limitations:

This framework, though highly laudable, gives rise to a few vital points, like:

a) What type of analysis is this ? Or what is the action triggered after putting your organization into this drill?

b) Does this give you real guidelines as to how to proceed further, after the analysis is completed?

c) Do we treat this as a guideline or checklist and proceed with using other techniques to formulate further steps?

d) There have been other techniques in vogue which have to be used to arrive at actionable points. Here too, a similar approach may be needed, as a tool, to really put this into action.

e) The above seems to be an abstract list of generic elements in any organization. But to improve each business process, such as Marketing, Finance, Manufacturing etc., what steps to be initiated is not spelt out.