What is McKinsey's 7-S Change Management Model and how to use it

Change is inevitable. 

And in most cases, change is good. 

When you’re trying to grow your business, it's not enough to just keep doing the same old things you've always done - it will eventually lead to stagnation and decline.

To stay on top of things, you need a plan for how to introduce change into your organization and that’s exactly where McKinsey’s 7-S Change Management Model comes into play.

In this article, we will explore:

• What McKinsey's 7-S refers to,
• Why you should consider using it as part of your strategy and
• How it can be applied in your organization.

Before getting into it, you can also check Kotter’s 8-Step Change Management Model and Lewin’s Change Model.

TL;DR

• McKinsey's 7-S model is the foundation every business owner needs to establish an effective change management process.
  
• The main advantage that McKinsey's 7-S model forms is the comfort that organizational change creates (instead of fear) and the focus on positive effects rather than negative ones during this process.
  
• This model includes seven components, which are divided into soft and hard S elements: Structure, strategy, staff, style, systems, shared values, and skills.
  
• In this article, you'll find examples that specify which S element should be the focus of your business based on the scenarios given.

What is the McKinsey 7-S Model?

McKinsey's 7-S Change Management Model, also commonly referred to as the McKinsey 7-S Framework, is a popular change management model that was developed in the 1980s by McKinsey consultants James L. Heskett, John P. Kotter, and Leonard A. Schlesinger while working with the executives of the companies facing various difficulties from struggling sales to new product development problems. 

They found that when successful companies are in trouble, they are able to quickly diagnose and tackle the root of the problem, using a common framework that involves all seven parts of an organization working together towards a common goal.

The McKinsey 7-S Model identifies seven components of an organization that must work together for effective change management: Structure, Strategy, Staff, Style, Systems, Shared Values, and Skills.

The McKinsey 7-S Model is a useful framework for people performing various roles within an organization because it acknowledges that there are aspects of organizational change that affect each component of the organization differently.

For example, if you work as a Human Resources Director, your role might involve making sure that the organizational changes do not affect staff in an adverse way and that they feel supported through the process of change.

If you work as a CEO, your focus might be on making structural changes to ensure that the organization is best positioned for growth while simultaneously trying to maintain current levels of productivity.

So basically, the McKinsey model makes sure to work for everyone. But what is it really used for?

What is McKinsey's 7-S Change Management Model used for?

The McKinsey 7-S Change Management Model is used to plan and implement organizational change.

in multiple industries and by different types of organizations

👉 For example, human resources departments often use this model as a way to facilitate a productive process of recruiting new staff members to the organization.

👉Marketing teams also use it as a way of developing effective strategies for new product development, while a banking institution might use the model to design ways of implementing changes that will increase overall levels of customer satisfaction.

The 7-S Model is commonly used by companies that deal with operational problems, whether it’s due to a company's current structure or because they’ve lost sight of their organization's vision and strategy.

By identifying the areas of opportunity using this model, an organization can develop a plan for change management and then work on implementing that plan effectively.

The Benefits of the McKinsey 7-S Model

The McKinsey 7-S Model is an effective framework for change management because:

✅ It helps both individual employees and upper-level executives to understand various components of organizational change that affect the entire organization.  

✅ It helps individuals to better understand their roles in the process of organizational change, as well as how much they can contribute toward effective implementation.

✅ For upper-level executives, this model provides a comprehensive framework for understanding the ways that organizational change affects all areas of the organization so that it makes it possible to develop and implement a plan that will have the most effective results possible.

✅ People who use this model typically report that it helps them motivate their staff members and that it’s an excellent way to align the entire organization around a common goal.

✅ The model can also help to promote greater trust between different levels of management within an organization, especially if it’s used for 'bottom-up' change efforts focused on involving employees in the design and implementation process of organizational change.

✅ The model suggests that the risk of resistance to change can be greatly lessened by including all seven components from the very beginning, which is a helpful way to think about organizational change and planning for effective implementation.

✅ Finally, using this model ensures that your organization's culture is not negatively affected by implementing necessary changes.

How to use McKinsey's 7-S model?

The first step when using this model is to understand the components that make up your organization.

Once you’ve identified these parts, you can assess how each of them is currently functioning and where you might face the problems which need to be tackled in order to ensure achieving success.  

The seven components of McKinsey's model are divided into two groups: hard S and soft S.

Hard S elements:

• Strategy
• Structure
• Systems

Soft S elements:

• Style
• Staff
• Skills
• Shared Values

Soft S elements are typically harder to change than hard S ones, which is why it’s important to focus your efforts on both groups at the same time.

By creating an organizational change management plan taking all seven components into account, you’ll not only be able to anticipate potential problems before they happen but also be prepared to respond to them.

As long as your organization understands how each of these Ss affects the entire structure and system of the business, it will be easier to create a plan for implementation that does not derail along the way.

Let's now go over each of these Ss in more detail:

1️⃣ Strategy

An effective strategy provides a solid foundation for your organization's change management plan. Without a clear organizational strategy, it can be difficult to convince your employees or stakeholders that changes, in general, are absolutely necessary.

If you clearly define what your business stands for and how you want it to grow in the future, people will be better able to cope and understand why changes are needed to keep the business moving forward.

2️⃣ Structure

The structure of your organization refers to the different types of departments, divisions, and roles that make up your company.

It also includes the reporting structure (who reports to whom) and how different departments interact with one another.

Structure is important because it helps to define the roles that employees play within an organization, such as their level of authority and what they are responsible for.

If a change being implemented affects many people's roles, it can be difficult to push through the plan if the structure of an organization is not devised to support it.

3️⃣ Systems

An organizational system is about getting the job done on a daily basis.

This includes specific procedures and protocols that people follow when completing their tasks.

When thinking about changing your organization's systems, it might be necessary to assess the different types of project management and workflows which are currently in place.

Each of these systems can have a different impact on the overall functionality of your organization.   

4️⃣ Style

This S represents the style of leadership and decision-making that is currently in place within your organization. When dealing with style, you want to assess whether or not there is a need for any changes within departments.

For example, some organizations might follow a very top-down management structure while others take a more team-oriented approach.

The style of leadership could also extend to workplace culture. For example, an organization that provides a more casual environment might be in need of some changes if it were to implement a large-scale project that requires a more formal working environment.

5️⃣ Staff

This element is all about the people within your organization.

You might want to ask questions like:

• Are all the positions in your company held by the right people?
• Are there any problems regarding your employees, such as low morale or burnout?
• What positions do you have filled? What are the gaps in the organization?
• What is the attrition level? What is the level of diversity?
• What is your Workforce Strategy?

The answers to these questions will help you better understand where you might encounter problems that need to be addressed.

6️⃣ Skills

This S is related to the skills of your employees.

Part of this is about assessing what employees are currently bringing to the table and what competencies they have or need to acquire.

Part of this assessment also involves understanding whether or not employees are up-to-date with current industry knowledge and skills.

For example, if your organization is working in an industry that is rapidly changing, you must surely find ways to ensure your employees are learning new things to help them remain competitive.

7️⃣ Shared Values

Shared values are all about the culture of your business.

It refers to how employees interact with one another and what values they share. For example, an organization that is filled with workaholics might foster a work hard - play hard culture where employees make a special effort and then go out to have fun together.

On the other hand, an organization filled with people who value work-life balance should introduce a different initiative that lets their employees use flexible schedules to take extra time off for personal projects.

This S also has to do with your company's mission and vision.

The shared values of your employees should reflect the mission and vision of the company. If you find that there is a disconnection here, it might be time to reassess what the company values are.

In addition to assessing the current state of your organization in each of these Ss, you should also consider your goals and the possible impact that the change initiative will have.

For example, if your company is trying to pivot towards a new industry or it’s addressing some internal flow problems that hinder productivity, this might have an impact on which S you want to target and which will likely need the most work.

When assessing each of these elements, remember that it's very important to consult with senior leaders within your organization to get their input on the possible changes that are likely to occur.

Of course, don't forget about any legal issues that might arise during the process of making necessary changes to your organization's systems. 

Examples of McKinsey 7S Model

Let's now take a look at the McKinsey 7-S Model in action to provide you with a better understanding of how it can be used in change management.

For example, let's say you are the CEO of ACME Corp., an IT company with 500 employees.

To help grow your company, you decide to expand the business into the financial service industry. The first thing you should do is to use the McKinsey 7-S Model to assess the current state of your company.

In terms of Staff, you may find that there are certain positions within the company that need to be filled by the right people.

For example, you have a vacant position in management and there are no suitable candidates with both financial service experience and social skills that are needed to manage a team. The impact on the organization may lie behind the fact that you do not have the right people in place to make this change happen.

You should prioritize filling these positions before moving forward with your expansion plans.

Another area that needs to be assessed is Systems.

When looking at your current systems, you see that there is no standard way for employees to do their work. This means that the transition to offering financial services might be complicated.

The impact of this assessment is related to identifying a  need for assessing the systems in place before making the change.

Finally, you are getting up to Strategy.

While you’re aiming to expand your business into financial services, there are other companies that have already begun offering these solutions.

The impact on the organization reflects the fact that you realize there is competition in the new industry.

The assessment leads you to prioritize research and find out how your company can differentiate itself from the competition.

By using the McKinsey 7-S model, you can better assess a situation and find the best way to move forward. 

More examples

👉 Let's say that you are working in an organization where there’s a lot of workplace tension.

Some employees have expressed how unsafe they feel, but the CEO is not willing to address the problem.

If you were looking at the organization through McKinsey's lens, you could see that the problem lies within the System or Shared Values.

This is because employees feel unsafe due to an unchecked threat in the organization.

In this example, the Shared Values S would be the area that needs to be addressed in order to deal with the problem. You could suggest that the CEO needs to acknowledge the issue and take steps to make sure employees are safe at work.

👉 Another example involves an organization's system impacting its employees. In this case, let's say you are working in an organization with a hierarchical structure.

The employees have expressed their uncertainty about who they should turn to for advice, but the CEO believes that everyone should be able to come to them for guidance.

In this case, the organization's system would be the area that needs to be looked at in order to tackle the problem. You may conclude that the CEO needs to implement a mentoring program so employees know who they should turn to for advice.

👉 Finally, let's say you are working in an organization that has a lot of chaos within its system.

The employees have pointed out the lack of standard working practices, so they are left unsure about how to approach their work.

The problem, in this case, lies with the Strategy S.

When this example is viewed through McKinsey's lens, you can see that the organization needs to create a new standard operating procedure.

Since not every organization encounters the same problems, the 7-S model can be a helpful way to assess an organization's needs.

Conclusion

It takes hard work to successfully implement any type of change within an organization.

At the same time, you shouldn't expect too much to change overnight.

You should always proceed with caution and make sure that you are moving at a manageable pace so as not to overwhelm your employees with too many changes at once.

Remember, the more effort you put into understanding where your organization stands, the easier it will be to successfully make changes moving forward.

Bonus: Kübler-Ross’ Five Stage Change Curve Model.