McKinsey’s 7S Framework
Presented BY : Group 3
AmAN Razvi (19PGPIM065)
Saurabh anand (19PGPIM070)
ChitRang NEGI (19PGPIM074)
Ravi Anand JHA (19PGPIM092)
Sumit Kumar (19PGPIM104)
Utsav Nautiyal (19PGPIM109)
CEO Jim Davis had three major
problems to solve
1. Improve firm’s profitability
2. Increase brand awareness through
advertisements
3. Capture a higher market share and
remain in top 5 American sneaker
firms.
New Balance : A USA based athletic footwear firm which started facing the heat in
late 1992 as American footwear market started to shrink.
Competitors like Nike and Adidas weren’t bothered much owing to the low cost
overseas manufacturing which provided funds for advertisement and endorsements
which in turn accentuated the sales.
NB’s manufacturing was based in the States, producing high quality shoes, and it
hadn’t had the money to spend on advertisement.
Its USPs were high quality, neighborhood running shoes which were endorsed by no
one.
The answer to NB’s problems?
McKinsey’s 7S Model
Developed in the late 1970s by Tom
Peters and Robert Waterman
The basic premise of the model is that
there are seven internal aspects of an
organization that need to be aligned if it
wants to be successful.
Stresses on the fact that effective
change can be brought in only one shot
effort
Key point is that all seven areas are
interconnected and change in one area
requires change in the rest of the areas
for it to function effectively.
Where 7S model can be used?
To improve the performance of a company,
To examine the likely effects of future changes within a
company,
To align departments and processes during internal
reconstruction or M&A,
To determine what is the best way to implement a
proposed strategy.
The Seven Elements
Hard elements Soft elements
Strategy Shared values
Structure Skills
Systems Style
Staff
"Hard" elements are easier to define or identify and management can
directly influence them: These are strategy statements; organization charts
and reporting lines; and formal processes and IT systems. Hard elements
answer many what questions about the business.
"Soft" elements, on the other hand, can be more difficult to describe, and
are 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. Soft elements answer many who and how questions about the
business. Ex- Who comprises the company workforce? How skilled the
Hard Elements
Strategy: the plan devised to maintain and build competitive advantage
over the competition.
Structure: the way the organization is structured and who reports to
whom.
Systems: the daily activities and procedures that staff members engage in
to get the job done. For Example- Budgeting, Financial accounting etc.
Soft Elements
Shared Values: these are the core values of the company that are
evidenced in the corporate culture and the general work ethic. Guided by
the Vision and Mission of the organization. Also known as Super ordinate
goals.
Style: the style of leadership adopted. Ex, Democratic, Autocratic etc
Staff: the employees and their general capabilities. Ex- Google, Amazon
etc
Skills: the actual skills and competencies of the employees working for
the company
Apple Inc
Shared Values - business is aligned around the
values of design and user experience
Strategy - focus on a small number of products
and to make them innovative and excellent –
enabling the business to capture a huge market
share relative to its size, and build a loyal
customer following
Structure: A divisional structure to focus on
different product lines by dedicated team. For
example , a specific team worked on Macintosh
in its genesis days.
Soft elements
Staff - offers their employees huge benefits
Skills - highly qualified and creative employees
Systems - supply chain with built capacity for launching and supplying
huge new market-dominating products
Style - people are free to innovate – as long as they met Jobs’ high
standards
How to use the tool?
Step 1. Identify the areas that are not effectively aligned
Step 2. Determine the optimal organization design
Step 3. Decide where and what changes should be made
Step 4. Make the necessary changes
Step 5. Continuously review the 7s
Did New Balance achieve its
goals?
New Balance continues to be one of the top 5 American athletic
footwear company with a market share just under 5%.
Mckinsey’s 7s model suggested it to expand overseas to achieve all it’s
goals
However, as per the then CEO Jim Davis, “ We would be a bigger, more
profitable company if we made everything overseas, but profits are not
everything. What matters most is making a product you believe in” and
rejected the idea of manufacturing overseas.
The firm continued to aim at increasing it’s profitability, market share
and improving it’s brand recognition, until 2015 when it decided to go
global.
Parting Question: Does 7S model challenge
Jim Davis’s take on success? What would
you have done in the situation?
Thank you!
