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How do you go about analyzing how well your organization is positioned to

achieve its intended objective? This is a question that has been asked for many
years, and there are many different answers. Some approaches look at internal
factors, others look at external ones, some combine these perspectives, and
others look for congruence between various aspects of the organization being
studied. Ultimately, the issue comes down to which factors to study.

While some models of organizational effectiveness go in and out of fashion, one

that has persisted is the McKinsey 7S framework.

It's all very well devising a

strategy, but you have to be able to implement it if it's to do any good. The
Seven S Framework first appeared in " The Art of Japanese Management" by
Richard Pascale and Anthony Athos in 1981. They had been looking at how
Japanese industry had been so successful, at around the same time that Tom
Peters and Robert Waterman were exploring what made a company excellent.
The Seven S model was born at a meeting of the four authors in 1978. It went
on to appear in "In Search of Excellence" by Peters and Waterman, and
was taken up as a basic tool by the global management consultancy
McKinsey: it's sometimes known as the McKinsey 7S model.

The Seven-Ss is a framework for analyzing organizations and their effectiveness.

It looks at the seven key elements that make the organizations successful, or
not: strategy; structure; systems; style; skills; staff; and shared values.

The model shows that organizational immune systems and the

many interconnected variables involved make change complex, and that an
effective change effort must address many of these issues simultaneously.
 ?

P‘ Ï S Model ± A Systemic Approach to Improving Organizations

The 7-S model is a tool for managerial analysis and action that provides a

structure with which to consider a company as a whole, so that the

organization's problems may be diagnosed and a strategy may be developed and

implemented.

The 7-S diagram illustrates the multiplicity interconnectedness of elements that

define an organization's ability to change. The theory helpe d to change

manager's thinking about how companies could be improved. It says that it is

not just a matter of devising a new strategy and following it through. Nor is it a

matter of setting up new systems and letting them generate improvements.

To be effective, your organization must have a high degree of fit, or internal

alignment among all the seven Ss. Each S must be consistent with and

reinforce the other Ss. All Ss are interrelated, so a change in one has a ripple

effect on all the others. It is impos sible to make progress on one without

making progress on all. Thus, to improve your organization, you have to master

systems thinking and pay attention to all of the seven elements at the same

time.

There is no starting point or implied hierarchy - different factors may drive the

business in any one organization.

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Structure is the organizational chart and associated information
that shows who reports to whom and how tasks are both divided up
and integrated. In other words, structures describe the hierarchy of
authority and accountability in an organization, the way the
organization's units relate to each other: centralized, functional
divisions (top-down); decentralized (the trend in larger
organizations); matrix, network, holding, etc. These relationships
are frequently diagrammed in organizational charts. Most
organizations use some mix of structures - pyramidal, matrix or
networked ones - to accomplish their goals.

 ‘‘‘

Strategies are plans an organization formulates to reach identifie d

goals, and a set of decisions and actions aimed at gaining a
sustainable advantage over the competition .

It is the direction and scope of the company over the long term. It is
the plan devised to maintain and build competitiv e advantage over
the competitors.


‘
Systems define the flow of activities involved in the daily operation
of business, including its core processes and its support systems.
They refer to the procedures, processes and routines that are used
 

to manage the organization and characterize how important work is

to be done.

Systems in Business System:-

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͞The interconnecting center of McKinsey's model is: Shared Values 
Shared values are commonly held beliefs, mindsets, and
assumptions that shape how an organization behaves ± its
corporate culture. Shared values are what engender trust.

Values are the identity by which a company is known throughout

its business areas, what the organization stands for and what it
believes in, it central beliefs and attitudes. These values must be
explicitly stated as both corporate objectives and individu al values.

When the model was first developed, these are the core values of the
company that are evidenced in the corporate culture and the general
work ethic.
 Ï

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"Style" refers to the cultural style of the organization, how key
managers behave in achieving the organization's goals, how
managers collectively spend their time and attention, and how they
use symbolic behavior.How management acts is more important

than what management says.

Style represents the leadership approach of top management and

the company's overall operating approach .


‘
"Staff" refers to the number and types of personnel within the
organization and how companies develop employees and shape
basic values. It is the company's people resources and how they are
developed, trained, and motivated.

‘
 Ý



‘
"Skills" refer to the dominant distinctive capabilities and competencies of
the personnel or of the organization as a whole.

"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.

"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.

The way the model is presented in Figure above depicts the interdependency of
the elements and indicates h ow a change in one affects all the others.

For example, a change in HR -systems like internal career plans and

management training will have an impact on organizational culture
(management style) and thus will affect structures, processes, and finally
characteristic competences of the organization.

In change processes, many organizations focus their efforts on the hard S¶s:-
Strategy, Structure and Systems. They care less for the soft S¶s, Skills, Staff,
Style and Shared Values. Peters and Waterman in ³In Search of Excellence´
commented however, that most successful companies work hard at these soft
S¶s. The soft factors can make or break a successful change process, since new
structures and strategies are difficult to build upon inappropriate cultures and
values. These problems often come up in the dissatisfying results of spectacular
mega-mergers. The lack of success and synergies in such mergers is often based
in a clash of completely different cultures, values, and styles, which make it
difficult to establish effective common systems and structures.
 Æ

’‘ ÷

 Ï 



The 7S model can be used in a wide variety of situations where an alignment

perspective is useful, for example to help you:

¸‘ Improve the performance of a company;

¸‘ Examine the likely effects of future changes within a company;
¸‘ Align departments and processes during a merger or acquisition; or
¸‘ 3etermine how best to implement a proposed strategy.

.
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Now you know what the model covers, but how can you use it?

The model is based on the theory that, for an organization to perform well, these
seven elements need to be aligned and mutually reinforcing. So, the model can
be used to help identify what needs to be realigned to improve performance, or
to maintain alignment (and performance) during other types of change.
 c

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.

You can use the 7S model to help analyze the current situation, a proposed
future situation and to identify gaps and inconsiste ncies between them. It's then
a question of adjusting and tuning the elements of the 7S model to ensure that
your organization works effectively and well once you reach the desired
endpoint.

Sounds simple? Well, of course not: Changing your organization p robably will
not be simple at all! Whole books and methodologies are dedicated to analyzing
organizational strategy, improving performance and managing change. The 7S
model is a good framework to help you ask the right questions - but it won't give
you all the answers. For that you'll need to bring together the right knowledge,
skills and experience.

When it comes to asking the right questions, we've developed a Mind Tools
checklist and a matrix to keep track of how the seven elements align with each
other. Supplement these with your own questions, based on your organization's
specific circumstances and accumulated wisdom.

x‘ Ï‘ ‘ !"‘

‘
Here are some of the questions that you'll need to explore to help you
understand your situation in terms of the 7S framework. Use them to analyze
your current situation first, and then repeat the exercise for your proposed
situation.


 
  ‘

¸‘ What is our strategy?

¸‘ How to we intend to achieve our objectives?
 cc

¸‘ How do we deal with competitive pressure?

¸‘ How are changes in customer demands dealt with?
¸‘ How is strategy adjusted for environmental issues?

 
 ‘

¸‘ How is the company/team divided?

¸‘ What is the hierarchy?
¸‘ How do the various departments coordinate activities?
¸‘ How do the team members organize and align themselves?
¸‘ Is decision making and controlling centralized or decentralized? Is this as
it should be, given what we're doing?
¸‘ Where are the lines of communication? Explicit and implicit?

 
‘

¸‘ What are the main systems that run the organization? Consider financial
and HR systems as well as communications and document storage.
¸‘ Where are the controls and how are they monitored and evaluated?
¸‘ What internal rules and processes does the team use to keep on track?

 

 ‘

¸‘ What are the core values?

¸‘ What is the corporate/team culture?
¸‘ How strong are the values?
¸‘ What are the fundamental values that the company/team was built on?

 
‘

¸‘ How participative is the management/leadership style?

¸‘ How effective is that leadership?
¸‘ 3o employees/team members tend to be competitive or cooperative?
¸‘ Are there real teams functioning within the organization or are they just
nominal groups?
 c]

‘

¸‘ What positions or specializations are represented within the team?

¸‘ What positions need to be filled?
¸‘ Are there gaps in required competencies?

‘

¸‘ What are the strongest skills represented within the company/team?

¸‘ Are there any skills gaps?
¸‘ What is the company/team known for doing well?
¸‘ 3o the current employees/team members have the ability to do the job?
¸‘ How are skills monitored and assessed?

‘‘

x‘
 


Using the information you have gathered, now examine where there are gaps
and inconsistencies between elements. Remember you can use this to look at
either your current or your desired organization.

¸‘ Start with your Shared Values: Are they consistent with your structure,
strategy, and systems? If not, what needs to change?

¸‘ Then look at the hard elements. How well does each one support the
others? Identify where changes need to be made.

¸‘ Next look at the other soft elements. 3o they support the desired hard
elements? 3o they support one another? If not, what needs to change?

¸‘ As you adjust and align the elements, you'll need to use an iterative (and
often time consuming) process of making adjustments, and then re -
analyzing how that impacts other elements and their alignment. The end
result of better performance will be worth it.

‘
 c?

A recent (2008) update on the Mckinsey 7S model is a short podcast

on the creation of Mckinsey 7S model by Lowell Bryan, a director in
McKinsey's New York office, involved in creating and applying the 7 -S
framework. He describes how it was introduced in the late 1970s to
address the critical role of coordination, rather than structure, i n
organizational effectiveness.

McKinsey 7S model referenced in the E-consultancy, Managing an E-commerce

team report 

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According to him McKinsey 7S model is referenced in the E-consultancy

Managing an E-commerce team report as a method of reviewing the internal
capabilities of an organisation to manage digital channels. Some of the key
issues that require management are shown in the table above .

{The original refererence is: Waterman, R.H., Peters, T.J. and Phillips, J.R.
(1980) Structure is not organisation. McKinsey Quarterly in-house journal.
McKinsey & Co., New York.}
 c

͞ j              ͞

x‘ eadership Style:

Infosys believes that leadership is one of the most essential ingredients of

organizational success which is provided by its Chairman, ¬ R ¬arayanmurthy.

Leadership is based on high business vision and predominantly supportive styles.

There is emphasis on developing leadership qualities among employees. For this

purpose, it has established ³Infosys eadership Institute´. Top management

emphasizes on open door policy, continuous sharing of information, takes inputs

from employees in decision making, and builds personal rapport with employees.

As we have seen over last few years, we have seen smooth transition from N R

Narayanmurthy to Nandan Nilakeni and from ¬andan ¬ilakeni to Kris

Gopalkrishnan without any adverse effects on the company outlook and each

one has proved to be an able leader taking company forward.

x‘ Staff (Human Resources):

Since Infosys is in knowledge based industry, it focuses on the quality of the

human resources. Out of total personnel, about 90 per cent are engineers. At
 cÏ

the entry level, it emphasizes on selecting candidates who find the company s

meritocratic culture satisfying, superior academic records, technical skill s, and

high level of learn ability. The company emphasizes on training and development

of its employees on continuous basis and spends about 2.65 per cent of its

revenues on up gradation of employees skills, and around 50% as

employee costs. In spite of t housands of people joining every month, Infosys

has been able to maintain its training standard mostly due to its highly matured

processes capabilities and investment in infrastructure.

 cÝ

x‘ Strategy:

Infosys has adopted a client focused strategy to achieve growth. Rather

than focusing on numerous small organizations, it focuses on limited number

of large organizations throughout world. In order to cater its clients, the

company emphasizes on custom-built softwares. Another differentiating factor

for Infosys is that it commands premium margins. Company does not

negotiate over margins beyond a certain limit and some time prefers to walk -out

rather than compromise on quality for low -cost contracts. This has helped in

building an image for quality driven model rather than cost -differentiating

model.

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nature and scope of engagements for the existing clients by

increasing the size and number of projects and extending the breadth of its

service offerings. For new clients, it provides value added solutions by leveraging

its in-depth industry expertise. It increases its recurring business with clients by

providing software re-engineering, maintenance, infrastructure management and

business process management services which are long -term in nature and

require frequent client contact.

‘
 cÆ

 
‘ ‘Infosys plans to establish new sales and marketing

offices, representative offices and global development centers to expand its

geographical reach. It plans to increase presence in China through Infosys

China, in the Czech Republic and Eastern Europe dir ectly and through Infosys

BPO, in Australia through Infosys Australia and in Latin America, through Infosys

Mexico.



‘ 
‘‘Infosys focuses on emerging trends, new technologies,

specific industries and pervasive business issues that confron t our clients. In

recent years, it has added new service offerings, such as consulting,

business process management, systems integration and infrastructure

management, which are major contributors to its growth.

3‘‘
‘
‘Infosys has specialized industry

expertise in the financial services, manufacturing, telecommunications,

retail,transportation and logistics industries.



‘
‘    ‘Infosys invests in the development of its premium

brand identity in the marketplace by participating in media and industry analyst

events, sponsorship of and participation in targeted industry conferences, trade

shows, recruiting efforts, community outreach programs and investor relations.

‘ 
‘
‘ ‘   
 ‘Infosys is known for its organic

growth (risk averse) strategy though it has strategic alliance with leading
 ]

technology providers take advantage of emerging technologies in a mutually

beneficial and cost-competitive manner.

x‘ Shared Values:

Values are important part of Infosys s organizational culture. In fact its

tagline depicts how much emphasis it lays on core values. The core values

are:

‡ Customer Delight: A commitment to surpassing customer expectations.

‡ eadership by Example: A commitment to set standards in business and

transactions and be an exemplar for the industry and teams.

‡ Integrity and Transparency: A commitment to be ethical, sincere and

open in our dealings.

‡ Fairness: A commitment to be objective and transaction -oriented, thereby

earning trust and respect.

‡ Pursuit of Excellence: A commitment to strive relentlessly, to constantly

improve ourselves, our teams, our services and products so as to become the

best.

x‘ Organizational Structure:

The company has adopted a free form organization devoid of

hierarchies. Everyone is known as associates irrespective of his position in

the company. Software development is undertaken through teams and the

 ]c

constitution of teams is based on the principle of flexibility. A member, who

might have been team leader in one project, may be replaced by another

member of the same team for another project. This system not only helps in

creating the feeling of equality but also helps in developing project leaders.

x‘ Skills: From last year, Infosys has made it mandatory for every employee

7uto clear a predefined certifications, domain as well as technical, in order to

be eligible for appraisal. This is just one of the initiatives taken by Infosys

which signifies the efforts taken for building competencies. Apart from

internal initiatives like knowledge management, Infosys has been CMM

evel 5 certified for its process capabilities. Infosys has entered the

Balanced Scorecard Hall of Fame for Executing Strategy for achi eving

breakthrough performance results using the Balanced Scorecard (BSC).

 ]]

×



³The Ï S framework of McKinsey is a Value Based Management (VBM)

model that describes how one can   




  
 
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Analysing 7Ss in Infosys indicate that it is an effective organization having

good fit among structure,system,strategies,shared values,style skills & staff
and this will push the organization forward for long term.
 ]

.


RAM GOPA

M.B.A.

 MBA

<DEPTT. OF B SI¬ESS ADMI¬ISTRATIO¬, ¬IVERSITY OF  CK¬OW>