The McKinsey 7S Framework
on Information Industry
Information Technology Industry
• Information technology, and the hardware and
software associated with the IT industry, are an
integral part of nearly every major global industry.
• The information technology (IT) industry has become of
the most robust industries in the world. IT, more than any
other industry or economic facet, has an increased
productivity, particularly in the developed world, and
therefore is a key driver of global economic growth.
Economies of scale and insatiable demand from both
consumers and enterprises characterize this rapidly
growing sector.
Features of the IT Industry at a Glance
• Economies of scale for the information technology industry are high.
The marginal cost of each unit of additional software or hardware is
insignificant compared to the value addition that results from it.
• Unlike other common industries, the IT industry is knowledge-
based.
•
• Efficient utilization of skilled labor forces in the IT sector can help an
economy achieve a rapid pace of economic growth.
•
• The IT industry helps many other sectors in the growth process of
the economy including the services and manufacturing sectors.
• The role of the IT Industry
• The IT industry can serve as a medium of e-governance, as it
assures easy accessibility to information. The use of information
technology in the service sector improves operational efficiency and
adds to transparency. It also serves as a medium of skill formation.
Domain of the IT Industry
• A wide variety of services come under the domain of the information
technology industry. Some of these services are as follows:
• Systems architecture
• Database design and development
• Networking
• Application development
• Testing
• Documentation
• Maintenance and hosting
• Operational support
• Security services
The McKinsey 7S Framework
Ensuring that all parts of your organization work in harmony
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.
• Determine how best to implement a proposed strategy.
• The McKinsey 7S model can be applied to elements of a
team or a project as well. The alignment issues apply,
regardless of how you decide to define the scope of the
areas you study.
The Seven Elements
• The McKinsey 7S model involves seven interdependent factors which
are categorized as either "hard" or "soft" 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.
"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 1 below depicts the interdependency
of the elements and indicates how a change in one affects all the others.
Let's look at each of the elements specifically:
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.
Shared Values: called "superordinate goals" 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.
Style: the style of leadership adopted.
Staff: the employees and their general capabilities.
Skills: the actual skills and competencies of the employees working for the
company.
Placing Shared Values in the middle of the model emphasizes that these
values are central to the development of all the other critical elements. The
company's structure, strategy, systems, style, staff and skills all stem from why
the organization was originally created, and what it stands for. The original
vision of the company was formed from the values of the creators. As the
values change, so do all the other elements.
7S Checklist Questions
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 (Point A) situation
first, and then repeat the exercise for your proposed situation (Point B).
Current Situation (Point A)
Shared Values Strategy Structure Systems Style Staff Skill
Shared Values
Strategy
Structure
Systems
Style
Staff
Skill
Future Situation (Point B)
Shared Values Strategy Structure Systems Style Staff Skill
Shared Values
Strategy
Structure
Systems
Style
Staff
Skill
Strategy:
What is our strategy?
How do we intend to achieve our objectives?
How do we deal with competitive pressure?
How are changes in customer demands dealt with?
How is strategy adjusted for environmental issues?
Structure:
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?
Systems:
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?
Shared Values:
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?
Style:
How participative is the management/leadership style?
How effective is that leadership?
Do employees/team members tend to be competitive or cooperative?
Are there real teams functioning within the organization or are they just
nominal groups?
Staff:
What positions or specializations are represented within the team?
What positions need to be filled?
Are there gaps in required competencies?
Skills:
What are the strongest skills represented within the company/team?
Are there any skills gaps?
What is the company/team known for doing well?
Do the current employees/team members have the ability to do the job?
How are skills monitored and assessed?
7S Matrix Questions
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.
Above I present McKinsey 7S Worksheet, which contains a matrix that you can
use to check off alignment between each of the elements as you go through the
following steps:
• 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. Do they support the desired hard
elements? Do 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.
The McKinsey 7S Framework on Information Industry
To describing 7S Framework I choose 5 Top IT companies of India:
