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 organisation being studied. Ultimately, the issue comes down to which factors to study.
While some models of organisational effectiveness go in and out of fashion, one that has persisted is the McKinsey 7S framework. Developed in the early 1980s by Tom Peters and Robert Waterman, two consultants working at the McKinsey & Company consulting firm, the basic premise of the model is that there are seven internal aspects of an organisation that need to be aligned if it is to be successful.
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 McKinsey 7S model involves seven interdependent factors, which are categorised as either "hard" or "soft" elements:
"Hard" elements are easier to define or identify, and management can directly influence them: These are strategy statements, organisation 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 organisation is going to be successful. The way the model is presented in Figure 1 above 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 a competitive advantage over the competition.
Structure: the way the organisation 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 emphasises 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 organisation 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.
How to Use the Model
The model is based on the theory that, for an organisation 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. Whatever the type of change – restructuring, new processes, organisational merger, new systems, change of leadership, and so on – the model can be used to understand how the organisational 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 analyse the current situation (Point A), and a proposed future situation (Point B) and to identify gaps and inconsistencies between them. It's then a question of adjusting and tuning the elements of the 7S model to ensure that your organisation works effectively and well once you reach the desired endpoint.
Ensuring That All Parts of Your Organisation Work together
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.
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 analyse your current (Point A) situation first, and then repeat the exercise for your proposed situation (Point B).
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?
How is the company/team divided?
What is the hierarchy?
How do the various departments coordinate activities?
How do the team members organise and align themselves?
Is decision-making and controlling centralised or decentralised? 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 organisation? 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?
Do employees/team members tend to be competitive or cooperative?
Are there real teams functioning within the organisation or are they just nominal groups?
What positions or specialisations 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?
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 organisation.
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-analysing how that impacts other elements and their alignment. The end result of better performance will be worth it.