A common adage in the management consulting business is that efficiency and effectiveness are completely different measurements. An organization can be extremely efficient, getting high productivity from their workforce and producing their product or service with very little waste or churn, yet be totally ineffective in meeting their objectives if, for instance, their product or service is not accepted in the marketplace. This difference is often distilled to the statement “efficiency is about doing things right, while effectiveness is about doing the right things.”
In my recent column on Six Sigma, I noted that Six Sigma is primarily focused on improving quality in areas such as manufacturing, sales, and customer service; in other words, on doing things right. It’s not a strategic methodology, so it’s not equipped to guide managers to examine their overall business model or strategy. So how do consultants or managers step up a level from process to strategy?
Understanding the Seven S framework’s basics
The Seven S approach is a framework that focuses on guiding managers to improving, not just our processes, but our entire strategic approach to the business. The Seven S model was originally proposed by Richard Tanner Pascale and Anthony Athos in their book The Art of Japanese Management; McKinsey and Company has adopted the model as the basis of its strategic consulting approach. Key to the conceptual foundation of this approach is the premise that the enterprise is only effective and competitive when certain elements are optimized. This approach is holistic in the sense that it proposes that the firm must refine all of these elements and bring them into harmony in order to achieve its highest level of effectiveness.
So what are the Seven Ss, and how do they fit together to help consultants and managers improve business performance? Here’s a brief walkthrough of the attributes of the Seven Ss.
#1. Strategy: The overriding goal or objective that the enterprise wishes to achieve, and the course of action it intends to take to reach that goal. From the viewpoint of IT, the key question here is often about alignment. Are the activities of the IT staff focused on achieving the strategic goals of the organization? Is there a forward-looking IT plan or roadmap that illustrates how the IT function will drive towards to long-term strategic objectives of the firm? Is the CIO involved in strategy formulation or just an implementer? Every IT professional has experienced situations in which a manager or executive becomes enamored of some technical solution, often sold to her by a sales representative as the “end-all fix,” and IT finds itself devoting all its energies to implementing a product that is disconnected from the firm’s strategic goals.
#2. Structure: The manner in which the enterprise is organized, and the relationships between the entities, such as departments, field offices, etc. Is the organization authoritarian, like the military, or decentralized or federated? How do internal processes and human resources work together to achieve the goals? In my consulting experience, I’ve seen many firms that want to migrate to an e-commerce approach to sales, and yet see e-commerce enablement as a project, rather than as a structural problem that needs to be solved. No matter how great the e-commerce engine an organization builds, if it’s internal organization and structure is not modified to adapt to this new channel, it has very little chance of success.
#3. Systems: Not just information systems and infrastructure, but also the processes and the functions that enable the organization to work, such as recruiting, accounting, and procurement. From e-commerce to data warehousing and knowledge management, and all across the array of processes and systems that companies employ to deliver their products and services, the ability to make the right technology decisions, to optimize processes, and to enhance productivity are make-or-break elements of success.
#4. Staff: The human resources that actually accomplish the work, and the recruiting, incentives, and compensation practices that encourage them to achieve. An organization’s ability to attract and retain the best talents and to keep them motivated and productive is key to execution of the enterprises goals. All the strategic innovation in the world cannot compensate for an unmotivated staff or low productivity.
#5. Style: The elusive “corporate culture” is captured here; is the enterprise customer focused and quality driven or focused on maximizing profitability at any cost? Does the enterprise strive to build a cohesive team of its staff, or does the organization view its workforce as a series of interchangeable hands-for-hire?
#6. Skills: The unique competencies that drive competitive advantage. From the “hard” technical skills of designing products and managing projects to the “soft” skills of communication and teamwork, staff capabilities are essential elements of strategic success. This element also addresses organizational skills: As we’ve recently learned in the case of General Motors, the ability of an organization to develop products or services that the marketplace values is the differentiating factor in the market battlefield.
#7. Shared Values: The core beliefs and attitudes that drive the enterprise. Values are not the mission of the company — that should be captured in the firm’s strategy. Values are about behaviors, taking the form of statements like “we’ll never sacrifice customer satisfaction for short term profit” or “we always thank the customer for choosing us.”
Applying the Seven S framework
Now that we’ve outlined the elements of the Seven S framework, the obvious question is: How can I apply this framework in our organization?
As a consultant, I’ll start a performance improvement engagement by educating my client on the elements of the framework. Many organizations grow organically and don’t think about their activities in this structured and methodical way. By simply exposing organizations to this sort of approach, you can start to ignite new ways of thinking about their strategic development process. By using this framework to methodically analyze the current state of each of these elements, we can get a holistic view of the enterprise and begin to develop a gap analysis that can guide an improvement plan.
Some firms are very strong in some areas, such as staffing and skills, but lack a common set of shared values and a coherent strategy-development function. Through interviews, observation, and facilitated work sessions, you can pinpoint improvement areas and then prescribe a plan for optimizing those functions.
Seven S is just a conceptual framework; therefore, it doesn’t tell us how to fix those areas that require development. By applying your experience, reviewing the ideas found in the literature (such as Good to Great and other business classics), enlisting the insights and suggestions of members of the organization, and applying disciplines like Six Sigma where appropriate, you can help firms apply a consistent approach to strategy development and execution and improve their results and competitive position.
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