Mckinsey 7S Change Management Model and its Application

Overview of the model

McKinsey 7S Model is another pivotal and extensively applied change management model that organizations utilize to deal with changes. The origins of this model are linked to the 20th Century. It was proposed by Robert Waterman and Tom Peters in 1970. The framework examines the micro-environment of an organization to determine how they can be aligned with the objective of effective change management.

McKinsey 7S Model is another pivotal and extensively applied change management model that organizations utilize to deal with changes. The origins of this model are linked to the 20th Century. It was proposed by Robert Waterman and Tom Peters in 1970. The framework examines the internal elements within an organization to determine how they can be aligned with the objective of effective change management.

Basically, this model of change management aligns the objectives of organizational transitions to companies’ organizational design. Furthermore, Mckinsey 7S Model classifies the internal elements within an organization into soft elements and hard elements. The hard elements identified under McKinsey's 7S Model include structure, strategy, and systems. On the contrary, the soft elements as per the model include shared values, skills, staff, and styles. Given below is an elaboration of each element that the model includes.

Structure

Needless to say, for any organization to succeed in its strategic goals, the structure acts as the foundation in effective planning as well as in the change management process.

Strategy

This element is about the various strategies that the company is working on with the objective of succeeding in its future goals, vision, and mission. In any organization, strategies with specific objectives form a critical success factor and play a salient role in the performance of the company. Whenever a change is integrated into an organization, various strategies are worked upon. Furthermore, objectives are set under strategies and key performance indicators and control measures are defined to gauge the success or failure of strategies.

Systems

It refers to the various kinds of infrastructural setups that exist within an organization. These include the business infrastructure, management infrastructure, technological infrastructure, and other systems within a company. In times of organizational changes, strongly built systems whether they are financial or technological, make change implementation more worthwhile and successful.

Shared Values

Shared values comprise company core values, mission, and vision that are aligned with the organizational design of a company at all levels. Values often have a huge role to play in terms of establishing the foundation of an organization’s culture. Besides, when organizational changes are executed, it is crucial to define how a change will impact the core values of a company. There needs to be alignment between the shared values of the company and the fundamental changes being introduced.

Skills

Skills within an organization make an essential part of the competencies and capabilities of an organization. The more accomplished the skill sets within an organization the greater the competitive advantage. Companies need to constantly work on helping employees acquire new and prerequisite soft skills and hard skills to stay competitive. For that, leaders need to first identify the skill gaps that exist in the workforce and then plan training programs and skill development initiatives accordingly.

Staff

It refers to the human resources in an organization and determinants of an engaged workforce that include talent management, reward systems, employee wellness, and so on. A major organizational change may result in the downsizing of the staff or may create a scenario where new employees need to be hired for making the change successful.

Styles

This is coherent to the leadership and management styles within an organization and their influence on the overall performance of the organization. Change management within an organization is largely dependent on the different leadership theories adopted by the top management. When leaders are transformational, they are more open to embracing change while leaders who resist change prove invaluable to the organization.

Now that we have seen the different elements that together make Mckinsey 7S Model, it is equally important to understand how the model can be applied for effective change management. Illustrated below is a stepwise process for the application of the model.

Application of McKinsey 7S Model of Change Management

First Step: Identification of existing gaps

The primary step in change management using the McKinsey 7S model is to understand where performance gaps exist at present. The identification of gaps will help the top management understand which elements of the organizational design are not in perfect alignment and what needs to be modified or if a new change is to be implemented. Both hard elements and soft elements need to be examined separately.

Second Step: Envisaging the ideal organizational design

After the gaps have been identified in the internal elements of the organization, the ideal or optimum organizational design needs to be visualized. For that, extensive research and development, stakeholders analysis, elaborative discussions among the top management, and effective decision making in terms of how the optimum organizational structure should look like.

Third Step: Deciding and planning the changes

Having visualized how the organizational design should be such that it is in perfect alignment with the mission and vision of the company, subsequently, the required changes need to be deliberated on and planned by the top management. There has to be a clear plan of what changes are needed, in which elements will the changes be made, and how the transitions will be implemented.

Fourth Step: Implementation of change

The final stage is where the changes are finally implemented and incorporated into the elements of the organizational design. When the change is incorporated, the top management ought to extend complete cooperation to the employees and support them to adapt to the transitions. The implementation has to be as effective as the decision-making behind the change.

McKinsey 7S Model of Change Management taking Coca Cola’s case

Let us try to understand the application of the McKinsey 7S Change Model with a real example for greater clarity and relevance. Coca-Cola, as the world already knows, is one of the most successful total beverage companies in the world with more than 200 brands catering to a wide range of customer demands and wants.

As many would already know, Coca-Cola acquired Costa Coffee from Whitbread PLC in the year 2019 to advance its ambitions of becoming a total beverage company. Let us try to understand how this acquisition change moved through the change management process as per McKinsey 7S Model.

• Coca-Cola Structure: To facilitate the success of Costa Coffee’s acquisition there were structural changes that the top management of Coca-Cola initiated. To elaborate, Dominic Paul was replaced as the CEO of Costa Coffee by Jill McDonald. Before this Jill McDonald had been the CEO of Marks and Spencers and the global marketing head of British Airways. She was roped in given her paramount experience in helping UK-based brands scale new heights as Costa-Coffee too is basically a UK-based brand headquartered in Dunstable.

• Coca-Cola Strategy: By acquiring the second-largest coffee chain in the world, Coca-Cola pursued its strategy of becoming the world’s most valuable and versatile total beverage company. To manage this change in a more efficient way, the change managers who proposed the acquisition did a stakeholders analysis first and explained to the stakeholders including shareholders of the company how this acquisition will boost the company’s performance in becoming the most successful total beverage company. They held open communication with the top management and others on how Costa-Coffee being the second-largest coffee chain globally will make the company’s expansion into the global coffee chain industry much more successful.

• Coca-Cola Systems: The company has advanced technological infrastructure and also has a well-planned system of global distribution. There are multiple channels of distribution and the company has a large network of suppliers. The operations are facilitated by state-of-the-art technologies and automation. Besides, there are strong financial systems and human resource management systems in place. The company used its strong finances to acquire Costa-Coffee for $ 4.9 billion. Further, the company used its other strongly built systems linked to performance management, technological capabilities, training infrastructure to facilitate the change.

• Coca-Cola Shared Values: Coca-Cola is determined to achieve its vision that revolves around the notion of 6Ps. These include profit, people, portfolio, planet, productivity, and partners. The larger vision of the company is to offer consumers the choice of beverages they love, create a sustainable future, and make positive differences in people’s lives. By acquiring Costa Coffee, the company’s vision of offering choice beverages to people got a further augmentation as there is a massive number of coffee consumers globally.

• Coca-Cola Skills: Coca-Cola worked on skill development and skill enhancement within its workforce to manage coffee-supply chains, marketing expertise needed for promoting a coffee brand to make constant progress with this acquisition. The company identified the skill gaps and plugged all those gaps with employee training and constant feedback to help its employees incorporate all the skills needed to implement the change successfully and to sustain it. The performance of the employees and the progress of the acquisition were tracked by key performance indicators and productivity tracking tools.

• Coca-Cola Staff: The company has more than 700,000 workers who are managed with a robust system of incentives and rewards to keep the overall staff morale high. Besides, for high engagement and better talent management, the company embraces a culture of diversity and inclusion. When the company acquired Costa-Coffee, the company also integrated Costa Coffee’s staff into its workforce because they had the expertise and experience in running Costa-Coffee. Besides, the company also hired new professionals to sustain the change who added to the present expertise of the global coffee industry.

• Coca-Cola Styles: James Quincey is the Chief Executive Officer of the company and in 2019, he also took over as the chairman of the company’s board of directors. He has a dynamic, visionary, and participative style of leadership. He is determined to drive revolutions within the organization. Still, he would have to keep refining his leadership effectiveness and continue to drive greater innovation for the company to achieve its strategic goals. He needs to be flexible and open to changes in his leadership subject to the situation’s demand. With his leadership style, he keeps employees motivated and also promotes a culture celebrating employees’ success and the success of Costa Coffee’s milestones to keep improving the outcomes of this acquisition.

FAQs