Assignment 05: BCG Matrix—McKinsey 7s

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Chapter14.pptx

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Strategic Analysis for Healthcare

Chapter 14

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McKinsey 7S Model

The 7S framework changed the way people think about organizational effectiveness.

“A previous focus of managers was on organization as structure—who does what, who reports to whom, and the like. As organizations grew in size and complexity, the more critical question became one of coordination” (McKinsey & Company 2008).

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McKinsey 7S Model

The 7S model takes its name from seven components:

Strategy

Structure

Systems

Staff

Skills

Style

Shared values

(See Exhibit 14.1.)

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McKinsey 7S Model

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Strategy

When you analyze strategy, ask yourself how well your organization’s current strategy has enabled it to reach its goals. Areas to consider may include the following:

Marketing strategy

Distribution

Product or service development

Business development

Customer service

Understanding of external market factors

(Braintree Group 2015)

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Structure

Organizational structure determines how well an organization can respond to new challenges and customer requirements.

Organizations with flat structures tend to allow more autonomy for individual business units and managers, enabling them to respond quickly to changing market conditions.

More traditional, hierarchical organizations tend to be less responsive.

However, they tend to have greater central management control and are better able to leverage the buying and selling power of the whole business (Braintree Group 2015).

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Systems

The third S involves the organization’s managerial processes, systems, and business tools.

Do these elements allow the organization to run efficiently and deliver good customer service, or do they hinder the pursuit of these goals?

Areas to consider include the following:

Customer service, research and development (R&D), sales, and marketing operations

Collection of management information

Financial management

Information technology

Internal communications

(Braintree Group 2015)

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Staff

Organizations depend heavily on their staffs.

This point is especially true in healthcare, where poor staff interactions can ruin a customer’s relationship with an organization.

The ability of an organization to recruit, train, and retain a skilled and talented staff is particularly important (Braintree Group 2015).

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Skills

The skills of an organization determine its ability to

provide innovative products and services,

differentiate itself from its competitors,

charge premium prices, and

defend and grow market share.

Highly skilled organizations tend to invest in equipment, R&D, and staff recruitment and development.

They tend to have a strong understanding of their markets, reward success, and maintain a no-blame culture (Braintree Group 2015).

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Style

The style with which managers approach the business tends to be reflected throughout the organization.

Managers who provide a supportive and enabling approach to staff, for instance, will often find that the same positive approach is passed along to customers (Braintree Group 2015).

Style may also be thought of as “culture.”

Healthcare managers work with a diverse a group of employees. All ages, genders, ethnic backgrounds, can be found in healthcare organizations. We must lead effectively with a style that can transcend inherent differences and make the organization function as a cohesive unit.

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Shared Values

The final S is shared values. To be truly successful, the entire organization needs to work toward the same goals and values.

Effective internal communications are key to ensuring that staff members are aware of the goals and values and, further, that they understand why those goals and values are so important.

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Applying the 7S Model

In keeping with the 7S model’s emphasis on coordination, you should apply the framework with the following key points in mind (JISC InfoNet 2008).

Focus on the links between each of the Ss rather on the Ss themselves. The links are key to identifying the organization’s strengths and weaknesses. No S is a strength or a weakness in its own right; only its degree of support (or lack thereof) for the other Ss is relevant.

The model highlights how a change made in any one S will have an impact on all the others. Thus, for a planned change to be effective, changes in one S should be accompanied by complementary changes in the others.

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McKinsey 7S Model

For more information, you can watch a short video from McKinsey & Company on the 7S framework:

http://www.mckinsey.com/spContent/Enduring%20IdeasV2/index.html#2472097023001?sid={A33BD7BC-F25A-4E9B-A7FA-9317110C7B33}&pid={0AFB2116-2539-4238-A6DB-1AB7CC7C6E00}

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Exercise

Form groups and identify the seven Ss that impact the organization you are studying.

Report out to the class.

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