The 7-S Framework

ENVIRONMENT OR CONTEXT

Strategy

The ways in which competitive advantage will be achieved. The actions that an organization takes to gain a sustainable advantage over the competition.

Here is how we create unique value

Some Key Questions

What are the companys sources of sustainable competitive advantage? (e.g. cost, quality, service, technical leadership). What are the companys key strategic priorities? (e.g. penetrating new markets, new product development, speed-to-market, improving customer service).

Structure

The way in which tasks and people are specialized and divided, and authority is distributed. The basic grouping of activities and reporting relationships into organizational sub-units. The mechanisms by which the activities of the members of the organisations are coordinated. Balancing the need for specialization with the need for integration.

There are four basic structural forms functional, divisional, matrix and network
Structure can lead people to focus attention on certain issues and ignore others. Reporting relationships in an organization often indicate which sub-units have the most power and influence.

What is the basic structural form? How centralized versus decentralized is the organisation? What is the relative status and power of the organisational sub-units?

Systems

The formal processes and procedures used to manage the organisation, including the management control systems, performance measurement and reward systems, planning, budgeting and resource allocation systems, information systems, and distribution systems. Processes and procedures, formal and informal, that an organization uses to manage itself on a daily basis focus the attention of managers. Strong influence on what they pay attention to and what they act on. Cross-functional teams Rewards people on individual, not team, performance

Some key questions

Does the organization have the systems it needs to run its business? (e.g. does it have a system for monitoring customer satisfaction?) What are the management systems that top management uses to run the company? Which ones do they pay the closest attention to?

Staffing

The people, their backgrounds, and competencies. The organizations approaches to recruitment, selection, and socialization. How people are developed; how recruits are trained, socialized, and integrated; and how their careers are managed.

How does the organization recruit and develop its people? (e.g. formal training, mentoring programs, stretch assignments). What are the demographic characteristics of the management team? (e.g., background, education, age, gender, professional identity, experience outside company). Where are the strongest leaders found in the organization (e.g. in which functions)? The weakest.

Skills
The distinctive competencies that reside in the organization. Can be distinctive competencies of people, management practices, systems, and/or technology. Skills represent both opportunities and constraints May act as a constraint when a new and different set of skills are required to compete Or the firm seeks to enter new markets

Some Key Questions

What business activities is the company distinctively good at performing?

What new capabilities does the organization need to develop, and which ones does it need to unlearn, to compete in the future?

Style

The leadership style of top management and the overall operating style of the organization. Style impacts the norms people follow and how they work and interact with each other and with customers.

Style captures how work actually gets done in the organization.

Where do they focus their attention? And, how do they make decisions

Small symbolic acts are another critical component of style.

How does top management make decisions? (e.g. participatory versus topdown, analytic versus arm-chair) How do managers spend their time? (e.g. in formal meetings, informal conversations, in the field with customers, in the lab)

Shared Values

The core or fundamental set of values that are widely shared in the organization and serve as guiding principles of what is important. Usually these values are communicated in simple ways, and may even seem trivial from outside. But to the organizations members, they have great meaning because they help focus attention and provide a broader sense of purpose.

Shared values highlight what is truly important to people in the organization and serve as guiding concepts for management action.
Do people have a shared understanding of why the company exists? Do people have a shared understanding of the vision of the company?

What types of issues receive the most and least top-management attention? (e.g. short run versus long run, internal versus external).

How to people describe the ways in which the company is distinctive? (e.g. focus on quality, emphasis on people).

A retail firms strategy is to compete on the basis of delivering superior service. Managers rewarded entirely for meeting their budget targets, style of the company is topdown, which inhibits the local decisionmaking needed for delivering exceptional service. An investment bank seeks to build broad and deep relationships with clients, offering them a full line of products. Banks reward system is based entirely on the performance of individual departments, not the overall firm.

Bank is staffed with people with vast technical expertise but few skills at managing relationships inside and outside the firm that cut across technical boundaries. Organizations must also stay aligned with their external environment (e.g. product and labor markets, the socio-political environment).

Managers tend to focus on just one or two elements and ignore the others. Recognize the full range of elements Focus on the ones that will have the greatest effect. Only by going through a diagnosis of the alignment of the organization can you determine where you need to focus your attention.
Strategy, structure and systems referred to as the hard Ss are easier to change than their counterparts. Softer Ss staffing, skills, style and shared values are harder to change directly, and typically take longer to do so. Effective companies tend to pay as much attention to these factors as to the hard-Ss