Structure follows Strategy
A large number of strategies are not successfully implemented in practice. Implementation often fails due to soft factors that were not sufficiently taken into account in strategy development. Even today, most companies still rely on hard factors. It is criticised that soft factors cannot be rationally recorded and measured.
The conditions for successful management have changed dramatically due to the growing dynamics and complexity of the environment. We are increasingly moving from technocratic management based on rational methods/instruments to humanistic or socio-economic management that takes into account both, hard and soft factors.
The 7-S Framework
In the early 1980s, a well-known model was developed which takes into account both the hard and the soft guide elements. The 7-S framework was developed by two McKinsey consultants (Peters/Waterman) – as an extension/adjustment of the still very popular “Structure follows Strategy” principle (Chandler, 1962). The starting point was the hypothesis that the hard elements such as structure and strategy were not in themselves sufficient to explain the success of companies. The 7-S system was designed to provide a holistic approach for explaining a company’s top performance and thus explain what really matters in strategy development. The model was based on an analysis of nearly 200 successful companies.
In the 7-S framework, the hard factors strategy, structure and systems are supplemented by the soft elements of style, staff, skills and shared values. These factors are interdependent, i.e. the change of one factor also influences other elements. Shared values serve as a link between all factors. It encompasses the culture of the company.
The seven elements can be evaluated in the form of a questionnaire, which is answered by employees from different departments of the company. The model can be realized in four steps
- Company Overview
Information from annual reports, industry analyses, organisational charts, strategy documents, etc. are gathered and discussed with the management.
- Development of Questionnaires and Surveys
In formulating the questions, not only the respective factor is recorded, but also the interaction with other factors.
- Evaluation and Deduction of the Relationships between the Factors
In exchange with the management the results are worked out. It is examined whether there is a match between the factors and the environment. This defines where actions are needed.
- Development of Change Projects
Based on the evaluation results, programs/projects can now be defined which can be used to address specific weaknesses.
The 7-S System in Practice
Before setting goals and developing strategies to achieve them, one should assess the strategies pursued so far and the success of the resulting programs. There is much to learn from the successes and mistakes of past projects. We will find that the success of strategies and programmes does not always depend solely on hard factors. The evaluation of pure business activities is therefore not sufficient to find out how the performance of the company can be increased.
The 7-S system helps to systematically and comprehensively investigate which factors are crucial for strategy development. It offers a good checklist for analysing the company’s initial situation and should therefore always be kept in mind in strategic projects.
The system is certainly too extensive for smaller projects. It is also not absolutely necessary to perform all steps. Rather, the system can be seen as an important reminder that “Structure follows Strategy” is only part of successful corporate development. If one also considers the soft factors, the successful implementation of strategies or projects is much more likely.