The 7S and Mintzbergs Configuration Models of Organizations - Case Study Example

Compare and contrast the 7S and Mintzberg’s configuration models of organizations Introduction The criteria used for the explanation of organizational plans can highly vary. In practice, a high range of factors have been proved to affect organizational performance, either in the short or the long term. A series of theoretical frameworks and models has been developed for helping organizations to measure their performance and develop effective strategies. Reference can be made, for example, to the best-practice approach (Armstrong and Baron 2002), the Industrial Organization Model (Ireland, Hoskisson and Hitt 2008), used for the analysis of the external organizational environment, and the IPMS reference model (Neely 2002), used for evaluating ‘performance measurement systems’ (Neely 2002, p.177). In this paper, emphasis is given on two, quite popular, theoretical frameworks: the McKinsey 7s Framework and the configuration model of Mintzberg. The elements and the role of the particular models are critically evaluated and analyzed referring to relevant literature. Between the two models, McKinsey’s 7s Framework is simpler and more flexible, a fact that makes it easier to be used when the time available for the evaluation of business performance is limited. On the other hand, when details need to be retrieved in regard to the potential transformations of an organization so that its effectiveness is increased, then the Mintzberg configuration model, that offers a clearer view on organizational processes, would be preferred. In regard to the above, current paper would be based on the following thesis statement: McKinsey’s 7s Framework and the Mintzberg configuration model are valuable models for measuring business performance. The former refers directly to the seven factors influencing business performance while the latter uses organizational structure as an indicator of business effectiveness. 2. McKinsey 7s Framework vs Mintzberg’s configuration model 2.1 Key characteristics of the above models In order to understand the differences and similarities of the two models, it is necessary to refer primarily to their characteristics and their role within modern organizations. In addition, the elements of each of the models need to be analyzed at the level that these elements can influence the models’ performance when used within a particular market. 2.1.1 McKinsey 7s Framework The McKinsey 7s Framework is commonly used for the evaluation of business performance. The Framework was first introduced in 1980s (Witcher and Chau 2010). It was only after two years, in 1982, that ‘Peters and Waterman included this model in their book ‘In search for Excellence’’ (Witcher and Chau 2010, p.248); it was through that book that McKinsey 7s Framework become popular worldwide. The McKinsey 7s Framework is based on the following view: the performance of each organization is influenced by seven factors/ variables (Witcher and Chau 2010). When having to evaluate organizational performance these variables need to be reviewed (Witcher and Chau 2010). The variables highlighted in the particular Framework are presented in Figure 1 below. A key characteristic of McKinsey’s 7s Framework is the following: the variables on which the framework is based tend to interact on a continuous basis (Witcher and Chau 2010). This means that the performance of each of these variables influences, necessarily, the performance of other variables (Witcher and Chau 2010). In addition, changes on one or more variables will also affect other variables (Witcher and Chau 2010). The relationship between these variables is made clear in Figure 1. On the other hand, the level at which each variable influences the other variables of the framework is not standardized, depending on the conditions in the organizational environment, the availability of time for analyzing organizational behaviour and so on. Figure 1 - McKinsey 7s Framework (Source: http://gs.utcc.ac.th/ceomba/mk/0%20Mar55/add/The%20McKinsey%207S%20English.pdf) In order to understand the role of the particular framework it is necessary to refer analytically to its variables. The seven variables included in this framework are: ‘a) strategy, b) structure, c) systems, d) shared values, e) skills, f) staff, g) style’ (Sekhar 2009, p.72). The elements of each of these variables can be summarized as follows: a) strategy is a term used for describing a set of activities that can secure the achievement of organizational objectives (Sekhar 2009, p.72). The effectiveness of strategy cannot be guaranteed (Sekhar 2009). Only estimations can be made, based on the current performance of business and its past responses to a series of organizational problems (Sekhar 2009). On the other hand, strategy is usually difficult to be successfully implemented if it is not flexible (Sekhar 2009), being open to changes in case the emergent organizational needs appear; b) the next variable, systems, can be characterized as quite complex; in fact, systems would refer to a high range of organizational processes, such as ‘cost control, decision-making, management and communication’ (Sekhar 2009, p.72). Systems have been described as the tools for managing, controlling and developing organizational decisions (Sekhar 2009, p.72). The role of systems in the success of organizational strategy has been vital. Indeed, through systems a manager can monitor organizational processes and promote appropriate strategies, taking into consideration the experiences of competitors in regard to similar initiatives (Sekhar 2009, p.72). At this point, reference should be made to next variable, structure; this variable is considered as particularly important showing the establishment of autonomous divisions within organizations so that organizational tasks are performed more effectively (Witcher and Chau 2010, p.249); the term structure can be also used for reflecting the assignment of different tasks to employees; in this way, the achievement of organizational goals is secured, as possible (Witcher and Chau 2010, p.249); d) shared values; these values can be characterized as ‘the key ideas on which the organization is built’ (Witcher and Chau 2010, p.249). The term values has been used, instead of the term ethics, in order to show the flexibility of these ideas, compared to ethics that cannot be changed as of its context, unless important social transformations are developed (Partridge 1999); e) skills; the particular term reflects not just the capabilities of individuals participating in organizational processes but also the potentials of the organization to respond to the needs of its operations (Sekhar 2009, p.73). In regard to the above, the following issue has been highlighted: the level of skills, of individuals and of organizations, is often difficult to be measured since the conditions in the organizational environment tend to be changed on a constant basis (Bhattacharyva 2010); f) staff; the individual involved in the organizational processes need to be appropriately skilled and trained, being able to respond to the demands of their position (Doole and Lowe 2008, p.168); however, staff working in firms worldwide can vary, as of skills/ professional background (Doole and Lowe 2008, p.168); g) style; the term style refers to the management style used within each organization (Doole and Lowe 2008, p.168). In the above context, style can have a decisive role in the development of organizational success but only if management practices are aligned organizational culture (Doole and Lowe 2008, p.168). The seven variables of McKinsey 7s Framework have been further categorized as follows: a) the first three variables, i.e. strategy, structure and systems have been characterized as ‘hard elements’ (Doole and Lowe 2008, p.167), at the level that can be easy identified and updated without the need for establishing particular rules or criteria for completing the above task; b) the rest parts of McKinsey 7s Framework are known as ‘soft elements’ (Doole and Lowe 2008, p.167) due to the following reason: these elements tend to be continuously changed being vulnerable to changes on the market or the cultural environment (Doole and Lowe 2008, p.167). The use of McKinsey 7s Framework in practice can be made clear through the case of British Airways. In the past, the decision of the firm’s managers to proceed to the reduction of staff has led to severe organizational turbulences. The strike of BA’s cabin crew during the Christmas vacations of 2009 affected the travel of about 1million people (Milmo 2009). Despite the strong employee resistance, the firm’s managers continue to use the limitation of workforce as a key strategy for reducing business costs. In May 2012, the firm’s managers used again the limitation of staff as a strategy for reducing business costs (Collis 2012). This initiative enforced the conflict between the firm’s strategic management team and staff. In the case of BA the value of staff and skills, as variables affecting business performance, as McKinsey accepts, seems to be ignored. The lack of effective communication between employer and employees is another element of the firm’s environment; in McKinsey Framework communication problems are incorporated in the variable ‘Systems’. Therefore in BA important failures are noted in regard to three, out of seven, variables affecting business performance. In this context the standardization of BA’s performance will be difficult to be achieved. In the case of United Airlines another variable of McKinsey’s Framework would be set under examination: strategy. The above firm has highly invested on its merge with Continental, in 2010, for achieving a dominant position in the US airline industry (Mouawad 2012). However, the merge with Continental has been followed by a series of operational and communication problems across the organization (Mouawad 2012). It is estimated that the first benefits of the merge will appear by the end of 2013 (Mouawad 2012). The failure of merge with Continental has severely harmed United, proving that strategy can be a variable affecting business performance, as noted in McKinsey’s Framework. 2.1.2 Mintzberg’s configuration model Another important theoretical framework for understanding organizational structure and performance is the configuration model of Mintzberg. The particular model was developed in 1983 (Cole 2004, p.185). The configuration model of Mintzberg, as presented below in Figure 2, is based on the view that organizations tend to have five different configurations that lead to different assumptions in regard to the current and future performance of the particular organization (Alexander and Vermeulen 2010). The specific model proposes the idea that organizational operations, from operating level up to strategic level, are appropriately supported by individuals/ employees who categorized as either ‘techno structure’ or ‘support staff’ (Alexander and Vermeulen 2010, p.31). Figure 2 - Mintzberg’s configuration model (Source: http://www.12manage.com/methods_mintzberg_configurations.html) Mintzberg’s configuration model, as presented above (Figure 2), is based on the view that within each organization there are certain configurations: ‘a) simple structure, b) machine bureaucracy, c) professional bureaucracy, d) divisionalised form and e) adhocracy’ (Cole 2004, p.186). In each of the above configurations different priorities have been set. For example, in the second configuration emphasis is given on technology, in the third configuration ‘the skills of staff’ (Cole 2004, p.186) are most important. In addition, in each configuration different type of staff is involved. For example, at the level of Operating Core (Figure 2), reference is made to activities developed by the high majority of staff such as ‘direct sales staff, operators and so on’ (Cole 2004, p.186). The model refers to employees at all levels of organizational hierarchy. For example, reference is made to strategic managers (Strategic Apex, Figure 2) and the IT specialists (Technostructure, Figure 2). Mintzberg’s model has been negatively criticized because of the following fact: the particular model seems to emphasize on ‘the common role of professionals within organizations’ (Tordoir 1995, p.34); reference is made in particular to the ‘techno structure’ (Tordoir 1995, p.34) element of the model. In this way, the other aspects of the role of professionals in organizations are not described, a fact that sets problems in regard to the value of the model for understanding all aspects of business operations. From another point of view, the categorization of employees as members of the ‘techno structure’ or the ‘support staff’ is not clear (Tordoir 1995, p.34). This means that the involvement of employees in organizational processes may not be closely monitored; the close control of employees’ participation in business operations is not set as a criterion by Mintzberg when evaluating the performance of an organization’s operations. 2.2 Critical comparison of the two models As explained earlier, in the context of McKinsey 7s Framework the internal consistency of the organization is secured. This target is achieved by the continuous interaction of the framework’s elements, as this interaction is reflected in Figure 1. On the other hand, the elements of Mintzberg’s configuration model cannot interact. In fact, each of the configurations incorporated in the above model acts independently, a fact that could lead to contradicting assumptions in regard to actual organizational performance (Tordoir 1995). Indeed, if the performance of organization in one of its configurations would be quite satisfied, the other configurations could not be benefited from such performance, a risk that is avoided in the McKinsey 7s Framework. Another important difference of the two models is the following one: the McKinsey 7s Framework is based on a series of variables which are pre-defined, i.e. they cannot be alternated if conditions in the organizational environment are highly changed. For the Mintzberg’s configuration model such potential would exist under the following risk: the high level of inconsistency, especially if organizational processes are complex and the quality of communication across organization is poor (Murray, Poole and Jones 2006). Finally, Mintzberg’s configuration model can be considered as of higher risk compared to McKinsey 7s Framework because of the following reason: in order for the former to be developed effectively, it is necessary for all parts/ mechanisms of an organization to be appropriately evaluated. Otherwise, it would be quite difficult to decide whether the characteristics of an organization can be used for characterizing the organization as of a particular type, according to the criteria set through the Mintzberg’s configuration model. 3. Conclusion When trying to evaluate business performance, managers may face a critical dilemma: they will possibly have to choose between theoretical frameworks that have been effectively used in similar cases and that are particularly effective in practice. Still, conflicts and lack of effective communication between the initiators of such plans can lead to mistakes in regard to the theoretical framework involved in organizational analysis. The comparison of the two models presented in this paper has led to the following assumption: both these models are quite valuable in analyzing business performance but from different point of views and using different variables/ criteria. For this reason, the choice of the theoretical framework that it is most appropriate each time would be based on realistic criteria taking into consideration organizational needs and market challenges. In any case, the McKinsey 7s Framework can be characterized as more appropriate for supporting emergent business decisions, a view that it is based on the framework’s simplicity compared to Mintzberg’s model. Still, if there is need to evaluate all organizational processes so that organizational needs are precisely estimated, then Mintzberg’s model is considered as more appropriate, especially if there will be no time for changing the evaluation criteria on which the strategic analysis of the organization has been based. 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