How the Balanced Scorecard Complements the Mckinsey 7-S Model Summary

How the Balanced Scorecard complements the McKinsey 7-S Model Summary

The book, In Search of Excellence, was introduced by McKinsey partners to describe the seven factors essential for effective strategy implementation. The seven factors include: Strategy, structure, systems, staff, skills, style/culture, and shared values. The 7-S model is a way to help create the “perfect” organizational structure. Economists and strategy scholars within academic literature focus more on the hard S’s of strategy, structure and systems, while scholars of other social sciences study the rest. The balanced scorecard was presented to organize performance objectives and measures in the financial perspective, the customer perspective, the internal process perspective, and the learning and growth perspective. It was realized that the 7-S Model and the Balanced Scorecard shared many features in common. Both models help managers organize their effective strategy execution. Most companies have learned that financial systems alone can’t describe, communicate, guide, or evaluate their strategies. The balanced scorecard takes pressure off of managers to implement the perfect structure. When they apply the enterprise scorecard to units, the units become better aligned regardless of the structure they choose. Skills generally refer to organizational skills and competencies, which are captured in the balanced scorecard. The balanced scorecard keeps executives focused on balancing short term operational improvements and the drivers of long term value creation. The robust framework of the balanced scorecard enables the leadership and organization style dimension of the 7-S framework to be highlighted and integrated. Although the 7-S model and the balanced scorecard were created completely separate, they work together very well. The application of the balanced scorecard to different organizational levels aligns companies’ structure to business unit and corporate strategy.