There are a variety of ways, shown in the Organizational Design Options” figure, in which people can organize to create successful societies, communities and organizations. When designing the organizational structure for innovation organizations the “7S” model provides an overall framework to think through that design. This is shown in the “7S” figure. Note that from a thinking process there are multiplicities of factors that powerfully influence overall organization effectiveness. These factors are interdependent; managers must search for a constantly evolving fit. Finally, a change in one element is likely to set up changes and reactions in all the other elements of the organization. Therefore, managers must take a total systems approach to the implementation of new strategies. This complexity is what makes organizational designs challenging. Descriptions of the components of the 7S model are:
- STRATEGY: the ways in which competitive advantage will be achieved.
- STRUCTURE: the way in which tasks and people are divided. The basic grouping of activities and reporting relationships. The primary basis for specialization and integration.
- SYSTEMS: formal systems and procedures including management control systems, performance measurement and reward systems, budgeting systems, information systems, planning systems, and capital budgeting systems .
- STYLE: the leadership style of both top management in the overall operating style of the organization. It reflects the norms people act on and how they work and interact with each other and with customers/stakeholders.
- STAFFING: people and their backgrounds and competencies. At its most basic, it is who wins in the many competitions for leadership positions. Includes approaches to recruitment, selection, socialization; how managers are developed; how young recruits are trained, socialized, and integrated; and career management.
- SKILLS: the basic competencies that reside in the organization. Can be distinctive competencies of people, management practices, technology, etc.
- SHARED VALUES: the guiding concepts and fundamental ideas around which the company is built. They focus attention and give purpose and meaning to the organization. Usually these values are simple and may even seem trivial from the outside. But they have great meaning in guiding behaviors within the company.
A caution when using this model is that managers are most familiar, and most inclined to attempt to use, and implement strategy and improve organizational effectiveness by relying on the “harder and more tangible” elements of the model. These elements are strategy, structure, and systems. However a study of companies (that were the highest performers in their industries) revealed that their General Managers payed far more attention to the “softer” elements, versus their counterparts in less successful competitive firms. These elements are style, staffing, skills, and shared values.