Misalignment in the 7-S Framework

A powerful tool developed for understanding and diagnosing an organization is the "7-S Framework". The model was originally developed by McKinsey & Company and now includes the following seven key elements: Strategy, Structure, Systems, Shared Values, Style, Staff, and Skills.

Businesses have problems when their 7-S's are not properly aligned. I recently had an opportunity to observe the difficulties caused by such a misalignment within an organization.

I came into contact with an action sport clothing company that couldn't determine why they were having difficulty growing. I observed that they had a lot of great aspects within their organization including skills, structure, systems, staff and style; however, as I spoke with different individuals within the organization, I noticed they lacked consistency between their strategy and shared values.

The shared values were seemingly non-existent within the company. Shared values are the "essential and enduring guiding principles and tenets that don't require justification, and that the company would keep even if business circumstances change."1 For the salespeople, it seemed that the end justified the means. In other words, as long as a retail sale was acquired, it was not important the manner in which it was achieved. Furthermore, the "sponsored" individuals had no idea for what the company stood and could not articulate what duty they owed to the company.

A big reason the shared values lacked was due to an unclear strategy for the company. A "strategy must address the question of how the business intends to distinguish itself from other competitors; or how the business will develop a sustainable advantage..."2 Management openly communicated to me that they were waiting to formally develop a strategy until they found their niche or "something that called their attention." My fear is that nothing will catch their attention until they find themselves in the "out-of-business" niche.

The lack of strategy has evidently created a misalignment that has translated into what was expressed to me as incongruent shared values among both employees and principals. My recommendation to this fledgling company is that they develop a strategy consistent with the competencies I observed in their S's of skills, staff, style, structure and systems. Since they do not share any uniform shared values they will need to keep desired values in mind as they establish their strategy. Only once the strategy is determinced can they effectively approach communicating what they feel are the shared values within the organization and move forward in achieving their desired growth goals.

1. "A Leader's Guide to Understanding Complex Organizations: An Expanded "7-S" Perspective," University of Virginia Darden School Foundation, 1998, by Jack Weber, p. 7.
2. Weber, p. 9.

Five Forces at work in the Middle East

For over a month, watershed events have been transpiring in a host of middle eastern countries. Tunisia led in their revolt against an oppressive government, which was followed by successes including the resignation of autocratic leader, President Hosni Mubarak, in Egypt. Iran is among several other countries that have also recently erupted in civilian riots. They demand government reformation from the long-time ultra-conservative regime and aim to oust their President Mahmoud Ahmadinejad. However, based on Porter's Five Forces Model, the people of Iran face a considerably different government. While Middle East countries share much in common, the Iran regime has created for themselves a particularly unique set of characteristics that improve their ability to maintain the status-quo.


Bargaining power of suppliers (Low). Generally the sanctions and embargoes imposed by free countries compromise the sustainability of a government like Iran. However, they have managed to keep the supplier power reasonably low by their involvement in OPEC. Furthermore, their close relationships with other similar regimes have allowed them to use an alternate means for acquiring necessary goods for sustainability.

Rivalry within industry (Low). As in all political regimes, the incumbent leader is careful to protect his supremacy with constant surveillance of any possible contender. Ahmadinejad is no different, he maintains tight control of his surrounding political environment and immediately destroys any possible threats.

Threat of substitute products (Low). It's easy for Americans to say that a solution is to simply move to a better country. This is very difficult to accomplish from an economic approach. Emigrants from Iran have generally been highly educated, many holding degrees from American and West European universities. Also, a large proportion are found to have been members of the pre-revolutionary elite that had succeeded in transferring much of their wealth out of Iran during and after the Revolution. Additionally, Iranians stereotypically are very proud of their heritage and find it hard to leave their homelands.

Bargaining power of customers (Moderate). The most difficult challenge that Iran faces is keeping the majority of their citizens just happy enough so as not to pressure an unmanageable uprising. Gathering a critical mass of protestors big enough and united enough to overthrow the authoritarian regime is a tall order. The possibility of an effective uprising is further diminished by the Government's control of media and communication.

Threat of new entrants (Low). At times war and intervention in Iran seem imminent; however, Iran as well as the rest of the World knows that the United States and the United Nations are hardly in the position to be on the front of another war. Ahmadinejad knows just how much he can push without entering a war and it will be a long before he thinks of crossing those political limits.


After considering the Iranian government's Five Forces, I submit that regretfully the people of Iran will be unsuccessful in achieving the change they seek. 

Knowing what you stand for-Creating a Corporate Strategy

This past weekend I was able to attend one of the most incredible experiences of my life: the Outdoor Retailer Trade Show. The event is a must-attend for every outdoor specialty company from The North Face, Black Diamond, and Keen to Columbia, Patagonia, and Clif Bar. And thousands more exhibit their goods "to provide your company the most cost/time efficient means of connecting with outdoor specialty retailers, manufacturers, and the media for unmatched selling opportunities and exposure"(1).

My purpose of attending was in order to secure sponsorship for my very own outdoor company, Rhino Challenge, which organizes extreme relay races for teams of 6. I talked to everyone in the industry including big name brands and startup companies. Among the startups I became aware of an obvious separator between those that I believe will penetrate the industry and those that will not. That differentiator is a defined Strategy Statement.

I seek sponsorship companies with whom I can develop a synergistic relationship in which our objectives and audiences merge. My method was to become familiar with the owners and their company by asking them about their target market, their key business goals and motivations, and most importantly the vision of their company. I was surprised by the direction that many of the startups lacked. They were happy to be taken wherever their consumers took them. One of my favorite Henry Kissinger quotes "If you don't know where you are going, every road will get you nowhere" describes the dangers of engaging in a business without a strategy.

The company with which I was most impressed was the Geigerrig. They have created an innovative hydration pack system that listens to the needs of the consumer as well as created a clearly defined strategy as to what they are and what they are not. The have engaged in a business with a clear product offering and corporate direction going forward. I truly believe they will penetrate the hydration pack system by finally offering a "convenient way to hydrate during outdoor activity"(2).

1. http://www.outdoorretailer.com/info/about-us
2. http://www.geigerrig.com/product-benefits/spray-to-drink.html

New Profit Pool for Mobile Carriers

It's no secret that mobile carriers make pennies on the dollar to provide the public with cellular service, the biggest profits come from the add-ons that everyone buys: the premiums for unlimited coverage, insurance, cell phone covers, you name it. And we buy it from them because we like the extra service or the convenience. Profit pools are created by bringing customers in with a low margin product in order to get them to buy a product with a high margin. It's the way businesses often work!

As our increasingly compulsive need to "always be on our cell phone at all times" has increased, so has government regulation on dangerous cell phone usage. I don't think I make it more than a week at a time without hearing a tragic story about a foolish individual crashing while driving and texting. In many states it has become illegal to talk or text on the phone while driving.

People can't seem to be disciplined enough to drop cell usage while driving. Therefore, several cell phone carriers are coming out with the option to add a new service for $4.99/month that automatically jams your cell phone while you drive. That's right, we are going to pay a mobile carrier $5 a month to turn our phone off.

The technology isn't anything new; however, the profit pool is. You can be certain that the mobile carriers will be trying to get as much mileage as they can out of the positive "socially responsible" media coverage that this new service will produce. But don't be fooled, the potential profits are what motivate these carriers to put together this new service. Nonetheless, kudos to them for innovatively finding a new profit pool!