Introduction

Why do apparently good strategies fail?

It is one of the most important questions facing small-to-medium business owners and leaders.

A business may have spent days, or even weeks, developing a thoughtful strategic plan. The Board may have agreed the priorities. Management may understand the financial targets. Everyone may leave the planning session enthusiastic about the future.

Then twelve months later, surprisingly little has changed.

Revenue growth has disappointed.

Margins remain under pressure.

Strategic projects are late.

Managers have become consumed by daily operations.

Technology investments haven’t delivered the expected productivity gains.

The owner is still making too many decisions.

Employees remain unclear about priorities.

And the strategy gradually becomes something discussed at Board meetings rather than something actually driving the organisation.

The problem may not be the strategy.

The problem may be alignment and execution.

This is where Business Improvement Perth needs to move beyond simply asking whether a business has a strategy. A more important question is whether the entire organisation is aligned and capable of executing it.

That distinction is critical.

A brilliant strategy supported by the wrong structure, inadequate skills, outdated systems, weak leadership, poor governance and unsuitable technology is unlikely to succeed.

Conversely, an organisation in which strategy, people, systems, leadership, culture, governance and technology reinforce one another possesses something extremely powerful:

Organisational alignment.

The McKinsey 7S Framework has helped leaders think about organisational alignment for more than four decades through seven interconnected elements:

Strategy, Structure, Systems, Shared Values, Skills, Style and Staff.

The framework remains highly relevant.

But business has changed enormously.

Artificial intelligence and automation are transforming how work gets done. Cybersecurity and data are now Board-level risks. Governance expectations are increasing. Sustainability has become a strategic rather than merely environmental consideration. Businesses must become less founder-dependent, more resilient and better able to adapt as markets change.

That raises an important question:

Is seven still enough?

I believe the original framework can be usefully extended for contemporary SMEs.

My proposed 10S Business Alignment & Performance Framework retains the original seven dimensions and adds three that deserve explicit attention in today’s environment:

Stewardship, Sustainability and Smart Technology.

This is not intended to replace the McKinsey 7S Framework, nor should it be presented as a McKinsey 10S model.

It is a contemporary extension designed specifically to help SME owners, Boards and leadership teams answer a more practical question:

Is the entire organisation aligned to successfully execute the strategy?

Throughout almost four decades of big corporate, being a start-up entrepreneur, and advising businesses across Australia and internationally, I have repeatedly seen that business performance rarely depends upon one isolated factor. Strategy, leadership, systems, financial discipline, people, governance, technology and execution continually interact.

That leads to one of the central propositions behind the 10S Framework:

Strategy execution is not a management task sitting beneath strategy. Execution is the outcome of organisational alignment.

Table of Contents

• Why Good Strategies Fail
• What Strategy Alignment Really Means
• What Is the McKinsey 7S Framework?
• Why Extend 7S to a 10S Framework?
• The 10S Business Alignment & Performance Framework
• S1 – Strategy
• S2 – Structure
• S3 – Systems
• S4 – Shared Values
• S5 – Skills
• S6 – Style
• S7 – Staff
• S8 – Stewardship
• S9 – Sustainability
• S10 – Smart Technology
• The Strategy–Execution Alignment Test
• The 10S Business Alignment Score
• Using the 10S Framework for Strategic Planning
• Using 10S for Business Improvement
• Practical Recommendations
• Key Takeaways
• Frequently Asked Questions
• Conclusion

Why Good Strategies Fail (Business Improvement Perth)

When a strategy doesn’t produce the expected result, the natural conclusion is often:

“The strategy was wrong.”

Sometimes it was.

But frequently the strategy was never properly executed.

There is a crucial difference.

Consider a hypothetical SME with a strategic objective to grow revenue from $15 million to $25 million within three years.

The strategy requires:

• Interstate expansion.
• New sales capability.
• Improved digital marketing.
• Better management reporting.
• Greater delegation from the founder.
• New technology.
• More sophisticated leadership.

The growth strategy itself may be entirely reasonable.

But imagine that:

• The organisational Structure remains unchanged.
• Existing Systems cannot handle the additional volume.
• The business lacks the necessary Skills.
• The wrong Staff occupy key positions.
• Leadership Style remains highly centralised.
• Shared Values reward short-term firefighting rather than long-term execution.
• Stewardship is weak and nobody rigorously monitors strategic delivery.
• Sustainability risks are ignored.
• Smart Technology is treated as an IT expense rather than a strategic capability.

The strategy doesn’t fail because the strategic objective was inherently wrong.

It fails because the organisation wasn’t aligned to deliver it.

Strategy Without Alignment Becomes Aspiration

This is one of the most common issues I see in SMEs.

The strategic plan says:

“Become less dependent on the owner.”

Yet every significant decision still requires the owner’s approval.

The strategy says:

“Improve customer experience.”

But customer-service systems remain unchanged.

The strategy says:

“Become data driven.”

Yet management reporting arrives six weeks late.

The strategy says:

“Develop our people.”

But no formal leadership development occurs.

The strategy says:

“Improve profitability.”

But nobody has analysed customer, product or divisional profitability.

There is a gap between strategic intent and organisational reality.

The 10S Framework is designed to identify that gap.

What Strategy Alignment Really Means (Business Improvement Perth)

Alignment means that the major components of the organisation reinforce rather than contradict one another.

At its simplest:

Strategy determines what the business is trying to achieve.

Everything else should increasingly support that objective.

If strategy requires superior customer service, Staff, Skills, Systems, technology, leadership behaviour and performance measures should reinforce superior service.

If strategy requires operational efficiency, Structure, Systems, technology and accountability should support efficiency.

If strategy requires innovation, leadership Style and Shared Values should encourage experimentation rather than punish every mistake.

If strategy involves acquisition-led growth, the organisation needs M&A capability, integration systems, governance, funding discipline and management capacity.

Alignment therefore asks:

Does the organisation we actually have support the strategy we say we want?

That sounds obvious.

In practice, the answer is often no.

The Strategy – Organisation – Execution Chain

I would describe the relationship this way:

Strategy → Alignment → Capability → Execution → Performance

Strategy provides direction.

Alignment ensures the organisation supports that direction.

Capability determines whether people and systems can execute.

Execution converts intention into action.

Performance reveals whether the strategy is producing results.

Break any link in that chain and performance suffers.

This is why discussing strategy and execution as entirely separate subjects can be misleading.

Execution is built into organisational design.

What Is the McKinsey 7S Framework? (Business Improvement Perth)

The McKinsey 7S Framework is one of the most recognised organisational alignment models.

It examines seven interconnected elements:

Strategy

The choices determining where and how the organisation intends to compete and succeed.

Structure

How roles, responsibilities, authority and reporting relationships are organised.

Systems

The processes through which work, information and decisions flow.

Shared Values

The beliefs, principles and behaviours that shape organisational culture.

Skills

The organisation’s collective capabilities.

Style

How leaders behave, communicate and make decisions.

Staff

The people within the organisation and how they are recruited, developed and deployed.

The framework’s enduring strength lies not simply in the seven individual categories.

Its strength lies in recognising that changing one part of an organisation frequently requires changes elsewhere.

That insight remains enormously important.

Why Extend 7S to the 10S Business Alignment & Performance Framework? (Business Improvement Perth)

The seven original dimensions still provide a powerful foundation.

The argument for 10S isn’t that McKinsey’s framework has become obsolete.

Rather, certain issues have become strategically important enough to deserve explicit consideration.

The three additional dimensions are:

Stewardship

How effectively the business is governed, protected and held accountable.

Sustainability

Whether the organisation can continue creating economic and strategic value over the long term.

Smart Technology

Whether technology, data, automation and AI are deliberately aligned with strategy and performance.

These dimensions may theoretically sit within aspects of the original 7S model.

But making them explicit changes the conversation.

A leadership team cannot casually say:

“Technology sits under Systems.”

Instead, it must answer:

Is technology materially strengthening our competitive position?

Governance cannot disappear into Structure.

Instead, the Board must answer:

Who is independently ensuring that strategy is actually being executed?

Sustainability cannot become an annual ESG discussion.

Instead, leaders must ask:

Could our existing business model still produce attractive returns five years from now?

These are questions contemporary SMEs need to confront directly.

The 10S Business Alignment & Performance Framework (Business Improvement Perth)

The expanded framework comprises:

S1 – Strategy

Where are we going, where will we compete and how will we win?

S2 – Structure

Are responsibilities, authority and reporting relationships designed to execute the strategy?

S3 – Systems

Do processes and information systems enable reliable, scalable execution?

S4 – Shared Values

Does culture reinforce the behaviours the strategy requires?

S5 – Skills

Do we possess the capabilities needed to execute today’s and tomorrow’s strategy?

S6 – Style

Does leadership behaviour support or undermine strategic execution?

S7 – Staff

Do we have the right people in the right positions with clear accountability?

S8 – Stewardship

Is governance protecting the organisation and holding management accountable for long-term value creation?

S9 – Sustainability

Can the strategy and business model continue producing attractive outcomes over time?

S10 – Smart Technology

Are technology, data, automation and AI being deliberately applied to improve productivity, customer value and competitive advantage?

Taken separately, these are ten useful business disciplines.

Taken together, they become an alignment and execution system.

S1 – Strategy: Alignment Starts With Knowing What You Are Actually Trying to Achieve (Business Improvement Perth)

There can be no meaningful organisational alignment without strategic clarity.

Yet many SME strategies remain surprisingly vague.

Statements such as:

• Grow revenue.
• Improve profitability.
• Expand nationally.
• Become the market leader.
• Deliver exceptional customer service.

may sound strategic but provide insufficient direction for organisational design.

A genuine strategy should answer:

• Which customers will we target?
• Which markets will we enter?
• Which will we avoid?
• What customer problem are we uniquely equipped to solve?
• Why should customers choose us?
• What is our competitive advantage?
• What resources will we allocate?
• What capabilities must we develop?
• What financial outcomes are expected?
• What will we deliberately stop doing?

The final question is particularly important.

Strategy requires choice.

If everything is strategic, nothing is strategic.

The Strategy Alignment Test

Ask your leadership team independently:

What are our five most important strategic priorities?

If you receive five dramatically different answers, execution problems have already begun.

Before aligning the organisation, align the leadership team.

S2 – Structure: Organise Around the Strategy, Not Yesterday’s Business (Business Improvement Perth)

One of the most common organisational problems in growing SMEs is structural lag.

The company grows faster than its organisational structure.

A founder initially supervises five people.

Then 15.

Then 30.

Then 60.

Yet responsibilities and decision rights continue functioning much as they did when the company was tiny.

The consequence is predictable:

• Owner overload.
• Slow decisions.
• Manager frustration.
• Duplication.
• Confused accountability.
• Excessive escalation.

Strategic alignment requires asking:

What structure does tomorrow’s business require?

Not:

How do we preserve today’s reporting lines?

For example, interstate expansion might require geographic responsibility.

Diversification might require divisional management.

Rapid growth may require a genuine executive team.

Succession may require separating ownership, governance and management.

Structure Should Follow Strategy

The organisational chart should therefore be treated as a strategic document.

It should clearly define:

• Who is accountable?
• Who decides?
• Who reports to whom?
• Which functions belong together?
• Which decisions should be centralised?
• Which should be delegated?

A badly designed structure forces good people to work around the organisation.

A good structure makes execution easier.

S3 – Systems: Turn Strategic Intent Into Organisational Routine (Business Improvement Perth)

Systems are where strategy begins becoming tangible.

Suppose the strategy says:

Increase profitable sales.

What systems exist for:

• Lead generation?
• CRM?
• Sales pipeline management?
• Pricing?
• Gross-margin analysis?
• Customer profitability?
• Sales accountability?

Suppose the strategy says:

Improve employee performance.

What systems exist for:

• Recruitment?
• Onboarding?
• Role descriptions?
• KPIs?
• Performance reviews?
• Leadership development?
• Succession?

Without supporting systems, strategic priorities remain dependent upon individual effort and memory.

That is rarely scalable.

A Simple Strategic Systems Test

For every strategic priority, ask:

Which organisational system will make this behaviour repeatable?

If the answer is:

“We’ll remind everyone”,

you probably don’t have a system.

S4 – Shared Values: Strategy Fails When Culture Pulls in the Opposite Direction (Business Improvement Perth)

Peter Drucker is frequently credited with the expression that “culture eats strategy for breakfast.” Whether or not the precise wording originated with Drucker, the underlying principle is important.

A business can have a beautifully articulated strategy, but if its culture encourages behaviours inconsistent with that strategy, execution becomes extraordinarily difficult.

Consider an SME whose strategy requires innovation.

Management announces:

“We need people to experiment, challenge established practices and find better ways of doing things.”

Yet when somebody tries something new and it fails, they are criticised.

Employees quickly learn the real rule:

Don’t take risks.

Or consider a business whose strategy requires accountability.

Management says:

“Everyone must take ownership.”

Yet the owner repeatedly intervenes, overrides managers’ decisions and personally solves problems.

The organisation learns another rule:

Wait for the owner.

The declared strategy and lived culture are now working against each other.

Shared Values Are Revealed by Behaviour

Many businesses proudly display values such as:

• Integrity
• Excellence
• Innovation
• Accountability
• Respect
• Customer focus
• Teamwork

But the real test isn’t what appears on the website.

Ask instead:

• What behaviours are rewarded?
• What behaviours are tolerated?
• What gets somebody promoted?
• What gets somebody dismissed?
• What happens when targets are missed?
• What happens when someone challenges the owner?
• What happens when commercial pressure conflicts with stated values?

The answers reveal the organisation’s real values.

The Strategy – Culture Alignment Test

For every major strategic priority, ask:

What behaviours does this strategy require, and does our existing culture encourage those behaviours?

If the strategy requires innovation but the culture punishes failure, there is misalignment.

If the strategy requires collaboration but remuneration rewards individual silos, there is misalignment.

If the strategy requires customer service but KPIs reward only volume, there is misalignment.

If the strategy requires delegation but the owner retains control, there is misalignment.

Culture doesn’t need to be perfect. It needs to support the strategy.

S5 – Skills: Strategy Is Worthless Without the Capability to Execute It (Business Improvement Perth)

One of the easiest mistakes in strategic planning is assuming the organisation already possesses the capabilities required to execute the strategy.

Often it doesn’t.

Imagine an SME develops a strategy involving:

• Interstate expansion.
• Acquisitions.
• Digital transformation.
• Artificial intelligence.
• New product development.
• Export markets.
• Government contracting.

These strategic choices immediately create capability requirements.

Interstate expansion may require multi-site leadership.

Acquisitions require valuation, due diligence, negotiation and integration capability.

AI requires technological understanding, data capability, governance and change management.

Government contracts may require sophisticated tendering, compliance and reporting.

The strategic question therefore isn’t simply:

“What do we want to achieve?”

It is:

“What must we become capable of doing exceptionally well to achieve it?”

Build a Strategic Capability Map

For every major strategic objective, identify:

Strategic Objective → Required Capability → Existing Capability → Capability Gap → Action Required

For example:

This immediately connects strategy with execution.

Today’s Skills Versus Tomorrow’s Skills

A further mistake is recruiting only for today’s requirements.

Strategy should force the business to look forward.

Ask:

What capabilities will this organisation require three years from now that it doesn’t possess today?

That question should influence recruitment, development, succession and technology investment now, not when the capability gap becomes a crisis.

S6 – Style: Leadership Behaviour Can Destroy an Otherwise Excellent Strategy (Leadership Development Perth)

Leadership Style is perhaps one of the most underestimated components of strategic execution.

Owners and CEOs frequently examine everybody else’s performance before examining their own behaviour.

Yet leadership behaviour cascades through an organisation.

Suppose the strategic plan says:

“Empower our management team.”

But the owner:

• Approves every significant expense.
• Attends every meeting.
• Rewrites managers’ work.
• Intervenes directly with their employees.
• Makes decisions without consulting them.
• Changes priorities frequently.

The organisation isn’t empowered.

It is strategically committed to empowerment but behaviourally committed to control.

Guess which one employees believe?

Leadership Style Must Evolve as the Business Grows

The leadership approach that successfully creates a $2 million business may prevent it becoming a $20 million business.

During start-up, founders often need to be:

• Highly involved.
• Decisive.
• Opportunistic.
• Hands-on.
• Fast-moving.

As the organisation grows, leadership increasingly requires:

• Delegation.
• Strategic thinking.
• Management development.
• Governance.
• Capital allocation.
• Accountability.
• Organisational design.

The founder must gradually move from:

Doing → Managing → Leading → Governing

Not every founder successfully makes that transition.

The Leadership Alignment Question

Ask:

Does the way we lead reinforce the organisation we are trying to build?

That question deserves discussion at Board level.

S7 – Staff: Right People, Right Roles, Right Accountability (Leadership Development Perth)

Strategy is ultimately executed by people.

Yet “people are our greatest asset” is an incomplete statement.

The right people can be extraordinary assets.

The wrong people in critical roles can materially constrain performance.

Successful strategy execution requires alignment between:

People + Roles + Capability + Accountability + Strategy

An SME pursuing aggressive growth may require different executives from one pursuing consolidation.

A company moving from entrepreneurial start-up to professional management may need different leadership capability.

A business adopting AI and automation may require different skills and attitudes.

A family business preparing for succession may need to reconsider whether family members occupy positions because of capability or lineage.

Ask the Difficult People Questions

For every critical role:

• Is this role actually required?
• Is the role clearly defined?
• Is the right person occupying it?
• Do they possess the necessary capability?
• Do they understand what they’re accountable for?
• Are their KPIs aligned with strategy?
• Are they capable of growing with the business?
• Who could replace them?
• What happens if they leave tomorrow?

The most uncomfortable question may be:

If this position became vacant today, knowing what we know now, would we enthusiastically rehire the incumbent?

If the answer is no, there is a problem worth confronting.

Strategic Workforce Planning

Don’t simply ask:

“How many employees will we need?”

Ask:

“What organisation and talent will our strategy require?”

That changes workforce planning from an HR exercise into strategic execution.

Extending the Model: Three Additional S’s for Contemporary SMEs (Business Improvement Perth)

The original seven elements remain powerful.

However, three areas now deserve explicit strategic attention rather than being absorbed into broader categories.

They are:

Stewardship. Sustainability. Smart Technology.

Together, they extend the traditional organisational alignment model into the proposed 10S Business Alignment & Performance Framework.

S8 – Stewardship: Governance Must Drive Strategy, Not Merely Police It (Governance & Boards Perth)

Why Stewardship?

Because growing SMEs eventually reach a point where informal governance becomes inadequate.

In an early-stage business, the owner may simultaneously be:

• Shareholder.
• Director.
• CEO.
• Strategist.
• Capital allocator.
• Chief salesperson.
• Final decision-maker.

Those roles are blurred because one person occupies all of them.

As the organisation grows, this becomes increasingly problematic.

Ownership, Governance and Management Are Different

These three roles should be distinguished:

Owners determine what they ultimately want from their investment.

Boards govern the organisation and hold management accountable.

Management executes strategy and runs the business.

When these roles become confused, accountability becomes equally confused.

A founder may say:

“It’s my business, so I can make the decision.”

Legally, depending on the circumstances, that may not be quite so straightforward.

More importantly, from a governance perspective, the question should be:

Is this decision in the best interests of the company and consistent with its strategy?

Stewardship Goes Beyond Compliance

Good governance is sometimes misunderstood as paperwork, Board minutes, policies and compliance.

Those things matter.

But effective Stewardship is much broader.

It includes:

• Strategic oversight.
• Financial discipline.
• Risk management.
• Capital allocation.
• Management accountability.
• Succession.
• Ethics.
• Stakeholder management.
• Organisational resilience.
• Long-term value creation.

A good Board shouldn’t simply ask:

“Are we compliant?”

It should also ask:

“Are we building a better, stronger and more valuable organisation?”

Stewardship and Strategy Execution

This is where the eighth S becomes critical.

Who monitors whether strategy is actually being implemented?

Who challenges management when milestones slip?

Who tests major assumptions?

Who ensures sufficient resources have been allocated?

Who examines strategic risk?

Who asks whether management possesses the capability required?

Without effective Stewardship, strategy can gradually disappear beneath operational priorities.

The Stewardship Alignment Test

Ask:

• Is there appropriate governance for the size and complexity of the business?
• Are Board and management responsibilities clear?
• Is strategy reviewed regularly?
• Are strategic KPIs reported?
• Are major risks actively managed?
• Is capital allocated according to strategic priorities?
• Does management receive constructive independent challenge?
• Is succession addressed?
• Are directors receiving sufficiently accurate and timely information?

If not, the problem may not be strategy.

It may be governance.

S9 – Sustainability: Will Today’s Strategy Still Create Value Tomorrow? (Business Improvement Perth)

The word sustainability has become heavily associated with environmental and ESG considerations.

Those are important, but within the 10S Framework I use the term much more broadly.

Business sustainability is the organisation’s capacity to remain financially, strategically, operationally and organisationally viable over the long term.

A business can be profitable today and deeply unsustainable.

Consider a company with:

• 60% of revenue from one customer.
• An owner approaching retirement with no successor.
• Ageing technology.
• No management depth.
• Excessive debt.
• Declining margins.
• One critical supplier.
• A product vulnerable to technological disruption.

Today’s P&L might look excellent.

Tomorrow’s business may not.

Five Dimensions of Business Sustainability

1. Financial Sustainability

Can the organisation consistently generate:

• Profits?
• Cash?
• Acceptable returns on capital?
• Adequate working capital?
• Appropriate debt servicing capacity?

Revenue growth without cash generation can destroy businesses.

2. Strategic Sustainability

Is the competitive advantage durable?

Can competitors easily replicate what you do?

Are customer needs changing?

Is your business model becoming commoditised?

3. Operational Sustainability

How dependent is the business upon:

• Particular employees?
• Individual customers?
• Suppliers?
• Equipment?
• Locations?
• The founder?

Concentration creates vulnerability.

4. Leadership Sustainability

Who succeeds key leaders?

Could the organisation operate effectively without the founder for three months?

What about twelve months?

If not, owner dependency is a strategic risk.

5. Market Sustainability

Will customers continue wanting what you sell?

History contains countless businesses that executed obsolete strategies extremely efficiently.

Operational excellence cannot save an irrelevant business model.

Sustainability Changes Strategic Thinking

Instead of merely asking:

“How do we grow next year?”

ask:

“What must we build today to ensure this business remains valuable five or ten years from now?”

That produces a very different strategic conversation.

S10 – Smart Technology: AI, Data and Technology Must Serve Strategy (Business Improvement Perth)

Technology deserves its own S because it has moved from operational support to strategic infrastructure.

AI accelerates that shift dramatically.

Yet many SMEs approach technology backwards.

Someone discovers a new piece of software.

The business buys it.

Employees receive limited training.

Adoption is inconsistent.

Systems don’t integrate.

Management wonders why productivity hasn’t improved.

That is technology acquisition.

It isn’t Smart Technology.

Start With the Business Problem

The correct sequence should be:

Strategy → Business Requirement → Process → Technology → Adoption → Measurement

Not:

Technology → Now let’s find something to do with it.

For example, if the strategy requires superior customer service, ask:

How can CRM, AI, automation and analytics improve customer experience?

If the strategy requires lower costs, ask:

Which repetitive processes can be automated?

If the strategy requires better decisions, ask:

Which data should management receive faster?

If the strategy requires growth without proportionately increasing overheads, ask:

Where can technology create operating leverage?

AI Makes Smart Technology a Leadership Issue

AI should not simply be delegated to IT.

Owners, Boards and senior management need to understand:

• Where AI could materially improve productivity.
• Which roles and processes will change.
• What data the organisation possesses.
• Cybersecurity implications.
• Privacy and confidentiality risks.
• Governance requirements.
• Employee capability.
• Competitive threats.
• New products and services AI may enable.

The strategic question isn’t:

“Are we using AI?”

It is:

“Are we using technology intelligently to execute our strategy better than we could without it?”

That is Smart Technology.

The 10S Strategy – Execution Alignment Test (Business Improvement Perth)

Once all ten dimensions have been considered, the framework becomes particularly useful.

Don’t simply score each S independently.

Test the connections between them.

For every strategic priority, ask:

1. Strategy – Is the objective clear?
2. Structure – Who is accountable?
3. Systems – What processes support execution?
4. Shared Values – What behaviours are required?
5. Skills – Do we possess the necessary capability?
6. Style – Does leadership reinforce it?
7. Staff – Do we have the right people?
8. Stewardship – Who governs and monitors delivery?
9. Sustainability – Does it strengthen long-term value?
10. Smart Technology – How can technology improve execution?

This transforms the framework from a static organisational diagnostic into a strategy-execution tool.

Example: Improving EBIT Margin

Suppose an SME establishes a strategic objective:

Increase EBIT margin from 7% to 12% within 24 months.

A conventional approach might simply tell management to reduce costs and increase prices.

The 10S approach asks considerably more.

Strategy: Where specifically will margin improvement come from?

Structure: Who owns profitability improvement?

Systems: Can we accurately measure customer, product and divisional profitability?

Shared Values: Does the organisation value profitable revenue, or celebrate revenue regardless of margin?

Skills: Do managers understand commercial drivers and contribution margins?

Style: Does leadership make disciplined commercial decisions or routinely discount?

Staff: Do we have the commercial capability required?

Stewardship: Is the Board rigorously monitoring margin improvement?

Sustainability: Are cost reductions strengthening the business or damaging future capability?

Smart Technology: Can automation reduce cost-to-serve or improve pricing decisions?

Suddenly “improve margin” becomes a coordinated organisational initiative rather than another number in the strategic plan.

Misalignment: The Hidden Enemy of Strategy Execution (Business Improvement Perth)

One of the most valuable uses of the 10S Framework is identifying contradictions.

For example:

Strategy says: Grow aggressively.

Structure says: Every decision still goes through the founder.

Strategy says: Differentiate through customer experience.

Systems say: Customer complaints aren’t systematically recorded.

Strategy says: Innovate.

Shared Values say: Don’t make mistakes.

Strategy says: Build leadership capability.

Style says: The CEO has the answer to everything.

Strategy says: Become data driven.

Smart Technology says: Management still relies on disconnected spreadsheets.

Strategy says: Build a business capable of succession.

Staff says: There is no credible successor.

Strategy says: Create sustainable long-term value.

Stewardship says: The Board spends 90% of its time discussing historical operational results.

These contradictions can explain why apparently sensible strategies fail.

The organisation is fighting itself.

The purpose of alignment is to stop that happening.

The 10S Business Alignment Score (Business Improvement Perth)

To make the framework practical, score each dimension from 1 to 10.

As a starting guide:

85–100 – Highly Aligned

The organisation is generally well positioned for execution, although targeted opportunities for improvement will remain.

70–84 – Fundamentally Sound

The business has reasonable alignment but several gaps require attention.

55–69 – Material Alignment Gaps

Several weaknesses may be constraining execution and performance.

40–54 – Significant Business Improvement Required

Strategic and organisational weaknesses require systematic intervention.

Below 40 – Fundamental Transformation May Be Required

Multiple interconnected weaknesses may be preventing effective execution.

However, the total score should never become the sole focus.

A company scoring 78 overall could still have a Smart Technology score of 2 or a Sustainability score of 3.

Those individual weaknesses may represent existential risks.

The purpose of scoring is therefore not to create a league table.

It is to expose the gaps, contradictions and constraints preventing successful strategy execution.

Using the 10S Framework for Strategic Planning (Strategic Planning Perth)

The 10S Framework becomes particularly powerful when it is incorporated directly into the strategic planning process.

Many strategic planning exercises begin with the external environment:

• What is happening in the economy?
• What are competitors doing?
• How are customers changing?
• What technologies are emerging?
• What opportunities and threats exist?

Those questions are essential.

But there is another equally important question:

Is our organisation actually capable of executing the strategy we are considering?

There is little value developing an ambitious five-year growth strategy without examining whether the organisation possesses the structure, systems, people, leadership, governance, technology and financial sustainability required to deliver it.

The 10S Framework therefore provides an excellent internal strategic analysis.

Step 1 – Establish the Strategy

Clearly define:

• Vision.
• Strategic objectives.
• Competitive positioning.
• Target markets.
• Growth priorities.
• Financial objectives.
• Major strategic initiatives.
• Required competitive advantage.

The clearer the strategy, the easier alignment becomes.

Step 2 – Complete the 10S Assessment Independently

Before the strategic planning workshop, ask:

• Owners.
• Directors.
• CEO.
• Senior executives.
• Selected managers.

to independently score each S from 1–10.

Do this before discussing the results.

Otherwise, powerful personalities can influence everybody else’s assessment.

Step 3 – Compare the Scores

This is where the exercise becomes particularly interesting.

Suppose:

CEO scores Strategy: 9

Board scores Strategy: 7

Management scores Strategy: 5

That gap is important.

The CEO may believe the strategy is exceptionally clear.

The people responsible for executing it may not.

Or:

Owner scores Style: 9

Management scores Style: 4

That discrepancy deserves discussion.

The objective isn’t to prove who is right.

The objective is to understand why perceptions differ.

Step 4 – Demand Evidence

Don’t allow scores to become subjective opinions.

Ask:

What evidence supports this score?

For Systems, evidence might include:

• Management reporting timeliness.
• CRM utilisation.
• Process documentation.
• Error rates.
• Customer response times.

For Staff:

• Employee turnover.
• Vacancies.
• Performance ratings.
• Succession coverage.
• Employee engagement.

For Sustainability:

• Customer concentration.
• Recurring revenue.
• Cash conversion.
• Debt.
• Supplier concentration.
• Owner dependency.

This transforms the 10S exercise from opinion into disciplined analysis.

Step 5 – Identify the Strategic Alignment Gaps

Now compare:

Current State → Required Future State

Suppose Smart Technology scores 4 today.

But successful execution of the strategy requires it to reach 8.

That four-point gap becomes strategically important.

Do the same for all ten dimensions.

The result becomes a 10S Strategy Alignment Gap Analysis.

Step 6 – Prioritise the Constraints

Don’t immediately launch ten improvement programs.

Ask instead:

Which three alignment gaps most threaten successful execution of our strategy?

This is crucial.

A business rarely possesses unlimited:

• Capital.
• Management capacity.
• Time.
• Change capability.

Prioritisation therefore matters.

Step 7 – Build the Gaps Into the Strategic Plan

Each material gap should become an initiative with:

• Accountable executive.
• Actions.
• Resources.
• Budget.
• Milestones.
• KPIs.
• Deadline.
• Governance oversight.

The 10S analysis has now moved from diagnosis into execution.

The 10S Strategy Alignment Matrix (Business Improvement Perth)

For each major strategic objective, I recommend constructing a simple matrix.

Run every major strategic initiative through those ten questions.

This simple discipline can expose weaknesses before they become execution failures.

From Annual Strategic Planning to Continuous Strategic Alignment (Strategic Planning Perth)

Another problem with conventional strategic planning is its annual nature.

Businesses hold an off-site workshop.

Everyone becomes enthusiastic.

The strategy is documented.

Then operations take over.

The strategic plan is reopened three months later, or sometimes not until next year’s workshop.

That isn’t strategic management.

Strategy should become an ongoing management discipline.

I recommend creating a recurring rhythm.

Monthly

Review:

• Strategic KPIs.
• Major initiatives.
• Exceptions.
• Delays.
• Accountability.

Quarterly

Review:

• Progress against strategic priorities.
• Material 10S alignment gaps.
• Market changes.
• Emerging risks.
• Capital allocation.

Annually

Conduct:

• Full strategy review.
• External strategic analysis.
• Full 10S assessment.
• Scenario analysis.
• Budget alignment.
• Leadership and capability review.

This creates a continuous loop:

Strategy → Execute → Measure → Learn → Realign → Execute

That is far more powerful than annual planning alone.

The 10S Framework as a Business Improvement Tool (Business Improvement Perth)

The framework isn’t only useful when developing strategy.

It can also help diagnose underperformance.

Imagine an SME whose EBIT margin has fallen from 14% to 7%.

The instinctive reaction might be:

“Costs are too high.”

Perhaps.

But the 10S assessment might reveal:

Strategy: The company has drifted towards low-margin customers.

Structure: Nobody owns margin improvement.

Systems: Customer profitability isn’t measured.

Shared Values: Revenue is celebrated regardless of profitability.

Skills: Salespeople lack commercial pricing capability.

Style: The owner routinely authorises discounts.

Staff: Sales incentives reward revenue rather than gross profit.

Stewardship: The Board focuses on revenue growth rather than return.

Sustainability: Margin erosion is weakening cash generation.

Smart Technology: Pricing and profitability analysis remain largely manual.

The original problem looked like:

“Our costs are too high.”

The real problem is systemic.

That is exactly what an alignment framework should reveal.

Using 10S During Rapid Growth (Business Growth Perth)

Rapid growth is often celebrated as evidence of success.

It can also expose every weakness in an organisation.

Revenue grows 30%.

Suddenly:

• Working capital becomes stretched.
• Recruitment accelerates.
• Quality deteriorates.
• Customer complaints increase.
• Managers become overwhelmed.
• Systems fail.
• The founder becomes the bottleneck.
• Cash becomes tighter despite rising revenue.

Growth didn’t necessarily create those weaknesses.

It exposed them.

Before pursuing aggressive growth, use the 10S Framework to ask:

Can our organisation absorb the growth we are targeting?

Particular attention should be given to:

• Structure.
• Systems.
• Skills.
• Staff.
• Stewardship.
• Sustainability.
• Smart Technology.

The objective isn’t merely growth.

It is profitable, manageable and sustainable growth.

Using 10S for Mergers & Acquisitions (Mergers & Acquisitions Perth)

Acquisitions provide another compelling application.

Businesses frequently devote enormous effort to:

• Valuation.
• Due diligence.
• Funding.
• Negotiation.
• Legal documentation.

Then underestimate integration.

Yet acquisition value is usually realised after the transaction closes.

The 10S Framework can become an integration checklist.

Strategy

Why did we acquire this business, and what value must be created?

Structure

How will the combined organisation operate?

Systems

Which financial, operational and reporting systems will survive?

Shared Values

Are the cultures compatible?

Skills

Which capabilities should be retained?

Style

Are leadership approaches compatible?

Staff

Who occupies key positions?

Stewardship

How will governance and accountability operate?

Sustainability

Does the combined business become more resilient and valuable?

Smart Technology

Which technology platforms should be integrated, replaced or upgraded?

This provides a much broader perspective than financial integration alone.

Using 10S for Succession Planning (Succession Planning Perth)

Succession is another area where alignment becomes critical.

Many owners think succession means:

“Who will replace me?”

That is only one question.

A better succession review asks:

Strategy

What should the business become after the founder exits?

Structure

Which responsibilities currently concentrated in the owner need redistribution?

Systems

Which processes exist only in the owner’s head?

Shared Values

How will the organisation preserve its culture without the founder?

Skills

What capabilities must successors possess?

Style

Does the next generation need to lead differently?

Staff

Who are the potential successors?

Stewardship

What governance structure should exist after transition?

Sustainability

Can the business thrive without the founder?

Smart Technology

Can technology reduce key-person dependency?

That turns succession from an event into organisational readiness.

Using 10S to Build a More Valuable and Saleable Business (Business Improvement Perth)

There is another significant benefit.

The 10S Framework can help owners think about their business through the eyes of a sophisticated purchaser.

Imagine two businesses.

Both generate:

$10 million revenue and $1.5 million EBITDA.

On the surface, they appear similar.

Business A

• Owner controls major customer relationships.
• Poor documentation.
• Weak second-tier management.
• Outdated systems.
• One customer represents 35% of revenue.
• No formal Board.
• Limited succession.
• Technology investment has been neglected.

Business B

• Professional management team.
• Diversified customers.
• Documented systems.
• Clear strategy.
• Strong culture.
• Effective governance.
• Modern technology.
• Low owner dependency.
• Succession plans.
• Sustainable competitive positioning.

The EBITDA is identical.

The quality of the earnings and the organisation supporting them is not.

A purchaser may therefore perceive materially different:

• Risk.
• Transferability.
• Growth potential.
• Integration difficulty.
• Management dependency.
• Future capital requirements.

This illustrates an important point:

Business value is influenced not only by how much profit you generate, but by the quality, resilience and transferability of the organisation generating it.

The 10S Framework can therefore become part of a multi-year business value improvement program.

The 10S Framework and the Owner-Dependency Problem (Business Improvement Perth)

Perhaps one of the greatest challenges facing SMEs is excessive dependence upon the owner.

Ask yourself:

What stops if I disappear for three months?

If the answer includes:

• Sales.
• Pricing.
• Recruitment.
• Major purchasing.
• Customer relationships.
• Banking.
• Strategy.
• Employee decisions.
• Supplier negotiations.

you may not yet own a genuinely independent business.

You may own an organisation heavily dependent upon your continuing personal involvement.

The 10S Framework exposes owner dependency across multiple dimensions:

Structure: Authority remains centralised.

Systems: Knowledge remains undocumented.

Skills: Management capability is insufficient.

Style: The owner struggles to delegate.

Staff: No credible second tier exists.

Stewardship: Governance depends upon the founder.

Sustainability: Succession risk is significant.

Smart Technology: Processes depend upon people rather than scalable systems.

Owner dependency is therefore rarely a single problem.

It is an alignment problem.

The 10S Framework as a Board Dashboard (Governance & Boards Perth)

The framework can also provide Boards with a useful strategic oversight tool.

Rather than reviewing only historical financial performance, Boards could periodically review the health of all ten dimensions.

For example:

This immediately shifts the Board conversation from:

“What happened last month?”

towards:

“Are we building the organisation required to deliver the strategy?”

Boards need both perspectives.

Historical performance tells us where we have been.

Strategic alignment helps determine whether we are capable of getting where we intend to go.

Don’t Confuse the 100-Point Score With the Objective (Business Improvement Perth)

A warning is necessary.

Once businesses start scoring things, there is a temptation to obsess over the number.

The objective isn’t to achieve:

100/100.

No organisation is perfectly aligned.

Nor should every S necessarily score 10.

The objective is to identify the areas where misalignment is materially preventing strategic execution.

A highly entrepreneurial SME may intentionally maintain a relatively simple Structure.

A stable professional-services business may not require the same Smart Technology sophistication as a technology company.

Context matters.

The key questions are:

What does our strategy require?

and:

Are the ten dimensions sufficiently aligned to deliver it?

The framework should stimulate judgement, not replace it.

Practical Recommendations for SME Owners & Leaders

If you want to apply the 10S Business Alignment & Performance Framework, I recommend starting with these steps:

1. Clarify your strategy first. You cannot assess alignment without knowing what the organisation is aligning behind.
2. Have owners, directors and senior managers independently score all ten dimensions from 1–10.
3. Compare the differences. Large variations in perception may be as valuable as the scores themselves.
4. Require evidence. Don’t accept 8/10 because somebody “feels” the organisation is good.
5. Identify your three weakest strategically important dimensions.
6. Examine the relationships between them. A Staff problem may actually originate in Structure, Style or Skills.
7. Identify contradictions. Where does organisational behaviour conflict with strategic intent?
8. Determine the required future-state score for each S. Not every dimension needs to reach 10.
9. Prioritise the largest strategy-critical gaps.
10. Create specific improvement initiatives with named accountability.
11. Allocate resources and budgets.
12. Establish measurable KPIs and milestones.
13. Integrate 10S actions into the strategic plan rather than creating a separate improvement program.
14. Review progress quarterly at management and Board level.
15. Repeat the full assessment annually.

Most importantly:

Don’t try to improve everything simultaneously.

Identify the few organisational constraints that are currently preventing successful execution and attack those first.

Key Takeaways: Successful Strategy Alignment & Execution (Business Improvement Perth)

The traditional McKinsey 7S Framework remains an exceptionally useful way of thinking about organisational alignment.

But contemporary SMEs face strategic issues that deserve greater prominence.

The proposed 10S Business Alignment & Performance Framework therefore adds:

Stewardship. Sustainability. Smart Technology.

The complete framework becomes:

Strategy + Structure + Systems + Shared Values + Skills + Style + Staff + Stewardship + Sustainability + Smart Technology.

The major lessons are:

• A good strategy can fail because the organisation isn’t aligned to execute it.
• Strategy and execution should not be treated as completely separate disciplines.
• Structure should reflect strategic requirements rather than historical convenience.
• Systems turn desired behaviours into repeatable organisational capability.
• Culture can either reinforce or undermine strategic priorities.
• Future strategy requires future capabilities.
• Leadership Style must evolve as the organisation grows.
• Staff should be aligned with roles, capability and accountability.
• Stewardship connects governance with strategy, risk and long-term value creation.
• Sustainability asks whether today’s success can endure.
• Smart Technology elevates AI, data, automation and cybersecurity to strategic importance.
• The interaction between the ten dimensions matters more than isolated scores.
• Alignment gaps can explain why apparently good strategies repeatedly fail.
• The 10S Framework can support strategic planning, business improvement, growth, M&A, succession and value creation.
• The ultimate objective isn’t a perfect score.

The objective is an organisation capable of successfully executing its strategy.

Frequently Asked Questions About the 10S Business Alignment & Performance Framework

What is the 10S Business Alignment & Performance Framework?

It is a contemporary SME-focused organisational alignment framework that retains the seven dimensions associated with the McKinsey 7S Framework and adds Stewardship, Sustainability and Smart Technology.

Is the 10S Framework a McKinsey model?

No. This distinction is important. The established McKinsey framework contains seven elements. The 10S Business Alignment & Performance Framework presented here is my proposed extension designed specifically for contemporary SME strategy alignment, execution and business improvement.

Why expand the traditional 7S Framework?

Because governance, long-term business sustainability and technology have become sufficiently important to warrant explicit consideration when assessing whether an organisation is capable of executing its strategy.

What are the ten elements?

Strategy, Structure, Systems, Shared Values, Skills, Style, Staff, Stewardship, Sustainability and Smart Technology.

Why is Stewardship included?

Stewardship captures governance, Board oversight, accountability, risk, capital allocation, compliance and succession, areas that become increasingly important as SMEs grow.

What does Sustainability mean in the 10S Framework?

It goes considerably beyond environmental sustainability. It examines whether the business is financially, strategically, operationally, competitively and organisationally capable of creating value over the long term.

Why is Smart Technology separate from Systems?

Technology could certainly sit within Systems. However, AI, automation, data, digital business models and cybersecurity have become strategically important enough to warrant explicit leadership and Board attention.

How does 10S improve strategy execution?

It requires leaders to examine whether Structure, Systems, culture, Skills, leadership, people, governance, sustainability and technology all support the chosen Strategy. This helps identify execution barriers before or during implementation.

How should SMEs score themselves?

Each S can initially be scored from 1–10, ideally by several directors and senior managers independently. Scores should then be discussed and supported by evidence.

What is a good 10S score?

There is no universal benchmark. A total score above 70 may indicate reasonable overall alignment, but individual weaknesses and major gaps between strategically interconnected dimensions are usually more important than the aggregate number.

Should every company aim for 100/100?

No. The framework is diagnostic rather than competitive. Different strategies require different organisational capabilities. The objective is sufficient alignment to execute the chosen strategy successfully.

How often should the 10S assessment be undertaken?

A comprehensive annual assessment combined with quarterly review of major alignment gaps would be appropriate for many SMEs.

Can 10S be used in strategic planning workshops?

Yes. This may be one of its most useful applications. It can form the internal organisational analysis that connects strategy development with implementation capability.

Can the framework help businesses preparing for sale?

Yes. It can help identify owner dependency, management weaknesses, inadequate systems, governance gaps, customer or supplier concentration, technology shortcomings and sustainability risks that may affect business quality and transferability.

Can the 10S Framework help family businesses?

Yes. Structure, Staff, Style, Stewardship and Sustainability are particularly relevant to family-business governance, leadership transition and succession.

Can it be used for acquisitions?

Yes. The ten dimensions provide a useful framework for considering post-acquisition organisational integration beyond conventional financial and legal due diligence.

Conclusion: Strategy Doesn’t Execute Itself (Business Improvement Perth)

There is a seductive simplicity to strategic planning.

Gather the leadership team.

Analyse the market.

Agree the vision.

Set the targets.

Identify the priorities.

Produce the plan.

Then return to work.

But that is where the difficult part begins.

Strategy doesn’t execute itself.

People execute it.

Systems enable it.

Structure allocates responsibility for it.

Culture either reinforces or resists it.

Skills determine whether the organisation is capable of it.

Leadership behaviour influences whether people believe it.

Staff ultimately deliver it.

Stewardship provides oversight and accountability.

Sustainability determines whether it creates enduring value.

Smart Technology increasingly determines how effectively, intelligently and competitively it can be delivered.

That is why I believe the enduring logic of McKinsey’s 7S Framework remains so valuable, but can be extended for contemporary SMEs.

The proposed 10S Business Alignment & Performance Framework isn’t about adding three fashionable words to an established management model.

Its purpose is much more practical.

It asks SME owners and leaders to stop examining business problems as isolated events and start looking at the organisation as an interconnected system.

Throughout almost four decades of big corporate, being a start-up entrepreneur, and advising businesses across Australia and internationally, I have repeatedly seen the consequences of both alignment and misalignment. My experience has included strategy development and execution, organisational transformation, acquisitions, capital raising, governance, leadership and building businesses through different stages of development.

The recurring lesson is that organisations rarely underperform because of one isolated weakness.

A strategy problem may actually be a Skills problem.

A Skills problem may actually be a Staff problem.

A Staff problem may originate in leadership Style.

A growth problem may really be a Systems problem.

An execution problem may be a Structure problem.

A succession problem may be a Stewardship problem.

A profitability problem may conceal a Sustainability problem.

And an apparently successful business today may be creating a serious Smart Technology problem for tomorrow.

The power of the 10S Framework therefore lies not in the ten individual S’s.

It lies in the connections between them.

That leads to the question I believe every SME owner, Board and leadership team should periodically ask:

We have a strategy, but is our entire organisation genuinely aligned and capable of executing it successfully?

If the answer is unclear, the strategic plan is not finished.

It has only begun.

Call to Action

If your business has a strategy but execution continually falls short, the problem may not be the strategic plan itself.

It may be organisational alignment.

A structured 10S Business Alignment & Performance Review can help identify where Strategy, Structure, Systems, Shared Values, Skills, Style, Staff, Stewardship, Sustainability and Smart Technology are reinforcing one another, and where they are pulling in different directions.

As a Fractional CEO, Non-Executive Chairman, Business Advisor and Coach & Mentor, I work with SME owners, Boards and leadership teams to strengthen strategy, governance, organisational alignment, accountability and execution.

Because developing the strategy is only half the challenge.

The real competitive advantage comes from building an organisation capable of executing it better than everyone else.