Corporate strategy is a comprehensive plan developed by top management to determine how a corporation competes and thrives within its industry. It addresses significant questions such as which businesses to engage in and how to manage various business plans. Corporate strategy can help in organisational rearrangement, problem identification, preventing counterproductive measures and creating contingency plans, proving the key to a company’s future success.

The primary aim of formulating a corporate strategy is to distribute its resources in the best way to derive maximum returns and achieve the company’s goals. There are four types of corporate strategies. We will discuss them as below.

Stability strategy

A stability strategy is often preferred by most companies the companies enjoy their market positions. They continue to explore into the same market and sell the same product but may incorporate research and development and innovation to the existing products. This type of strategy ensures a continuous flow of revenue. The company may try to engage their target market by presenting offers and trials to the customers. Coca-Cola is a classic example of stability strategy. It has maintained its strong core competence while strategically exploring market expansion opportunities. By capitalizing on its diversified brand portfolio and global reach, Coca-Cola aims for sustained growth and positive impact worldwide. The company has largely maintained its flagship product, Coca-Cola soda, over 140 years, focusing on strengthening the brand, optimizing its distribution channels, and maintaining a loyal customer base.  

Expansion strategy

The expansion strategy is suitable for a firm that has already established its foothold within a certain market and aspires to grow in other markets or expand its product offerings. They may want to develop and sell new products, increase their market share or internationalise a business that has already saturated the domestic market. Expansion may involve the diversification of the business functions and thus a larger allocation of resources. This strategy results in greater returns as compared to the previous performance of the company. It can also mean more growth opportunities for the employees. Reliance Industries has showed major clean energy expansion plans at its 48th Annual General Meeting, including scaling solar module manufacturing capacity to 20 GW (Gigawatt) launching a 3 GW plant, and building a gigawatt-scale battery storage facility with an initial capacity of 40 GWh per year.

Retrenchment strategy

Sometimes, an organisation withdraws from its current position or performance to prevent itself from becoming insolvent. This may occur during an economic recession or crisis such as Covid, or if the initial business plan failed to produce the desired results. A company may implement a retrenchment (cost cutting) strategy at various levels and in different areas of the business. For example, a company may decide to completely stop the production of a particular product and thus eliminate all costs associated with it. This can reduce the number of employed staff or its fixed assets and variable costs. Retrenchment as a corporate-level strategy helps improve companies’ financial stability by reducing them in size or making their products and services less diverse. Tata Communications has been shifting away from its legacy of network services business, which faces pricing and operational challenges, toward expanding digital infrastructure and services including cloud connectivity, cybersecurity, IoT (the Internet of things), and communication platforms to build new revenue streams.

Combination strategy

This type of strategy is a combination of the stability, expansion and retrenchment. A company may adopt a combination strategy after they have weighed the pros and cons of each of their products or business units. It could be stability and retrenchment, expansion and retrenchment, or expansion and stability. Combination strategies are a mixture of stability, expansion, or retrenchment strategies. They are also called mixed or hybrid strategies and may be applied in an organization either at the same time in different businesses or at different times in the same business. Thermax is a big name in industrial boilers and heaters in India, which has used multiple combination strategies to survive and grow. The company diversified into energy conservation equipment pollution control. Thermax has signed definitive agreements for acquisition to be completed in near future with buildtechproducts and will fully acquire the balance stake of the company over the next two years while it closed its China subsidiary – TZL (Thermax (Zhejiang) Cooling & Heating Engineering Co. This is a combination strategy of expansion and retrenchment.

The four levers of strategy, also known as the “Levers of Control” is introduced by Harvard Business School professor Robert Simons. These are belief systems, boundary systems, diagnostic control systems, and interactive control systems. These levers are tools managers use to implement and adjust business strategies by inspiring purpose, setting limits, monitoring performance, and guiding future strategy development. These are important because they help managers balance the pressure between freedom and control, enabling them to guide their organizations toward strategic goals by ensuring commitment, defining acceptable behavior, monitoring performance, and stimulating future strategy. 

Belief Systems

These are the formal and informal values, such as vision, mission, philosophies and goals. The purpose of these values and beliefs define the organization’s core purpose and inspire commitment of all stakeholders. An organization’s belief system is a set of principles, values, and assumptions that guide its employees’ thoughts, behaviours, and decisions. It provides a framework for understanding the level of competition in the industry. It helps defining purpose, and conducting business, and is often expressed through mission statements, credos, and core values. These systems influence strategic direction and shape the organization’s culture.

I am giving here example of Marico Ltd for understanding the levers of strategies. Marico’s belief system is known as “The Marico Way,” centres on innovation, inclusivity, and sustainable growth to make a positive impact on all stakeholders. This ethos is built on a set of core values and a “people-first” philosophy that treats employees as valued “members”. The Marico Way guides the company’s actions and how it behaves in everyday business. It has enabled Marico to create a unique culture. For Marico, People and Culture have always been at the core of success.  Their purpose is the reason for their existence.

Marico is people-centric because it prioritizes its employees through initiatives like its “People First” ethos, focusing on a culture of trust, transparency, and empowerment, and by providing flexibility, investing in talent development, and linking employee growth to business goals through its GROW framework. The company’s strategies, such as the hybrid work model, are designed to enhance employee satisfaction, engagement, and productivity.

Boundary Systems

These systems establish the acceptable limits of freedom for employees, outlining what is not allowed to minimize risk and define the territory for experimentation and competition. A boundary system of an organization defines the limits of its operations and authority, whether they are internal or external. This can include management systems like rules and procedures to set limits on employee freedom, or specific systems that manage the interaction of the organization with its external environment, such as IT interfaces or a framework for environmental responsibility.

Marico’s “boundary system” is defined by its strong corporate governance framework, ethical code of conduct, risk management structure, and the policies and practices that promote a culture of decentralization, empowerment, and meritocracy. Instead of rigid, top-down control, the system is guided by organizational values and transparent processes that allow employees—whom the company refers to as “members” to operate with autonomy within clearly defined ethical and strategic limits.

Diagnostic Control Systems

These are traditional management control systems used to monitor, measure, and control costs, prices, and efficiency, aligning employee behavior with strategic goals. A diagnostic control system is formal system organizations used to monitor outcomes and correct deviations from performance standards. It involves tracking progress toward goals through metrics like budgets, key performance indicators (KPIs), and financial reports to ensure the business strategy is being effectively implemented. These systems are often used in a “management-by-exception” approach, where managers focus their attention on significant deviations rather than day-to-day operations.

Diagnostic control system at Marico is a traditional management control framework used to monitor and measure performance against pre-set goals and strategic plans. Drawing on Robert Simons’ “Levers of Control” framework, this system allows top management to ensure that employees are on track to achieve intended strategies without constant direct supervision. For example, quantifiable outputs are measured against a pre-determined standard. Results are compared to the standard to identify deviations. Actions are taken to correct the deviations and get the organization back on track. Marico implemented an integrated IT system, including SAP, to improve supply chain visibility and efficiency. This system provides real-time data to monitor key performance indicators (KPIs) like stock levels, order generation, and forecasting accuracy.

For its Bangladesh unit, Marico implemented diagnostics to identify and fix flaws in the sales and distribution network. This allows management to improve and align sales performance with business strategy based on specific insights.

Interactive Control Systems

These systems force managers and employees to focus on new strategic uncertainties, stimulating dialogue and learning to guide future strategy and innovation. Interactive control systems are management tools that managers use to directly and frequently engage with their subordinates on issues of strategic uncertainty. These systems are a key part of a company’s overall management control framework, focusing on tracking new ideas, triggering organizational learning, and adapting the organization’s strategy in response to changing circumstances. Examples include regular strategy meetings, innovation workshops, and cross-functional teams where managers challenge assumptions and employees are encouraged to propose new initiatives.

While a specific, public facing “Interactive Control System” at Marico is not detailed in the search results, the company’s annual reports and corporate governance documents reveal a control approach consistent with Robert Simons’ “Levers of Control” framework. In this model, an interactive control system is a formal management tool used to encourage learning and adaptation in response to strategic uncertainties.

Interactive control systems at Marico consist of digital tools and automation used across its supply chain, manufacturing, and consumer engagement, which promote dialogue and innovation rather than merely monitoring performance. These systems involve real-time data analysis and employee involvement to address “strategic uncertainties” and adapt to changing market dynamics, distinguishing them from simple diagnostic or automated systems.

Strategic leadership involves managers using their creative problem-solving skills and strategic vision to help team members and an organization achieve long-term goals. Strategic leaders are strong communicators, active listeners, passionate, positive, innovative, collaborative, honest, diplomatic, empathetic, and humble. This article throws light on some good Strategic Leaders who have turned around their organizations. The article also talks about Threshold Competencies in Strategic Leadership.

Threshold competencies include basic knowledge, skills, character, motives, self-image, and social role and these are essential for performing a job. Without these, some areas of performance will be of poor quality. To move beyond minimum performance, additional competencies are required.

The term threshold competency was coined in 2006 to describe the level of knowledge and skills an individual must have before they can take on a particular employment. This is typically measured by conducting interviews and written tests. Threshold competency is a term used to describe the level of skill or knowledge that an individual needs to be able to perform their responsibility in a job.

Can everyone become a leader? The answer is NO. Some people mould themselves in leadership position easily. Strategic leadership is a type of leadership in which leaders influence those around them to embrace a collective vision for the success of their organization. These leaders can work confidently in today’s VUCA world by approaching situations with creativity, vision and focus on long-term success and providing their team with a clear sense of direction and collaboration to work together toward a common goal.

Good leaders understand VUCA World

VUCA stands for volatility, uncertainty, complexity, and ambiguity. It describes the situation of constant, unpredictable change that is now the norm in certain industries and areas of the business world.

Tactical leaders possess the unique ability to figure out the best strategies and implementing them methodically to help their organization remain sustainable. And, sustainability requires adaptation, whether it’s the available technology, the changing climate, fluctuating economy or other affecting factors, and organizations without strategic leaders are at risk of failure in the face of these factors.

What is Google CEO Pichai’s leadership style? According to reports, he is a modest, restrained man. He is empathetic, supportive, and graceful at navigating political minefields. He avoids confrontation, instead emphasizing cooperation. He waits out conflicts rather than confronting opponents. “He has great relationships. He’s just not a polarizing figure,” Minnie Ingersoll, a former Google product manager who worked with Pichai early in his career, told The Wall Street Journal.

EQ is an important threshold competency

Leaders with high emotional intelligence can utilize their emotions appropriately to influence positive outcomes. This is a must-have skill for leaders. It helps them effectively manage teams without causing rifts or conflicts.

However, there are some basic competencies that are essential for an employee to hold a leading position. These are: conceptual skills, integrity, humanity, communication skills, and business acumen. While the first four are basic traits that make an employee a good leader, business acumen is exceptionally important. Business acumen is an ability to understand and handle business situations. It is the collection of both general and organization-specific knowledge about how things get done and why they are important. 

Leadership competency is an essential element of a team leader at mid-level, or senior-level position in an organization. The most essential part of a leader’s job is to understand and convey goals, delegate tasks, set deadlines, and motivate employees. Good EQ helps leaders to perform well.

Employees who wish to progress into managerial roles are required to have leadership competency. The leadership ability of an employee is judged based on his interaction with other employees, subordinates, how he builds relationships with others, and how he handles conflict.

The leadership style of Mukesh Ambani is very distinctive. Mukesh Ambani doesn’t restrict himself to the traditional boundaries of monocratic, transformational, and situational leaderships among others. His has own unique style of leading. He is a visionary. He can think of the future – the unknown. He knows what technology will be feasible in the future. He understands the sustainability of a company and its potential not based on its present promises but what it promises in the future. It is this ability of the Indian billionaire that has ensured the unprecedented success of Reliance Industries, a conglomerate that was founded by his father Dhirubhai Ambani. Mukesh is an impatient man. He wants solutions to the problems at the earliest. For that purpose, he employs only the best hands. He doesn’t pretend that he knows the solution to each problem.

Effective leaders not only guide teams towards achieving strategic objectives but also foster a culture of innovation, collaboration, and continuous improvement. They inspire employees to reach their full potential, steer through challenges, and capture new opportunities. A successful leader ensures employees’ prosperity and the organization’s economic success.

Respects discipline

Employees get influenced by their manager’s discipline, his style, which in turn improves their work performance. Some leaders also use a compensation structure to promote the achievement of strategic goals resulting in the union of individual and company goals.

A leader’s role is to prioritize the team’s needs and create an environment where everyone can flourish and learn from one another. They know that investing in people and prioritizing their requirements results in unwavering loyalty and trust. To inspire the team, managers need to communicate a simple clear and relevant vision of the way forward. Solving internal conflicts is not an easy task. Differences of opinion and confrontations are inevitable when a diverse group of people gathers under one roof.

Narayan Murthy is known for his down to earth nature and friendliness. His achievements and hard work are a great example for any other Indian who aspires to be an entrepreneur. His encouragement has led to the revolutions of startup industries in India. He gives importance to passion and will to persevere. He says that leaders must give priority to the long-term interests. High levels of optimism and high aspirations.

Inspires Team

A leader’s job is to inspire their teams from time to time by appreciating/recognizing their efforts, comprehending complex situations, and acting appropriately towards creating a contented workforce. Leadership development programs help to reinforce the company’s vision, mission, and values. These programs bring employees together, and team-building events provide opportunities for socialization as well as encouraging employees to work as a team and better understand one another on a personal level.

Motivating employees is learning about their needs and desires, delivering what they require, and rewarding them for a well-done job. A leader inspires team members by listening to and appreciating their ideas, as well as recognizing their contributions.

A leader is accountable for ensuring that his/her team stays efficient and productive. They can encourage higher productivity levels from each team member by applying modern management strategies designed to improve time management, minimize employee stress, and increase the quality deliverables of meetings.

The Indian business tycoon Azeem Premji plays the role of chairman of Wipro Limited and has a net worth of US $7.2 billion as of October 2019. One of the top industry leaders in India quotes “Success is achieved twice. Once in the mind and the second time in the real world” among others demonstrate how he as one of powerful person in India thinks. Premji’s sharp strategic vision and crisp communication skills led his team to strive for excellence. He has been known for his modesty, simplicity, and non-extravagance.

Managing Change Effectively

Managing change especially when it’s traumatic is no joke. CCD, which once did roaring business through it’s over 500 outlets in India and abroad, has now plunged into debt, forcing the closure of these cafes that was thronged by youngsters and office goers. The founder V.G. Siddhartha committed suicide which called for change in leadership because the Bengaluru-based firm saw a sharp decline in its fortunes and piling losses. People thought that the Coffee Day company would not survive after Siddhartha’s death and questions thronged as to who would continue to run the company after him. People believed the company could not recover because of the accumulated debt. But Malavika Hegde, wife of V G Siddhartha, put all the suspicion to end and achieved a milestone by saving CCD from disappearing despite being a single woman and mother of two sons.

Good leaders uphold agreements and make sure others do the same. They don’t let people get away with not changing, and work to understand the underlying reasons so they can remove obstacles. Malvika Hegde aided CCD to sail through challenging times by improving employees’ ability to respond quickly in unpredictably changing business situations. Leadership plays a significant role during such times of layoffs, corporate restructuring, political turmoil, and new competitors.

Conclusion

Leadership is a vast subject and requires a necessary skill especially for team handling and senior positions in an organization. The list of threshold competencies that a leader should possess is immense. Many behavioural or personality traits can be observed and learned by leadership role in an organization. And leadership studies are a multidisciplinary academic field of study that focuses on leadership in organizational contexts and in human life.

A leader’s role can’t be overlooked because it impacts the entire business. A strong leader has the power to inspire, energize and motivate their entire team to work together to achieve shared goals, leading to more effective collaboration, innovation, and productivity.

Bumping is a practice used by many companies to reserve talent pool during downsizing, wherein, a senior level employee, whose position has been selected for removal, is offered the option of accepting an alternative position of lesser seniority within the organisation

Bumping is a practice of allowing more senior level employees who become redundant in their profile and the organization replaces them in alternate positions which are occupied by other employees. Redundancy sets in for various reasons such as commercial reasons, employee morale, HR policy etc. The question to be answered is: whether   bumping is only an option available to employers? Can the organization consider saving the jobs of a sluggish senior employee at the cost of younger, efficient junior employee?

Bumping is a process used by many organizations during downsizing to keep the valued staff by giving employees with seniority the option of taking other positions within the company that they are qualified for and that are currently held by employees with less seniority.

Thus employees get a chance to ‘bump’ another employee out of their position, so it’s the second employee that actually gets made redundant. It is a useful tool for employers who want to hold on to the skills and experience of employees who would otherwise be downsized.

An employer can avoid bumping if he/she has a good reason to do so. On the other hand, bumping can be used if the employer is able to show that the true reason for the dismissal of the bumped employee is redundancy and not some other reason, such as performance, which would take the dismissal outside the scope of redundancy and therefore make it potentially unfair. Bumping is a point to be considered under corporate governance of
what principles should employers follow while identifying the selection pool for redundant employees.

On the flipside many companies make the mistake of thinking younger, less experienced employees will cost less than older employees who make more money. One fact cannot be overlooked that long-time employees are more knowledgeable, have built a wealth of knowledge about how to work most efficiently and know the customers. They have the past history of customers; what’s worked in the past, what hasn’t, and why. A younger, less experienced employee, eager to make his mark, may implement policies and procedures that have failed numerous times before, alienating customers and costing the company money. Therefore it is better to avoid signalling to senior employees wrongly.

Even though organizations have considerable flexibility in determining the pool from which employees will be selected for redundancy, they must still consider being reasonable or running the risk that sacking will be deemed unfair. Companies often warp their own ethical climate by pushing too much change from the top, too quickly and too frequently. Bumping results in a hurried process to implement staff reduction targets, dispose of big businesses in major markets, and lead mergers and acquisitions. Such actions create inherent conflicts of interest.

When assessing if an organization is being fair or reasonable in deciding on a selection pool of redundant employees, it is worth fixing a panel to decide parameters to term employees ‘redundant’ and to check whether other groups of employees are doing similar work. And, whether employees’ jobs are exchangeable and whether such transfers/exchanges are there in HR policies or not, and, whether employees are informed about such policies from time to time.   

Common provisions in bumping rights

1. The provisions of bumping rights often include a clause requiring that a senior employee must have the minimum qualifications required to fill the position of the junior employee who will be laid off as a result of the bumping system.
2. Provisions may limit the type of positions that can be considered for bumping, such as only positions with the same job classification or title or only jobs with a lower job classification or title.
3. Some contracts include a provision regarding the refusal to exercise bumping rights. For example, there might be a clause that limits the number of job offers an employee can refuse before they are struck off the company’s re-employment register.

What does subject to bumping mean?

Subject to bumping means that the employee holding the job in question can be expatriate by another employee in terms of applicable bumping rights.

A business can have an established bumping system that is defined in the company policy, stated in a binding agreement between the employer and the employee, or in a union contract or collective bargaining agreement (CBA). The rules that afford an employee bumping rights will vary with each agreement.

Though the business world keeps talking about ethical values on various platforms, corporate ethical failures have become painfully common. World over, billions of dollars have been paid in fines by Corporates charged with ethical breaches. In a survey conducted by ECI’s (Ethics & Compliance Initiatives) National Business Ethics Survey, has found that the pressure employees may experience to compromise their organization’s ethics standards, policies or the law is linked with an increased likelihood to observe misconduct. In brief, pressure goes hand in hand with higher prevalence rates of misconduct. Every employee in an organization is exposed to the risk of facing an ethical dilemma at some point in time, and some ethical decisions can be more challenging.

Bumping can be a result of excessive pressure to reach unrealistic performance targets from the superiors. When imaginative goals are set, employees make compromising choices in order to reach targets, this leads to poor appraisals, resulting into redundancy. 

To survive the completion and to expand organizations need to restructure people, structure, culture, knowledge, policies, legalities, processes, technologies, product designs, marketing practices, pricing etc. A CEO may see change in terms of organizational structure and strategy, a manager in operations may see change in terms of processes, a manager in technology may see change in terms of systems & tools, a manager in HR may see in terms of training and development or recruitment of new staff, clerical staff may find it difficult to change the paper work format, peons and helpers may find it absurd to see each one stressed in the organization or find new bosses with new thinking.  In some cases a change is so complex that no one person has a true end-to-end assessment of it. The McKinsey 7-S model is based on the theory that, for an organization to perform well, to change from time to time, it need to look at the 7 Ss:  Strategy, Structure, Systems, Shared Values, Skills, Style and Staff.  These seven elements need to be aligned and reciprocally reinforced. The model helps in realigning and identifying problems that need to be worked on to improve performance of the organization. While some models of organizational effectiveness have been outdated, one that has persevered its continuity is the McKinsey 7-S Model framework. It was developed in the early 1980s by Tom Peters and Robert Waterman, two consultants working at the McKinsey & Company consulting firm, the basic premise of the model is that there are seven internal aspects of an organization that need to be aligned if it is to be successful.

Whatever the type of change may be: restructuring, new processes, organizational merger, new systems, change of leadership, new market, recruitment so on – the model can be used to understand how the organizational elements are interconnected. It helps to ensure the wider impact of changes made in one area and how it affects other areas.

McKinsey 7-S Model elements

Strategy

It is a scientific plan devised to maintain and build competitive advantage over the competition. The task involves gaining appropriate budgets and demonstrating, delivering value and ROI from budgets, who is to take charge, who would assist, time frame, what end results expected etc. It helps in annual planning approach. Business strategy is generally created at the upper levels of an organization. Grand corporate strategies can be broken down into objectives and tactics to ensure that the strategy is relevant all the way down the organizational hierarchy. Organizational structure is put into place relatively early in the life of a business, but it can be changed over time as the company evolves. The organizational structure matters in making strategies.

Structure

It clarifies the way the organization is structured and who reports to whom and span of control each person enjoys. The modification of organizational structure is made when it is very essential.  A company’s organizational structure must support its strategy. Employees at all levels of the company must be empowered to effectively complete the tasks necessary to achieve organizational objectives, and company structure can aid or hinder employees in their roles. Especially when reporting relations are not clear, and good employees are made to work under incompetent people, organizational goals and objectives become hazy. Structure can also dictate the means by which strategies are formed. Bureaucratic companies tend to generate a majority of strategic ideas at the top levels of management. Companies with flatter structures, on the other hand, often involve a range of employees in strategy sessions.

Systems

The daily activities and procedures that staff members engage in to get the job done. For example, the HR team is one component, the finance and accounts is a component, the service delivery staff another component. The gate keepers another one, so on. Standard Operating Procedures (SOP) help in running the system smoothly. And, making them easier yet scientifically designed helps a lot.  Whether documentation is important or not – remember it is the first set of deliverables within an organization process. Considering them unimportant is a lackluster attitude.

Shared Values

These are the organization’s stated values and rules of behavior. It is how the members represent the organization both in terms of their behavior and the shared values. Their interpersonal behaviors and their behaviors with outsiders speak volumes. This is expressed in mission, vision, philosophies and values of the organization. It serves as a guide for all of the company’s decision-making. Shareholders, leaders and employees and customers are generally the target of the mission. It projects the future, of what the organizations hopes to become.

Why shared value is placed in the middle of the model? The reason is shared values emphasizes that these values are central to the development of all the other critical elements. The company’s structure, strategy, systems, style, staff and skills all stem from why the organization was originally created, and what it stands for. The original vision of the company was formed from the values of the creators. As the values change, so do all the other elements.

Style

It represents the style of leadership adopted. The style implies a leader’s style of providing direction, implementing plans, and motivating people. There are many different leadership styles proposed by various authors. Organizations flourish with good leadership and they disappear because of leadership. The culture and goals of an organization determine which leadership style fits the firm best. Some companies offer several leadership styles within the organization, dependent upon the necessary tasks to complete and departmental needs. Includes both the way in which key managers behave in achieving the organization’s goals and the cultural style of the organization as a whole.

Staff

It represents the employees and their general capabilities. The success of any organization depends on the employee’s learning spirit. The organizations that continually seek to expand their capacity to create. In today’s highly competitive labor market, the hiring talent is not a joke, organizations have realized that capacities of workers matter a lot. The breakdown of staff in terms of their background, age and sex and characteristics such as IT, finance, marketing needs scientific thinking. Depending on the competitiveness of staff, organizations decide use of contractors and consultants. Many organizations depend on outsourcing. Staff recruitment and retention, and virtual working makes the difference and compels organizations to think about staff development and training.

Skills

The actual skills and competencies of the employees working for the company. It’s critically important that companies develop strategies to manage their people through the crisis if they are to survive and prosper in the long term. Companies need workers who can stay organized and focus on the projects at hand. However, company managers must also organize the work of their employees. Organizational skills in the workplace can include general organizing, planning, and time management, scheduling, coordinating resources and meeting deadlines. Distinctive capabilities of key staff can be interpreted as specific skill-sets of team members.

The above seven elements are divided into Hard and Soft elements:

Hard Elements: are tangible elements. They are Strategy, Structure and Systems.

Soft Elements: are intangible elements. They are Shared Values, Skills, Staff and Style.

One important point to note is that, in the first version of this model which was published in 1982, “systems” was classified as “soft” element. Since 1982, many processes in very many organizations have been meticulously documented or automated, making them relatively easy to analyze and change. They are therefore shown above as “hard”.