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Mckinseys 7 framework

Definition
McKinsey 7s model is a tool that analyzes firms organizational design by looking at 7 key
internal elements: strategy, structure, systems, shared values, style, staff and skills, in order to
identify if they are effectively aligned and allow organization to achieve its objectives.

Understanding the tool


McKinsey 7s model was developed in 1980s by McKinsey consultants Tom Peters, Robert
Waterman and Julien Philips with a help from Richard Pascale and Anthony G. Athos. Since
the introduction, the model has been widely used by academics and practitioners and remains
one of the most popular strategic planning tools. It sought to present an emphasis on human
resources (Soft S), rather than the traditional mass production tangibles of capital,
infrastructure and equipment, as a key to higher organizational performance. The goal of the
model was to show how 7 elements of the company: Structure, Strategy, Skills, Staff, Style,
Systems, and Shared values, can be aligned together to achieve effectiveness in a company.
The key point of the model is that all the seven areas are interconnected and a change in one
area requires change in the rest of a firm for it to function effectively.
Below you can find the McKinsey model, which represents the connections between seven
areas and divides them into Soft Ss and Hard Ss. The shape of the model emphasizes
interconnectedness of the elements.

The model can be applied to many situations and is a valuable tool when organizational
design is at question. The most common uses of the framework are:

To facilitate organizational change.

To help implement new strategy.

To identify how each area may change in a future.

To facilitate the merger of organizations.

7s factors

In McKinsey model, the seven areas of organization are divided into the soft and hard
areas. Strategy, structure and systems are hard elements that are much easier to identify and
manage when compared to soft elements. On the other hand, soft areas, although harder to
manage, are the foundation of the organization and are more likely to create the sustained
competitive advantage.
Hard S

Soft S

Strategy

Style

Structure

Staf

Systems

Skills
Shared Values

Strategy is a plan developed by a firm to achieve sustained competitive advantage and


successfully compete in the market. What does a well-aligned strategy mean in 7s McKinsey
model? In general, a sound strategy is the one thats clearly articulated, is long-term, helps to
achieve competitive advantage and is reinforced by strong vision, mission and values. But its
hard to tell if such strategy is well-aligned with other elements when analyzed alone. So the
key in 7s model is not to look at your company to find the great strategy, structure, systems
and etc. but to look if its aligned with other elements. For example, short-term strategy is
usually a poor choice for a company but if its aligned with other 6 elements, then it may
provide strong results.
Structure represents the way business divisions and units are organized and includes the
information of who is accountable to whom. In other words, structure is the organizational
chart of the firm. It is also one of the most visible and easy to change elements of the
framework.
Systems are the processes and procedures of the company, which reveal business daily
activities and how decisions are made. Systems are the area of the firm that determines how
business is done and it should be the main focus for managers during organizational change.

Skills are the abilities that firms employees perform very well. They also include capabilities
and competences. During organizational change, the question often arises of what skills the
company will really need to reinforce its new strategy or new structure.
Staff element is concerned with what type and how many employees an organization will
need and how they will be recruited, trained, motivated and rewarded.
Style represents the way the company is managed by top-level managers, how they interact,
what actions do they take and their symbolic value. In other words, it is the management style
of companys leaders.
Shared Values are at the core of McKinsey 7s model. They are the norms and standards that
guide employee behavior and company actions and thus, are the foundation of every
organization.
The authors of the framework emphasize that all elements must be given equal
importance to achieve the best results.

Using the tool


As we pointed out earlier, the McKinsey 7s framework is often used when organizational
design and effectiveness are at question. It is easy to understand the model but much harder to
apply it for your organization due to a common misunderstanding of what should a wellaligned elements be like. There is a useful paper from excellencegateway.org.uk, which
provides examples showing how effective and ineffective elements look like. Yet, separate
elements that are effective on their own do not necessarily lead to optimal organizational
alignment.
We provide the following steps that should help you to apply this tool:
Step 1. Identify the areas that are not effectively aligned
During the first step, your aim is to look at the 7S elements and identify if they are effectively
aligned with each other. Normally, you should already be aware of how 7 elements are aligned
in your company, but if you dont you can use the checklist from WhittBlog to do that. After
youve answered the questions outlined there you should look for the gaps, inconsistencies
and weaknesses between the relationships of the elements. For example, you designed the
strategy that relies on quick product introduction but the matrix structure with conflicting
relationships hinders that so theres a conflict that requires the change in strategy or structure.
Step 2. Determine the optimal organization design
With the help from top management, your second step is to find out what effective
organizational design you want to achieve. By knowing the desired alignment you can set
your goals and make the action plans much easier. This step is not as straightforward as
identifying how seven areas are currently aligned in your organization for a few reasons. First,

you need to find the best optimal alignment, which is not known to you at the moment, so it
requires more than answering the questions or collecting data. Second, there are no templates
or predetermined organizational designs that you could use and youll have to do a lot of
research or benchmarking to find out how other similar organizations coped with
organizational change or what organizational designs they are using.
Step 3. Decide where and what changes should be made
This is basically your action plan, which will detail the areas you want to realign and how
would you like to do that. If you find that your firms structure and management style are not
aligned with companys values, you should decide how to reorganize the reporting
relationships and which top managers should the company let go or how to influence them to
change their management style so the company could work more effectively.
Step 4. Make the necessary changes
The implementation is the most important stage in any process, change or analysis and only
the well-implemented changes have positive effects. Therefore, you should find the people in
your company or hire consultants that are the best suited to implement the changes.
Step 5. Continuously review the 7s
The seven elements: strategy, structure, systems, skills, staff, style and values are dynamic and
change constantly. A change in one element always has effects on the other elements and
requires implementing new organizational design. Thus, continuous review of each area is
very important.

Example
Well use a simplified example to show how the model should be applied to an existing
organization.
Current position #1
Well start with a small startup, which offers services online. The companys main strategy is
to grow its share in the market. The company is new, so its structure is simple and made of a
very few managers and bottom level workers, who undertake specific tasks. There are a very
few formal systems, mainly because the company doesnt need many at this time.
Alignment
So far the 7 factors are aligned properly. The company is small and theres no need for
complex matrix structure and comprehensive business systems, which are very expensive to
develop.

Aligne
d
Strategy

Market penetration

Yes

Structure

Simple structure

Yes

Systems

Few formal systems. The systems are mainly


concerned with customer support and order
processing. There are no or few strategic planning, Yes
personnel management and new business
generation systems.

Skills

Few specialized skills and the rest of jobs are


undertaken by the management (the founders).

Staf

Few employees are needed for an organization.


They are motivated by successful business growth
Yes
and rewarded with business shares, of which market
value is rising.

Style

Democratic but often chaotic management style.

Yes

Shared Values

The staf is adventurous, values teamwork and


trusts each other.

Yes

Yes

Current position #2
The startup has grown to become large business with 500+ employees and now maintains
50% market share in a domestic market. Its structure has changed and is now a well-oiled
bureaucratic machine. The business expanded its staff, introduced new motivation, reward and
control systems. Shared values evolved and now the company values enthusiasm and
excellence. Trust and teamwork has disappeared due to so many new employees.
Alignment
The company expanded and a few problems came with it. First, the companys strategy is no
longer viable. The business has a large market share in its domestic market, so the best way
for it to grow is either to start introducing new products to the market or to expand to other
geographical markets. Therefore, its strategy is not aligned with the rest of company or its
goals. The company should have seen this but it lacks strategic planning systems and
analytical skills.
Business management style is still chaotic and it is a problem of top managers lacking
management skills. The top management is mainly comprised of founders, who dont have the
appropriate skills. New skills should be introduced to the company.
Aligne

d
Strategy

Market penetration

No

Structure

Bureaucratic machine

Yes

Systems

Order processing and control, customer support and


No
personnel management systems.

Skills

Skills related to service ofering and business


support, but few managerial and analytical skills.

No

Staf

Many employees and appropriate motivation and


reward systems.

Yes

Style

Democratic but often chaotic management style.

No

Shared Values

Enthusiasm and excellence

No

Current position #3
The company realizes that it needs to expand to other regions, so it changes its strategy from
market penetration to market development. The company opens new offices in Asia, North
and South Americas. Company introduced new strategic planning systems hired new
management, which brought new analytical, strategic planning and most importantly
managerial skills. Organizations structure and shared values havent changed.
Alignment
Strategy, systems, skills and style have changed and are now properly aligned with the rest of
the company. Other elements like shared values, staff and organizational structure are
misaligned. First, companys structure should have changed from well-oiled bureaucratic
machine to division structure. The division structure is designed to facilitate the operations in
new geographic regions. This hasnt been done and the company will struggle to work
effectively. Second, new shared values should evolve or be introduced in an organization,
because many people from new cultures come to the company and they all bring their own
values, often, very different than the current ones. This may hinder teamwork performance
and communication between different regions. Motivation and reward systems also have to be
adapted to cultural differences.
Aligne
d
Strategy

Market development

Yes

Structure

Bureaucratic machine

No

Systems

Order processing and control, customer support,


personnel management and strategic planning

Yes

systems.
Skills

Skills aligned with companys operations.

Yes

Staf

Employees form many cultures, who expect


diferent motivation and reward systems.

No

Style

Democratic style

Yes

Shared Values

Enthusiasm and excellence

No

Weve showed the simplified example of how the Mckinsey 7s model should be applied. It is
important to understand that the seven elements are much more complex in reality and youll
have to gather a lot of information on each of them to make any appropriate decision.
The model is simple, but its worth the effort to do one for your business to gather some
insight and find out if your current organization is working effectively.

Starbucks McKinsey 7S Framework


Posted on July 25, 2012 by John Dudovskiy

The rationalised plan for effective leadership and management for


Starbucks Corporation is best presented through McKinsey 7S Framework. It has to be noted
that the essence of McKinseys 7S model is that a firm is the comprehensive sum of its parts,
and that the internal dynamics of an organisation clearly determine that organisations ability
to compete, the premise being that both the strategy and the structure of the organisation
determine managements effectiveness (Joseph and Mohapatra, 2009, p.59).
The 7Ses of the framework are divided into hard and soft elements. Strategy, structure and
systems are considered to be hard elements of the framework, whereas, soft elements consist
of shared values, skills, style and staff. Starbucks management have direct influence and
control over the hard elements of the framework, whereas the soft elements are usually
influenced by corporate culture, and therefore they are more difficult to control.

Hard Elements

Strategy. Starbucks has to be concentrating on the quality of its products at the same time
offering excellent level of customer services. The main strategy for the company is to increase
revenues through effectively positioning Starbucks stores as third place environment.
Structure. Flat management structure needs to be achieved through de-layering. Specifically,
the positions of assistant managers need to be eliminated within the stores, after which there
will be only three levels of management store manager, shift manager and customer
assistants, thus considerable amount of costs can be saved and organisational efficiency can
be increased.
Systems. Rather than daily roles among customer assistant being appointed by shift
supervisors, the rotation system of duties needs to be introduced that will reduce the potential
of conflicts among the workforce, and the work process would be more interesting.

Soft Elements
Shared values. Currently effective set of values are being promoted by management at
Starbucks, however, more effective initiatives and programs need to be devised that would
ensure these values being shared and appreciated by all members of the workforce.
Skills. Necessary training and development programs need to be organised in a systematic
manner and thus it has to be ensured that all members of the workforce are equipped with
skills necessary to achieve a high level of customer satisfaction.
Style. Management style within stores should be changed from Laissez Faire to inspirational
management. In this way a greater number of the workforce can be effectively motivated for
higher performances with less financial resources.
Staff. Only capable and promising candidates need to be employed by Starbucks and
employees have to be provided growth potential.

HOFSTEDE
DIMENSIONS
Hofstede's Cultural Dimensions

Understanding Workplace Values Around the World


Learn how to be more sensitive to
the needs of people in different cultures.
We know that we are living in a global age. Technology has brought everyone much closer
together. This means that people of different cultures find themselves working together and
communicating more and more.
This is exciting, but it can also be frustrating and fraught with uncertainty. How do you relate
to someone of another culture? What do you say, or not say, to start a conversation right? Are
there cultural taboos that you need to be aware of?
Building connections with people from around the world is just one dimension of cultural
diversity. You will also need to factor it into motivating people, structuring projects, and
developing strategy.
How can we understand cultural differences? Are we relegated to learning from our mistakes,
or are there generalized guidelines to follow?

Fortunately, psychologist Dr Geert Hofstede asked himself this question in the 1970s. What
emerged after a decade of research and thousands of interviews is a model of cultural
dimensions that has become an internationally recognized standard.
With access to people working for the same organization in over 40 countries of the world, he
collected cultural data and analyzed his findings. He initially identified four distinct cultural
dimensions that served to distinguish one culture from another. Later he added a fifth
dimension, and that is how the model stands today.
He scored each country using a scale of roughly 0 to 100 for each dimension. The higher the
score, the more that dimension is exhibited in society.

The Five Dimensions of Culture


Armed with a large database of cultural statistics, Hofstede analyzed the results and found
clear patterns of similarity and difference amid the responses along these five dimensions.
Interestingly, his research was done on employees of IBM only, which allowed him to
attribute the patterns to national differences in culture, largely eliminating the problem of
differences in company culture.
The five dimensions are:
1. Power/Distance (PD)

This refers to the degree of inequality that exists and is accepted among people with and
without power. A high PD score indicates that society accepts an unequal distribution of
power, and that people understand "their place" in the system. Low PD means that power is
shared and well dispersed. It also means that society members view themselves as equals.
Application: According to the model, in a high PD country such as Malaysia (104), you
would probably send reports only to top management and have closed-door meetings where
only select powerful leaders were in attendance.
PD

High PD

Characteristics

Centralized companies.

Strong hierarchies.

Large gaps in
compensation, authority,
and respect.

Flatter organizations.

Tips

Acknowledge a leader's
power.

Be aware that you may


need to go to the top for
answers

Use teamwork.

Low PD

PD

Characteristics

Supervisors and
employees are
considered almost as
equals.

Tips

Involve as many people


as possible in decision
making.

2. Individualism (IDV)

This refers to the strength of the ties people have to others within the community. A high IDV
score indicates loose connections. In countries with a high IDV score there is a lack of
interpersonal connection, and little sharing of responsibility beyond family and perhaps a few
close friends. A society with a low IDV score would have strong group cohesion, and there
would be a large amount of loyalty and respect for members of the group. The group itself is
also larger and people take more responsibility for each other's well being.
Application: The model suggests that in the Central American countries of Panama and
Guatemala where the IDV scores are very low (11 and 6, respectively), a marketing campaign
that emphasized benefits to the community or that tied into a popular political movement
would likely be understood and well received.
IDV

High IDV

Low IDV

Characteristics

High valuation on
people's time and their
need for freedom.

An enjoyment of
challenges, and an
expectation of rewards
for hard work.

Respect for privacy.

Emphasis on building
skills and becoming
masters of something.

Work for intrinsic


rewards.

Harmony more important


than honesty.

Tips

Acknowledge
accomplishments.

Don't ask for too much


personal information.

Encourage debate and


expression of own ideas.

Show respect for age and


wisdom.

Suppress feelings and


emotions to work in
harmony.

Respect traditions and


introduce change slowly.

3. Masculinity (MAS)

This refers to how much a society sticks with, and values, traditional male and female roles.
High MAS scores are found in countries where men are expected to be "tough," to be the
provider, and to be assertive. If women work outside the home, they tend to have separate
professions from men. Low MAS scores do not reverse the gender roles. In a low MAS
society, the roles are simply blurred. You see women and men working together equally across
many professions. Men are allowed to be sensitive, and women can work hard for
professional success.
Application: Japan is highly masculine with a score of 95, whereas Sweden has the lowest
measured value (5). According to the model, if you were to open an office in Japan, you might
have greater success if you appointed a male employee to lead the team and had a strong male
contingent on the team. In Sweden, on the other hand, you would aim for a team that was
balanced in terms of skill rather than gender.
MAS

High MAS

Characteristics

Men are masculine and


women are feminine.

There is a well defined


distinction between
men's work and women's
work.

Low MAS

A woman can do
anything a man can do.
Powerful and successful
women are admired and
respected.

Hofstede's Cultural Dimensions

Tips

Be aware that people


may expect male and
female roles to be
distinct.

Advise men to avoid


discussing emotions or
making emotionally
based decisions or
arguments.

Avoid an "old boys' club"


mentality.

Ensure job design and


practices are not
discriminatory to either
gender.

Treat men and women


equally.

Understanding Workplace Values Around the World


Learn how to be more sensitive to
the needs of people in different cultures.
We know that we are living in a global age. Technology has brought everyone much closer
together. This means that people of different cultures find themselves working together and
communicating more and more.
This is exciting, but it can also be frustrating and fraught with uncertainty. How do you relate
to someone of another culture? What do you say, or not say, to start a conversation right? Are
there cultural taboos that you need to be aware of?
Building connections with people from around the world is just one dimension of cultural
diversity. You will also need to factor it into motivating people, structuring projects, and
developing strategy.
How can we understand cultural differences? Are we relegated to learning from our mistakes,
or are there generalized guidelines to follow?
Fortunately, psychologist Dr Geert Hofstede asked himself this question in the 1970s. What
emerged after a decade of research and thousands of interviews is a model of cultural
dimensions that has become an internationally recognized standard.
With access to people working for the same organization in over 40 countries of the world, he
collected cultural data and analyzed his findings. He initially identified four distinct cultural
dimensions that served to distinguish one culture from another. Later he added a fifth
dimension, and that is how the model stands today.
He scored each country using a scale of roughly 0 to 100 for each dimension. The higher the
score, the more that dimension is exhibited in society.

The Five Dimensions of Culture


Armed with a large database of cultural statistics, Hofstede analyzed the results and found
clear patterns of similarity and difference amid the responses along these five dimensions.
Interestingly, his research was done on employees of IBM only, which allowed him to
attribute the patterns to national differences in culture, largely eliminating the problem of
differences in company culture.
The five dimensions are:
1. Power/Distance (PD)

This refers to the degree of inequality that exists and is accepted among people with and
without power. A high PD score indicates that society accepts an unequal distribution of
power, and that people understand "their place" in the system. Low PD means that power is
shared and well dispersed. It also means that society members view themselves as equals.

Application: According to the model, in a high PD country such as Malaysia (104), you
would probably send reports only to top management and have closed-door meetings where
only select powerful leaders were in attendance.
PD

High PD

Low PD

Characteristics

Centralized companies.

Strong hierarchies.

Large gaps in
compensation, authority,
and respect.

Flatter organizations.

Supervisors and
employees are
considered almost as
equals.

Tips

Acknowledge a leader's
power.

Be aware that you may


need to go to the top for
answers

Use teamwork.

Involve as many people


as possible in decision
making.

2. Individualism (IDV)

This refers to the strength of the ties people have to others within the community. A high IDV
score indicates loose connections. In countries with a high IDV score there is a lack of
interpersonal connection, and little sharing of responsibility beyond family and perhaps a few
close friends. A society with a low IDV score would have strong group cohesion, and there
would be a large amount of loyalty and respect for members of the group. The group itself is
also larger and people take more responsibility for each other's well being.
Application: The model suggests that in the Central American countries of Panama and
Guatemala where the IDV scores are very low (11 and 6, respectively), a marketing campaign
that emphasized benefits to the community or that tied into a popular political movement
would likely be understood and well received.
IDV

Characteristics

Tips

High IDV

High valuation on
people's time and their
need for freedom.

An enjoyment of
challenges, and an
expectation of rewards
for hard work.

Acknowledge
accomplishments.

Don't ask for too much


personal information.

Encourage debate and


expression of own ideas.

IDV

Low IDV

Characteristics

Respect for privacy.

Emphasis on building
skills and becoming
masters of something.

Work for intrinsic


rewards.

Harmony more important


than honesty.

Tips

Show respect for age and


wisdom.

Suppress feelings and


emotions to work in
harmony.

Respect traditions and


introduce change slowly.

3. Masculinity (MAS)

This refers to how much a society sticks with, and values, traditional male and female roles.
High MAS scores are found in countries where men are expected to be "tough," to be the
provider, and to be assertive. If women work outside the home, they tend to have separate
professions from men. Low MAS scores do not reverse the gender roles. In a low MAS
society, the roles are simply blurred. You see women and men working together equally across
many professions. Men are allowed to be sensitive, and women can work hard for
professional success.
Application: Japan is highly masculine with a score of 95, whereas Sweden has the lowest
measured value (5). According to the model, if you were to open an office in Japan, you might
have greater success if you appointed a male employee to lead the team and had a strong male
contingent on the team. In Sweden, on the other hand, you would aim for a team that was
balanced in terms of skill rather than gender.
MAS

High MAS

Characteristics

Tips

Be aware that people


may expect male and
female roles to be
distinct.

Men are masculine and


women are feminine.

There is a well defined


distinction between
men's work and women's
work.

Advise men to avoid


discussing emotions or
making emotionally
based decisions or
arguments.

A woman can do

Avoid an "old boys' club"

Low MAS

MAS

Characteristics

Tips
mentality.

anything a man can do.

Powerful and successful


women are admired and
respected.

Ensure job design and


practices are not
discriminatory to either
gender.

Treat men and women


equally.

4. Uncertainty/Avoidance Index (UAI)

This relates to the degree of anxiety that society members feel when in uncertain or unknown
situations. High UAI-scoring nations try to avoid ambiguous situations whenever possible.
They are governed by rules and order and they seek a collective "truth." Low UAI scores
indicate that the society enjoys novel events and values differences. There are very few rules,
and people are encouraged to discover their own truth.
Application: Hofstede's Cultural Dimensions imply that when discussing a project with
people in Belgium, whose country scored a 94 on the UAI scale, you should investigate the
various options and then present a limited number of choices, but have very detailed
information available on your contingency and risk plans. (Note that there will be cultural
differences between French and Dutch speakers in Belgium.)
UAI

Characteristics

Tips

High UAI

Very formal business


conduct with lots of rules
and policies.

Be clear and concise


about your expectations
and parameters.

Need and expect


structure.

Sense of nervousness

Plan and prepare,


communicate often and
early, provide detailed
plans, and focus on the

UAI

Characteristics

Tips
tactical aspects of a job
or project.

spurns high levels of


emotion and expression.

Diferences are avoided.

Informal business
attitude.

More concern with long


term strategy than what
is happening on a daily
basis.

Accepting of change and


risk.

Low UAI

Express your emotions


through hand gestures
and raised voices.

Do not impose rules or


structure unnecessarily.

Minimize your emotional


response by being calm
and contemplating
situations before
speaking.

Express curiosity when


you discover diferences.

5. Long Term Orientation (LTO)

This refers to how much society values long-standing as opposed to short-term traditions
and values. This is the fifth dimension that Hofstede added in the 1990s, after finding that
Asian countries with a strong link to Confucian philosophy acted differently from Western
cultures. In countries with a high LTO score, delivering on social obligations and avoiding
"loss of face" are considered very important.
Application: According to the model, people in the United States and United Kingdom have
low LTO scores. This suggests that you can pretty much expect anything in this culture in
terms of creative expression and novel ideas. The model implies that people in the U.S. and
U.K. don't value tradition as much as many others, and are therefore likely to be willing to
help you execute the most innovative plans as long as they get to participate fully. (This may
be surprising to people in the U.K., with its associations of tradition.)

LTO

Characteristics

Tips

High LTO

Family is the basis of


society.

Show respect for


traditions.

Parents and men have


more authority than
young people and
women.

Do not display
extravagance or act
frivolously.

LTO

Low LTO

Characteristics

Strong work ethic.

High value placed on


education and training.

Promotion of equality.

High creativity,
individualism.

Treat others as you would


like to be treated.

Self-actualization is
sought.

Tips

Reward perseverance,
loyalty, and commitment.

Avoid doing anything that


would cause another to
"lose face."

Expect to live by the


same standards and rules
you create.

Be respectful of others.

Do not hesitate to
introduce necessary
changes.

For a list of scores by dimension per country and more detailed information about Hofstede's
research, visit his website.
Note:

Hofstede's analysis is done by country. While this is valid for many countries, it does not hold
in the countries where there are strong subcultures that are based on ethnicity of origin or
geography. In Canada, for instance, there is a distinct French Canadian culture that has quite a
different set of norms from those of English-speaking Canada. And in Italy, masculinity
scores would differ between north and south.

Key Points
Cultural norms play a large part in the mechanics and interpersonal relationships of the
workplace. When you grow up in a culture, you take your norms of behavior for granted. You
don't have to think about your reactions, preferences, and feelings.
When you step into a foreign culture, suddenly things seem different. You don't know what to
do or say. Using Hofstede's Cultural Dimensions as a starting point, you can evaluate your
approach, your decisions, and actions based on a general sense of how the society might think
and react to you.
Of course, no society is homogenous, and there will be deviations from the norms found.
However, with this as your guide you won't be going in blind. The unknown will be a little
less intimidating and you'll get a much-needed boost of confidence and security from studying
this cultural model.