Operating Model Design: Think about the operating model holistically, as many decisions to structure and processes will be critical and link to value delivery

This image presents a framework for thinking about operating model design holistically, emphasizing that decisions related to organizational structure and processes are critical and directly impact value delivery. It breaks down the operating model into three key pillars: Structure, Process, and People.
Let's delve into each pillar in detail:

Overarching Message

The central message at the top, "Think about the operating model holistically, as many decisions related to structure and processes will be critical and link to value delivery," underscores the interconnectedness of these elements. It suggests that an effective operating model isn't just about how the organization is set up (structure) or how work gets done (process), but also about the people who execute that work. All these aspects must be considered together to achieve desired outcomes and deliver value.

Operating Model Design

This is the overarching theme, indicating that the following sections are components that need to be intentionally designed and aligned.

  1. Pillar: Structure

    This pillar focuses on how the organization is organized and its fundamental building blocks. It includes:

    • "Boxes and lines" (primary and secondary axes of organization and structure): This refers to the traditional organizational chart, outlining the different departments, divisions, and reporting relationships. It defines the formal hierarchy and how different parts of the organization are connected. This includes both the primary way the organization is segmented (e.g., by product, geography, function) and any secondary structures (e.g., matrix structures).
    • Roles and responsibilities (e.g., profit-and-loss ownership, corporate-function role, sales team structure): This defines the specific duties, accountabilities, and authority assigned to individuals and teams within the structure. It clarifies who is responsible for what, including key aspects like profit and loss ownership and the specific organization of functional teams (like sales).
    • Governance (e.g., decision rights, committee structure): This outlines how decisions are made within the organization. It defines who has the authority to make specific decisions, the processes for decision-making, and the role of committees and other governing bodies.
    • Boundaries and location (e.g., global footprint): This considers the physical and geographical scope of the organization. It includes decisions about where different parts of the organization are located (globally or regionally) and the boundaries between different organizational units or with external partners.
    In essence, the "Structure" pillar answers the question: "How is the organization formally set up and who is responsible for what, and where?"
  2. Pillar: Process

    This pillar focuses on how work flows and how tasks are executed within the organization. It includes:

    • Process design (cross-cutting process redesign): This involves defining, documenting, and optimizing the key processes that span across different parts of the organization (cross-functional processes). This could include processes like order fulfilment, product development, or customer onboarding. Redesigning these processes aims for efficiency, effectiveness, and better customer outcomes.
    • Linkages (formal mechanisms to link corporate functions and business units): This refers to the established and documented ways in which different parts of the organization (like corporate functions like HR or Finance and the various business units) interact and collaborate. These linkages can be through formal meetings, reporting structures, shared systems, or defined workflows.
    • Performance management (e.g., metrics and targets by which performance is measured): This defines how the organization measures its success and the performance of its various parts and individuals. It includes establishing key performance indicators (KPIs), setting targets, and tracking progress against those targets.
    • Systems and technology (e.g., end-state architecture): This encompasses the IT systems, tools, and technology infrastructure that support the organization's processes. It also considers the desired future state of the technology architecture to enable efficient and effective operations.

    In essence, the "Process" pillar answers the question: "How does work actually get done across the organization, how do different parts connect, how is performance measured, and what technology supports these activities?"

  3. Pillar: People

    This pillar focuses on the human element of the operating model, recognizing that people are crucial for executing the structure and processes. It includes:

    • Workforce size (e.g., synergies in roles in corporate functions, sales, and non-sales): This considers the number of people needed in different parts of the organization to effectively execute the work. It also looks for opportunities to create synergies and efficiencies in roles across different functions.
    • Talent and skills (e.g., retaining and selecting talent, addressing talent gaps): This focuses on having the right people with the necessary skills and competencies in the right roles. It includes strategies for attracting, recruiting, developing, and retaining talent, as well as identifying and addressing any gaps in skills.
    • Culture (e.g., working norms, values, management practices): This refers to the shared values, beliefs, behaviors, and norms that influence how people work together within the organization. It also includes management styles and practices that shape the employee experience and organizational effectiveness.
    • Informal networks (e.g., influencers supporting change management): This acknowledges the existence and importance of informal relationships and communication channels within the organization. Identifying and leveraging influential individuals within these networks can be crucial for driving change and adoption of new ways of working.

    In essence, the "People" pillar answers the question: "Who are the people doing the work, what are their skills, what is the culture like, and how do formal and informal networks influence operations?"

The Holistic View

The framework emphasizes that these three pillars are not independent but rather interconnected and interdependent. Decisions made in one area will inevitably impact the others. For example:

  • A change in the structure (e.g., creating a new department) will require defining new roles and responsibilities, potentially impacting existing processes, and necessitating the hiring or retraining of people with specific skills.
  • Redesigning a key process might require changes to the structure to ensure the right teams are involved, necessitate new systems and technology, and demand that people adopt new working norms and develop new skills
  • A shift in organizational culture can influence how effectively structures and processes are implemented and how engaged and productive people are.

Therefore, when designing or redesigning an operating model, leaders need to consider all three pillars in an integrated way to ensure alignment and maximize value delivery. Neglecting any one pillar can lead to inefficiencies, lack of clarity, and ultimately, hinder the organization's ability to achieve its goals.