A SUCCESSFUL ORGANISATION IS
IN CONTROL OF ITS OPERATING MODEL
A SUCCESSFUL ORGANISATION IS IN CONTROL OF ITS OPERATING MODEL
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Why your operating model matters....
For an organisation to become and remain successful, it takes more than just clear business objectives supported by a good strategy.
Reports from McKinsey, The Economist Unit and others show that only 12-13% of all organisations are successful with their strategy. All other organisations fail to achieve their business objectives and, consequently, their (financial) performance.
What sets successful organisations apart from the rest is their control over their operating model during the execution of their strategy.
That is why your operating model matters…
Think of the operating model as the unknown or lesser known cousin of the business model. Without a well-thought-out business model, there can be no good strategy, and the same applies to the execution of the strategy: you need a well-performing operating model to be able to deliver the strategy.
But that’s precisely where the challenge lies: it is not easy to take control of your operating model, which is why we launched this website and wrote a book to help organisations just do that.
The operating model details how an organisation is internally organised to deliver the agreed strategy and establishes coherence between the strategy and the daily operations.
In our view the operating model consists of eight operating model elements that are interrelated and influence each other with each change within an organisation and that makes it difficult to take control of your operating model.
If your operating model works well strategy feeds on daily operations, as the daily operations are fed by the strategy. The result is that your organisation can run and transform its business in an effective and efficient manner and thus creates the conditions to become successful.
Challenges in operating model design & management
The challenges of designing and managing an operating model can be broken down into two components:
1. There is no holistic, shared understanding of how the organisation creates value. Particularly organisations with more than 50 employees, knowledge of the organisation as a whole no longer resides with the founder or the board of directors and is being lost.
2. The lack of familiarity with the concept of the operating model during (the preparation for) the execution of the strategy. As a result, the organisation lacks a common language how to organise itself end-to-end during the change and remain effective and efficient afterwards.
If an organisation wants to deliver its strategy, it must function like an orchestra: everyone performs their role based on the same sheet music to ensure the performance is a success.
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Although leading an organisation and navigating its business environment is far more complex and dynamic than conducting an orchestra, the organization—just as with a musical piece—must work holistically, from a shared view of what it does, to be successful. Otherwise, despite the commitment of all those involved, many efforts will result in sub-optimal outcomes that do not amount to the desired business objectives of the strategy.
When an organisation has this holistic, shared view – the music piece – as its starting point, it has still to operate successfully within its dynamic business environment based on this view.
That is where the operating model comes into play. First, the organisation must define its operating model with its elements to get in control. Secondly, it must also learn how to maintain that control by adjusting these elements, taking their interdependencies into account.
We developed an approach with an easy-to-apply framework that, first and foremost, creates the holistic, shared view. With this framework in place, the complexity of managing your operating model is significantly reduced and enables you to take control of your operating model.
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Interested to learn more about our approach: go to the section 'Our book on operating model design and management'.