Optimising an Operating Model

A business strategy outlines the principles and values of an organisation and sets out its long-term aspirations. Underlying this as a foundation is the organisations operating model – this is the method through which the strategy is put into practice. Its most vital aspect is in defining the different roles and responsibilities within an organisation to ensure individuals, teams, departments, and functions can efficiently and effectively collaborate.

An operating model is a visual representation of how a business functions; the model is a blueprint depicting how a business creates and delivers its products/ services. Its purpose is to translate the strategic intent outlined in the overall strategy, into operational capabilities by defining the roles and responsibilities of the 4 key components of any operating model: People, Processes, Technology, and Data.

People are the stakeholders in the business, they are the entities that will carry out the physical processes and have a role and responsibility to ensure these are completed successfully.

Processes are the activities the business undertakes that are required to deliver the product/ services that propel it towards its greater goal.

The technology component is the mechanism through which strategic operations are carried out and supported. When curating an operating model, it is imperative that the roles and responsibilities of technology within the business process are considered and applied.

Data is what is required to support organisational activities and processes; it should consider the role of both inputs and outputs and how data flow is managed.

An operating model should be defined in a hierarchal manner, where each level progressively explores components of the business in greater detail. At the very top, a holistic Enterprise Level view across the whole business is provided. Subsequent levels focus on individual business units, examining their activities, breaking these down into their processes, until eventually reaching the procedural level where the sum of these detailed operating models across each business unit make up the overall organisational operating model. This framework is most efficient as it compartmentalises complex business processes into separate functions and gives detail on how each one should be carried out. Furthermore, using a hierarchy allows the operating model to adapt based on the progress the organisation is making through its growth, change, and implementation of new initiatives. For example, when the model is first established, it is an abstract conception where none of its contents physically exist. As its development occurs, the model shifts from being an abstract design to tangible components that can be analysed, evaluated and enhanced to drive continuous improvement and improved outcomes.

By Hari Reilly-Singh and Alex Hoang