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Why Your Operating Model is Not Just Your Organisational Structure

When carrying out the business transformation section, very often the need to create a functional operating model is high on the agenda, to ensure a clear structure, and a defined role. However, the mistake many leaders make is to think that the key function of the operating model is to develop the organizational structure, and everything else will then fall into place. This is very short; there are many other elements that need to be considered to ensure success and proof of the future of the business.

Before you start the focus pathway on the organogram, which reports to whom or is responsible for certain activities, it is important to first determine what the operating model is and how it works. While it does not include an organizational review, it also needs to include your structure, processes, work flow, systems, people / culture strategies, and roles and responsibilities.

I advise leaders to start with an 'inside-out' approach. Think about how the organization interacts with the market, its customers and clients, and then review what makes sense strategically. Consider your business objectively and whether there are different ways to look at it. There are many factors at play - whether structured by market, by customer, by product, profit and loss, specific project, function, or matrix of a number of these factors. What works for your business.

After this is established, then reverse the thinking and consider the business from the inside out. Take the time to think about how your bespoke operating model or 'way of working' can produce a competitive advantage. For example, facing the market through product lines and not 'industry lines', if this goes against normal processes, and will be a point of difference for your company. If there is no clear competitive advantage for doing things differently, find out how you can do the same thing, but more effectively and efficiently.

After establishing this, the next step is to determine what workflow processes, data and systems are needed to enable the operating model.

The matrix operating model is becoming more commonly introduced, which, when done well, can help foster collaboration and seek input from various functions throughout the organization. But very often this matrix model falls because processes are possible, data and systems are not well defined, and those involved are not sure what they are doing. This can cause a 'perfect storm' of unclear accountability, fear, and mistakes, and people retreat rather than leaning in. By establishing KPIs and communicating them effectively, this can be a successful system to follow. It is also important to consider mechanisms for reviewing and discussing KPIs and ideal results - this cannot just be a set and forget.

When preparing an operating model, it is important to have all the leaders in the room map everything. But be sure to use the facilitator to keep everyone on track, making sure everyone contributes equally and to manage difficult conversations objectively. At the end of the discussion, there should be a clear idea of ​​what the operating model is like, taking into account the following checklist:

How does the organization deal with its market - through product / industry lines?
What organizational structure is placed, who is responsible for certain responsibilities.
What processes are needed are needed to streamline the workflow
What data and systems are important to enable the process
Which roles include what specific activities, and how are processes, systems and data owned? How is accountability enforced?
What behaviors are needed throughout the team to facilitate the operating model
What mechanisms exist to ensure discussion and improvement continue and that there are review points
This is a useful guide for making decisions. As long as the decision maker understands the importance of developing an operating model that includes an organizational structure, but is not exclusive to it, a successful growth trajectory can be implemented, which is appropriate for the goals, measurable and aligned with the objectives.