StratChat 11 Feb 2021: Operating Models

What is an operating model and what role does it play in business strategy?

Contents

  1. Working on the business
  2. Some frameworks for operating models
  3. Setting the context
  4. Support functions
  5. Who is the customer?

#StratChat posterStratChat is a weekly virtual networking event for anyone with an interest in developing and executing better business strategies. It is an informal community-led conversation hosted by StratNavApp.com. To sign up for future events click here.

StratChat is conducted under Chatham House Rules. Consequently, the summary below is presented without any attribution of who said what. As such, it is an agglomerate of views - not necessarily just those of the writer or indeed of any one individual.

On 11 February 2021, we talked about Operating Models.

Working on the business

Most people work in the business. They have a specific role. They are allocated specific resources. They can collaborate with other people. But those people are also operating in the business. The business has a specific shape, with defined boundaries.

When doing business strategy, we work on the business. We consider the shape and structure of the business. We look at its boundaries and how it interacts with the external world. And then we propose changes to that.

(Working on the business is not the role of business strategists alone. It is also what every CEO and leader should do. There is a significant overlap between the role of the business strategist and CEO/leader in this regard.)

Operating models provide us with a framework for understanding the internal and external shape of the business. They are a tool for working on the business rather than in it.

One of the simplest ways of doing this is to:

  1. Describe the Current Operating Model (or COM) and analyse its strengths and weaknesses relative to the opportunities and threats that the business faces.
  2. Design a Target Operating Model (or TOM) which is an improvement on the COM given the aforementioned analysis.
  3. Do a gap analysis between the two.
  4. Develop a programme of work to close those gaps. 

Some frameworks for operating models

People Process Technology TOM triangle imagePeople, Process and Technology

One of the simplest ways of describing an operating model is to consider the people, processes and technology that make it up.

That can be considered reasonably comprehensive:

  1. People: all the human elements of the organisation.
  2. Technology: all of the non-human elements of the organisation.
  3. Process: all of the interactions between these elements.

However, useful as this is, at some point, it becomes too simplistic to solve real problems.

 

 

POLISM imagePOLISM

Andrew Campbell, from Ashridge Business School developed the POLISM model in an attempt to plug that gap.

You can read more about it in his book Operating Model Canvas.

It puts process, in the form of Value Delivery Chain(s), at the heart of model. It also clearly connects it to the Value Proposition(s) which the operating model delivers to the customers/beneficiaries.