Five lessons for implementing an operating model
For any organisation seeking to navigate the Covid-19 crisis, a robust operating model – the vehicle to deliver an organisation’s strategy – is a critical factor for strategy execution. Tom Leary, Vickesh Kambaran and Isabelle Smith from Q5 in Australia share a number of lessons for operating model implementation.
In a recession, revenue typically falls or shifts across channels, and enormous pressure is placed on an organisation’s cost base. The process of defining a robust operating model serves to clarify the relationship between cost and value and ensure resources are allocated to the areas which will experience the greatest return.
Furthermore, an operating model describes not only what needs to happen where but also how it needs to happen in an efficient and effective manner. When establishing a new or revising an operating model, here are five factors we have identified that we know contribute to an organisation’s success.
Active sponsorship: Designing and implementing a new operating model successfully requires an ambitious and committed sponsor with the right profile and seniority to align everyone to a strong vision, bring the right people into the tent, and help them navigate obstacles. In ideal circumstances, the best person to take on this role is the CEO.
Aligned and bought-in leadership: Your executive team must understand honestly and comprehensively where you are today as an organisation, where you are trying to go, and why. They must also be prepared to engage in some difficult discussions about the appropriate operating model for the future. Without their support, your new operating model will remain a drawing on a piece of paper.
A true understanding of the economics of your business: This is not purely a financial exercise. The most successful organisations understand how to bring together product, people, activity and financial information to provide true insight as to how the organisation is operating. This helps to develop a true baseline position (e.g. an objective product profitability with bottom up cost allocation) and provides an ability to model and test the future desired state.
Cross disciplinary and structured design methods: The most successful enterprise operating model designs we have delivered have drawn on cross-functional teams to ensure a sufficient representation of capability and experience across the business, and to help build advocacy for the change you are about to go through. Successful projects are also usually supported by a robust and clear design methodology to guide them through the process and provide a roadmap to follow
Internal ownership: Operating model design is a specific field of expertise that many organisations choose not to build in house. It might make sense in these cases to lean on external experts to help guide and shape the process and deliver optimum outcomes. However, this does not replace the need for internal ownership – if people within your business do not own the change, they’re unlikely to accept it, let alone drive it once the support has left the building.
