Operating model: Difference between revisions

Revision as of 13:03, 24 April 2021

Revision as of 13:05, 24 April 2021

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==Definition==

There are different ways of defining the elements that make up an operating model.

:''People'', ''process'' and ''technology'' is one commonly used definition,<ref>http://www.boozallen.com/media/file/People-Process-Technology-Enterprise2.pdf</ref> ''process'', ''organization'' and ''technology'' is another, and .<ref>Marne de Vries, Alta van der Merwe, Paula Kotze and Aurona Gerber. (2011) A Method for Identifying Process Reuse Opportunities to Enhance the Operating Model, and 2011 IEEE International Conference on Industrial Engineering and Engineering Management</ref> ''Process'', ''Organization'', ''Location'', ''Information'', ''Suppliers'', ''Management system'' yet another [[Taxonomy_(general)|taxonomy]].<ref>http://www.operatingmodelcanvas.com</ref>

An organization is a complex system for delivering value. An operating model breaks this system into components, showing how it works. It can help different participants understand the whole. It can help leaders identify problems that are causing under performance. It can help those making changes check that they have thought through all elements and that the whole will still work. It can help those transforming an operation coordinate all the different changes that need to happen.

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The term operating model may have been first used in corporate-level strategy (see ''[[#History|History]]'' below) to describe the way in which an organization is structured into business divisions, what activities are centralized or decentralized and how much integration is required across business divisions. The term is most commonly used today when referring to the way a single business division or single function operates, as in 'the operating model of the exploration division' or 'the operating model of the HR function'. It can also be used at a much more micro level to describe how a department within a function works or how a factory is laid out. The section below titled ''[[#Business/IT dialogue|Business/IT dialogue]]'', explores one framework for thinking about the IT implications of different corporate strategies.

An operating model is one of the tools that leaders can use to help them formulate and execute strategy. Typically work on an operating model starts after some strategic plan has been proposed. It translates that plan into operating requirements and decisions and often also contributes to the plan by showing areas where the plan will be hard to implement. A framework for thinking about the transformation journey from strategy development to successful outcome - 'The Strategy Journey'- <ref>https://stratability.co/framework/</ref><ref>http://strategyjourney.com/book/strategy-journey/</ref> lists the operating model as one of five models that help leaders navigate through different stages or phases from leadership and motivation, business design, value creation, ''[[business architecture]]'' and business transformation. In this framework, the operating model describes how the organization will implement the strategies and tactics that have been defined in the mission model, [[business model]] and value model. Through work on the operating model, leaders can think about the capabilities the organization will need to successfully transform.

An operating model can also be used as a tool when an organization is facing performance challenges. The model can help with the diagnosis (what is causing the performance problems) and with the solution (what needs to change to correct the problems).