A well-designed operating model involves far more than the lines and boxes or spans and layers in the organization chart. It includes accountabilities. Who has P&L authority? Who on that org chart has the authority to make which decisions? As companies move to more agile operating models, they must learn to balance accountability with autonomy. A new operating model also requires a governance structure and leadership model so leaders know how they will exercise operational control and inspire employees—and hold themselves accountable for doing both. That means choosing the right dashboards, defining which metrics matter most and mapping out how long-range planning, resource allocation, and budgeting will work. And since people ultimately make all the difference, your operating model should define how you manage the assignments and career paths for your difference-making talent.
Crucially, the operating model also must define ways of working and behaviors that actually bring your company’s strategy to life. If your company’s promise to its customer is lowest costs, is everyone focused on cost control? If your reputation is built on superb service, is everyone — not just the front line, but even back-office functions like accounting or legal or procurement —highly attuned to how they affect the customer experience? What high-performance behaviors are nonnegotiable, and how do you make sure that you’re enabling and reinforcing them? What is your approach to risk taking, experimentation, and test and learn?
And finally, does the operating model support the company’s strategic mission with the right combination of people, process, technology, and tools? Are you focusing opex and capex on these priorities in order to build competitively differentiated capabilities?
Author: Eric Garton
Source: Harvard Business Review
Subjects: Management, Organizational Behavior
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