The dynamic operating model

Every business has an operating model, whether it’s consciously or unconsciously designed and deployed. What’s your operating model and does it deliver for you and your customers?

Almost all the work I undertake involves engaging with a client’s operating model (OM). This can include designing a new OM from the ground up for a pre-launch company or a start-up in its early growth stages, evaluating and updating an existing OM, or entirely reimagining a company’s operations and implementing a new OM.

Over the years I’ve seen the whole range. From very detailed Target Operating Model documentation running into tens of pages (TL;DR), to the other end of the scale — businesses that have organically developed and people just got stuff done. Unsurprisingly the second approach is mostly seen in start-ups where everyone needs to muck in on whatever the priority is. It’s cost effective, builds teamwork (mostly), and focuses people on the things that are most important.

The thing is, as a business grows, that approach can turn into chaos, confusion and cost through mistakes, lack of clarity and lack of coordination.

When I talk to clients about operating models there can be concerns that an OM might slow down quick changes that are needed, or that the result could be too rigid for their business, or that it means lots of new roles and therefore cost.

In my career I have definitely seen those pitfalls come to fruition. In a recent McKinsey & Company study on operating models they found that “only 23% were highly successful” and “63% were somewhat successful.” That’s not great, particularly when you think about the effort and potential disruption the work may have brought about.

I believe an OM review and resultant changes can avoid all of those pitfalls if done correctly. It doesn’t need to be overly engineered, cost a lot of money, or take so long that opportunities are missed. Done right, it can be freeing, build engagement, and be deployed on a ‘just in time’ basis.

My approach is to quickly come to know a business through both qualitative and quantitative work. I review data, look at the goals of the business, and talk to people inside it — the approach is the same whether there are 10, 100, or 1,000 people in the business. Understanding the now and the future objectives means I can identify and describe the gap. Once we’ve described that, we design the approach to closing it.

I build modular operating models that can be deployed over time as the business needs them — supporting growth, working more effectively, reducing cost to serve, all of these, or something else.

If any of this resonates and you’d like to talk it through, I’m easy to find. mark@soothconsulting.xyz.