For any organisation, understanding and aligning an operating model to business goals is crucial. But what exactly is an operating model, and why is it so important? Here we break it down in simple terms.
What is an Operating Model?
An operating model is essentially the blueprint of how an organisation operates. It’s not just one element; it’s a combination of several components that work together to make your organisation function effectively. These components include:
- Strategy and Leadership: The purpose, values, goals and leadership style that define your organisation’s environment and support effective decision making.
- Organisational Structure: This defines how your organisation is organised. It includes the hierarchy, roles, and responsibilities within your organisation. Ideally this will include delegated responsibilities for decision making and escalation.
- People and Culture: It’s your people that deliver on your organisation’s promise. Your team & the culture created is a crucial component. Their skills, expertise, and how they are managed, motivated, kept engaged and developed all fall into this category.
- Processes: These are the daily activities and tasks that your team carries out – your ways of working. They range from how you handle customer enquiries to how your leaders manage their people.
- Technology and Systems: This refers to the tools and software you use to manage various aspects of your organisations, from accounting software to customer relationship management (CRM) and project management / resource planning systems.
Why is it important?
An operating model is more than just a concept or grand title – it’s the practical, everyday functioning of your organisation.
Having each component working together and all pulling in the same direction can be a catalyst for sustainable change and growth. Done well, it not only aligns everything in your organisation to the delivery of strategic goals, it also:
- Facilitates better decision-making: With a clear operating model, decisions can be made more effectively, as everyone understands the organisation’s direction and goals.
- Improves efficiency: By eliminating inefficiencies and streamlining processes, which saves time and money.
- Ensures consistency: Consistency in how you operate ensures a reliable customer experience, builds trust in your brand and delivers an improved training experience.
- Enhances agility: Markets change rapidly. A well-aligned operating model allows organisations to adapt quickly to new opportunities or challenges.