Organizational change happens fast today. Companies often reorganize as frequently as every two years, but these changes take just as long to implement. This creates a disconnect between strategy and the operating model, leading to confusion and inefficiency. The result? Operational redesigns that provide little value, as they fail to change how the business actually operates or align with its core strategy.
To successfully align your operating model with your strategy, you must start by answering four key questions. These questions will help you identify the capabilities your company needs to drive value and achieve its business goals.
1. What do we need to do to create value?
The first step is understanding where your company creates the most value. This means identifying the business units, processes, or brand attributes that contribute most to your overall success. Surprisingly, many companies have not fully mapped their value chain, missing out on opportunities to differentiate themselves.
To design an effective operating model, you must pinpoint the most critical elements of your value chain. This will help you focus on where to allocate resources and what capabilities are essential.
2. What capabilities do we need to capture this value?
Once you understand where your value is created, the next step is determining which capabilities are needed to support these efforts. No company excels in every area, so it's important to focus on where you can truly excel to meet your strategic objectives. Your operating model should be designed to amplify these strengths rather than cater to every function equally.
3. Do we currently have these capabilities, and if so, where?
Now, it's time to assess your company's current capabilities. Do you already have the necessary functions and skills in place? This evaluation should focus on:
- Which capabilities should reside in the corporate center versus business units?
- Who should have the authority to make key decisions and manage resources?
- Are the right people in the most critical roles?
In today’s agile business environment, identifying existing capabilities and aligning talent to value is key. By ensuring the best people are in the right roles, you can more easily adapt to operational and strategic changes.
4. What are the implications for our operating-model design?
After assessing your capabilities and needs, the final step is building a road map for your operating model. This involves prioritizing your strengths and addressing any strategic weaknesses. The goal is to reconfigure or build new capabilities that ensure you can meet your long-term objectives.
Before implementing a new operating model, ensure it reflects the insights gained from these four questions. By doing so, you’ll create a model that supports your company’s strategy and drives long-term success.
Need help with answering these questions? Contact us today and we can help you!
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