Answering four key questions can help you identify the capabilities your company needs to enable its operating model and unlock its strategy.
Organizational change is happening at a rapid pace today. As often as every two years, companies are reorganizing and introducing new operating models that can take just as long to implement. This cycle means that many organizations barely complete one reorg before starting the next.
This constant flux often leads to a disconnect between a company’s strategy and its operating model, exacerbating existing problems, triggering unnecessary reactions, and spreading confusion across the organization. Frequently, operational redesigns create little value because simply moving departments or changing reporting lines fails to address how an organization fundamentally operates. Worse, the redesign may not be rooted in the company’s strategy, merely reinforcing existing biases and social dynamics.
Four Key Operational Questions
The importance of a strong link between strategy and operating model cannot be overstated. To strengthen this link and pursue a robust business strategy, it’s essential to answer these four questions honestly and completely:
1. What Do We Need to Do to Create Value?
To achieve its strategy, every company has certain business units, process steps, or brand attributes that contribute more to creating value than others. However, many companies don’t fully understand what they do that creates the most value. Often, they haven’t mapped out their industry’s value chain to identify the key differentiators.
The first and most crucial step in redesigning your operating model is to understand which specific parts of the work or steps in the value chain are most critical to creating value. This understanding will guide how you design an effective model and allocate resources. Once this is clear, you can move on to the next step: identifying the necessary capabilities.
2. What Capabilities Do We Need to Capture This Value?
Next, it’s time to specify what your company needs to be able to do to deliver on the most important parts of the value chain. Remember, no company excels at everything, and operating models are not designed to meet every need. Your company must clearly identify where it can truly excel to achieve its strategic goals.
3. Do We Have These Capabilities Today, and Where?
At this stage, your company needs to assess whether it currently possesses the functions and capabilities necessary to create value or if they need to be developed. This involves further exploration:
- Which functions and capabilities should reside within the corporate center versus within the business units?
- Who should be empowered to make key decisions and manage resources?
- What are the most critical roles within the organization, and do we have the best people in these roles?
As agile ways of working become a source of value, it’s essential to identify where the most needed capabilities already exist, both organizationally and geographically. Mapping talent to value—placing the right people with the right skills in the right jobs and ensuring the best people are in the most critical roles—will enable your organization to adapt to operational and strategic changes more effectively.
4. What Are the Implications for Our Operating-Model Design?
Building a road map for operating-model design involves prioritizing existing strengths and addressing strategic weaknesses. This may require reconfiguring, building, or acquiring new capabilities to ensure your company can deliver on its strategic goals. Before embarking on a full operating-model redesign, your company should clearly articulate the implications from the above assessment and ensure that the new design reflects these insights.
Ready to Align Your Strategy and Operating Model?
Achieving a successful alignment between strategy and operating model is crucial for any organization seeking to thrive in today’s fast-paced environment. At Pipol, we specialize in helping organizations navigate these complexities, offering expert guidance and tailored solutions to ensure your operating model fully supports your strategic objectives.
Contact us today to learn more about how we can help you create a robust, future-proof operating model that drives real value for your organization.
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