Organizational design, work perspectives, leadership, experience and change are all integral components of an operating model. But what is an operating model? This article seeks to clarify the different existing frameworks for this fundamental element of an organization's uniqueness. Establishing the operating model through literature is not easy. The term is widely used, especially by consulting firms and in corporate reports, but there seems to be “an implicit understanding” of the concept (Bateman, 2011).
This confusion often overlaps with operations management. One of the first definitions appeared in an article published by Accenture in 2000, in which the term was used as an operating business model (Linder and Cantrell, 2000). It was defined as the organization's central logic for creating value and introduced a framework for testing the different components of the operating model that would make the company unique. As shown in the figure, this already seems like a fairly complete model, highlighting many of the elements that are really key in an operating model.
An operating model is a visualization (i.e., a model or collection of models, maps, tables and graphs) that explains how the organization works to provide value to its customers or beneficiaries. There is generally no consensus on how to document an operating model (Hammond, 2011). Too often, many managers react simply by showing an organization chart, but this is not enough. Depending on the definition we use and the model we apply, we may be forced to use different documents together to ensure a complete view of the whole. In this section, I will try to detail as much as possible the critical theories about operating models.
I will start with a somewhat chronological order of what concerns the academic world and then leave for a second section the models developed by large consulting firms. Ross provides a taxonomy of the choices that existing companies had made and that would allow defining an operating model within an organization. This work has allowed us to draw up a classification of organizations based on their position in the matrix, as well as studies on which model is most suitable for a specific market or situation. In addition, the model is explicitly derived from studies in information science and has expressly established a strong link with the concept of business architecture that we will examine later. CCPPOLDAT is an almost unintelligible acronym for “a set of cross-functional points of view that is used to represent a company without structural and functional biases” (Winders, 2011). This model was developed and improved at Centrica Plc.
(British Gas) from the original POLDAT framework initially created by Computer Science Corporation (CSC). Primarily with a customer-centric approach, this model can be used to describe operating models, although it can also be used for gap analysis and project or change impacts and baselines. The Operating Model Canvas is derived from Andrew Campbell's work at Ashridge University and was crystallized in his book Operating Model Canvas (Campbell, Gutierrez and Lancelott, 2011). The objective of the Canvas is to capture ideas on how to design operations and organizations that offer a value proposition to a target customer or beneficiary. It helps translate strategy into decisions about activities and organization. The SOMS model has been developed thanks to Ian R.
Hodgkinson and Rosamund Chester Buxton's work at Loughborough University. The operating model is the operational design that makes it possible to deliver business strategy. It is the model of how an organization operates in various domains to meet its objectives (SOMS, 2011). According to SOMS' model, an operating model provides architecture and framework for business operations, providing basic stability and flexibility in critical areas. That's why this model is proposed as “certification for professionals”; a kind of set of tools that can help design and define an operating model itself.
It illustrates the concept through a simple design with four important components. Although it doesn't provide an entirely new concept of operating model, your article is excellent at explaining the difference between the operating model and organization model. In his book “The Discipline of Market Leaders” M. Wiersema (1999) argues that no company can succeed today if it tries to be everything to all people. Instead it must find its unique value that only it can offer to its chosen market.
They have identified three value disciplines that a company must evaluate and define in order to build its unique positioning. In this section I will try to summarize large consulting firms' approach. With one exception I observed that many of these models are constantly evolving in different articles and publications that different companies offer their customers demonstrating some kind of “flexibility”.
