Operating Model

 

One should not be confused between Business model and operation model, the business model is about value proposition and how effectively commercialize, increase profit by revenue from products or services to the customers it helps the organization to evaluate in time of ecosystem what the organization must do and what it must change to maintain sustainability, but the operating model might looks less attractive apparently however one cannot ignore the importance of having the right one, the operating model is part of execution life cycle of the strategy framework because it support the strategic priorities and ensure the organization works effectively defining what matter most starting with design principles for strategic requirements, focus on the specific sources of value to the business, the operating model would help to make it easier decide on important critical decisions, defines scope and boundaries reflecting opportunities for customers, support a repeatable product design process that balances customer requirements and technical feasibility, articulate organizational strengths by making it easier for distributers to do business with the organization to reach out larger market, clarifying the role of the centre leveraging scales and expertise for example any unit generate more than 80% of the demand for shared services will have responsibility to manage that service.
With increasing customer expectations for more tailored services, a growing model called SOMS (service operating model skills) to deliver more value to the customers.
The operating model is the link and serves as the bridge between strategy and execution, like tools & techniques between Input & output; to simplify further, let’s use the example of two cars racing one car with not perfect operating engines but driven by the fastest driver (A) the other one has an almost perfect operating engine but driven by an ordinary driver (B) in the final race result, the fastest driver did not win!, the ordinary driver won the race because he was equipped with a better functioning system with all data, processes and people to complete the capability package where the fastest driver suffered from mechanical failure (not his fault) but the operating model package he has was inferior therefore a winning operating model is needed to convert strategy to successful results.
The future model is TOM (Target Operating Model); this one is hard to achieve because the operating model itself must develop transformation effort in the form of programs of changes; unless the changes are for the right reasons, it won’t be worth it. A few steps are needed to reach the target operating model addressing why the mission model, what business model the organization have, how the value model analyzes, moving from the current operating model to the transformation model must be knowing when to do that to reach the final TOM.