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Changing your Operating Model

In previous operating model articles, I have talked about what is the operating model and secondly about how to implement an operating model. This time around I want to talk about ways of changing your operating model. Most of us already have an operating model whether we like it or not and it’s about changing this operatable that can be complex talk consuming but also trying to decide what operating model to move to as there are so many that you could choose from.

Your existing operating model may not be explicitly defined but it exists whether you like it or not. The maturity of this operating model depends on your group’s maturity, the organisational maturity as a whole and, the awareness of operating models, business architecture and, turning strategy into actionable plans and programs. Probably like most organisations there is a highly mixed level of maturity within the organisation. Some areas will be advanced or at least fairly well advanced, others will be at a basic level, there is no getting around this aspect. Creating a uniform level across the organisation is not desirable or even possible.

As you gain more maturity it becomes easier to understand that you need multiple operating models across the organisation. This is not a one size fits all approach. Some parts of the organisation will retain a more traditional view and have an appropriate operating model for them. Other parts of the organisation will be more experimental and, require a super suitable operating model for that style of work. These ends of the spectrum are not the same and should not be treated as such.
As we go through this article, I’ll point out what could change and potential ways of changing.

What operating model do you have now?

The starting point is to understand what operating model do you have currently or more likely, what operating models? Much of this depends on your current level of maturity. It may sound trite, but the operating model is a journey rather than a destination, as your operating model will change overtime depending on the organisation needs and strategy.

I would expect that most organisations would have a “plan, build, run” model. This is probably the most common model in use today especially in IT. Other models that could be used are, a siloed approach or a very horizontal view but based on technology towers. More advanced models include well defined models such as IT4IT, the Service Operating Model Skills (SOMS) framework and the set of MIT Sloan models:

  • Diversification (low standardisation, low integration)
  • Coordination (low standardisation, high integration)
  • Replication (high standardisation, low integration)
  • Unification (high standardisation, high integration)
  • There are industry specific models such as eTOM (telecommunications), IAA (Insurance), BIAN (Banking), IFW (Banking but used elsewhere as well), etc. Please contact us if you want information on these models. My personal view is that some of these models are ageing and, are not quite as suitable going forward with the impact of digital disruption.
    Make sure that you don’t confuse the business model (how the business delivers value) with the operating model (how the business runs itself).

    Why do you need to change your operating model?

    Most organisations know where they want to go even if they cannot fully express it. Communicating strategy to the entire organisation (top to bottom) and getting all the staff to understand it is a key failing in Australian businesses in my opinion.

    Large organisations typically have a strong strategy, architecture and, business planning organisation and have the resources and capabilities to define the strategy and then execute on it. Smaller organisations, those at the bottom of enterprise level and smaller, often struggle to turn their strategy into execution.

    If you want your current strategy to have an enterprise wide impact then you need to do a few things. These include but not limited to:

  • changing your operating model,
  • having the investment capability to implement and,
  • having the execution capability.
  • Since we’re only talking about operating model here, I’ll ignore the other two parts.

    Many organisations run multiple, often independent initiatives within business units to effect their strategy. The key issue here is that they are often independent and not coordinated. Changing your operating model brings these independent efforts together, usually (nothing is perfect!).

    But you’re still wondering why the operating model changes. Key reason is business change, this happens the whole time as we all know but, the operating model changes when there is a significant business change. This could include:

    External industry disruption are such things as digitisation and/or, new entrants into the market, etc.

    This disruption often requires significant realignment of the business to either, respond with competing capability or, protect current market share and customer base. At the same time the organisation is going to need to maintain its existing capability and this is where often a dichotomy arises between the old way of doing things and the new.

    From an IT perspective, we can respond in several ways, some specific and some that are more generic and required deeper dives to make the appropriate changes for your organisation.

    Different models required

    As I stated before, you’re going to need different operating models to support older through to newer. Some parts of the organisation require, stability, high governance and, high structure; other parts of the organisation require, low governance, high change and, high flexibility. There will be other areas that require a mixture of these aspects. Gartner is fond of its two-speed model, I’m not a big proponent of this as I believe that two models is not nuanced enough. I agree that it’s simple to communicate this view but, often does not allow for enough flexibility within the organisation. The diagram below shows a view of multiple operating model mode attributes. It is important to understand that this represents a continuum and not discrete steps.

    A different view on this is based on what type of organisation and level of maturity you may have. I will discuss assessment around maturity and operating models in a different discussion. I am using the metaphor of types of Japanese fighter mainly because I like it and feedback so far has been good. Makes what can be a dry subject at times more fun. The fighter represents, in a broad brush the type of organisation you have. Of course different parts of the organisation will show all three, most likely and sometimes two at a time. There may be more nuanced separations but, for sake of simplicity I am keeping it to three:

  • Street fighter – do then think, individual, shortcuts, lack of strategy, superhero pretence
  • Samurai – honour, discipline, loyalty, control, strategy
  • Ninja – agility, adaptability, precise tools for the right job, think outside the square, focus, human
  • This last diagram starts to describe how IT can leverage this model to change its operating model over time. While this has a flavour of the Operations / Service Delivery areas of IT, it does not have to apply only here. It can apply on a smaller scale (but probably not at the team level) or larger scale – IT wide.

    Conclusion

    I hope this article has proven informative, gives you some ideas, promotes some conversations and, discussion around your operating model and your capability to enact. As always, we are here to help and guide you on the journey. Nothing will be perfect and, anyone who tells you different or, that everything will be ‘finished’ when they leave does not understand the journey. Feel free to contact us for a discussion.