1. What is an Operating Model

2. Operating model and stakeholders
Owners
Core Employees
Target
Beneficiaries
Employee Offer
Operating
Model
Customer Offer
While it is evident that organisations need strategies for each stakeholder, most strategy work in commercial organisations is focused on customers. This is because the competition for customers Is the most pressing “difficulty”. Executives often presume that, if they can attract a customer, they will be able to find money, people and business partners. Hence they focus on customer strategy and leave the interaction with the other stakeholders to those working on the “operating model”. But, maybe it would be better if strategists did a complete job of defining all the “core” stakeholders and all the “offers” to these stakeholders.
Business Partners
Partner Offer

3. The components of an operating model
POLISM
P rocesses for delivering value
O rganisation and people
L ocations, property and assets
I nformation systems
S uppliers and partners
M anagement system

4. The Operating Model Canvas
Suppliers
Locations S L
Value Delivery Chain(s)
Value P
Proposition
Customer/
Beneficiary
Organisation
Information I O M
Management System

5. Business model and stakeholders
Owners
Core Employees
Target
Beneficiaries
Employee Offer
Operating
Model
Customer Offer
While it is evident that organisations need strategies for each stakeholder, most strategy work in commercial organisations is focused on customers. This is because the competition for customers Is the most pressing “difficulty”. Executives often presume that, if they can attract a customer, they will be able to find money, people and business partners. Hence they focus on customer strategy and leave the interaction with the other stakeholders to those working on the “operating model”. But, maybe it would be better if strategists did a complete job of defining all the “core” stakeholders and all the “offers” to these stakeholders.
Business Partners
Partner Offer

6. The Operating Model Canvas addresses the back end
How?
Middle
What?
Front End
For whom?
Key Partners
Key Activities
Value Proposition
Customer Relationships
Customer Segments
Key Resources
Channels
Cost Structure
Revenue Streams

7. The Business Model Canvas
Back End
(operations)
Front End
(customers/channels)
Financial Model
Middle
(value)
Suppliers
Locations
Processes
Org.
Info

8. High-level operating models
Can do in a day
Can do in a month
Ten page Operating Model
One page Operating Model
Information systems
The elements of the organisation that are most important for delivering the value proposition.
Operating Model Canvas
Organisation chart
Locations
Management system
Processes
Suppliers
The main operating activities that deliver the value proposition

9. Detailed operating models
Can do in a 6 months
Likely to take more than a year
One hundred page Operating Model
One thousand page Operating Manual
OPERATING
MODEL

10. There are many levels of detail ..
Processes
Organisation Structure
Locations
Level 1
(one page)
Operating Model Canvas
Level 2
(ten pages)
High-level Value Chain Map
High-level Organisation Model
High-level Locations Footprint
Level 3
(100 pages)
More detailed Value Chain Maps
Org. Models for lower levels, decision grids, people models
More-detailed Locations Footprint
Level 4
(1000 pages)
Detailed process maps for all processes
Job descriptions for all positions, detailed decision grids, etc
Square meters of space, site plans, floor layouts, etc

11. … when doing operating model work
Information
Suppliers
Management System
Operating Model Canvas
High-level IT Blueprint: applications and owners
High-level Supplier Matrix
High-level Management Calendar/Scorecard
IT Architecture
More-detailed Supplier Matrix
High-level attendees, agendas, KPIs
IT security policies, service levels, staffing rotas, etc
Chosen suppliers, supplier agreements, etc
Detailed agendas, reporting forms, etc

12. Why is a high-level operating model needed
Strategy rarely says much about how. A high-level operating model converts strategy into the first level of how.
When implementing strategy, managers often have slightly different understandings of what is needed, influenced by their different functional perspectives. A high-level operating model helps keep them on the same page.
An operating model, when cascaded to lower levels, is a way of communicating strategy down to lower levels in the organisation and helps create alignment for level 4 decisions.
Strategies are often unrealistic. A high-level operating model provides useful feedback into the strategy process.