Operating Model Redesign

An operating model should change as conditions change. Yet many companies operate with the same model they have had for decades. The time to redesign is now.

Operating models often become outmoded

Consider these scenarios:

  • Company A fails to grow due to its localized operating model leading to dozens of distinct P&Ls, and any strategic change requires dozens of stakeholders to agree (and they don’t)
  • Company B pursues growth by acquisition, layering on each new entity until the organization becomes bloated, expensive, and slow-moving
  • Company C sees a shift in its revenues, with the majority now coming from services, yet it still acts like a product company, holding on to outdated structure, processes, metrics, and mindsets

Each of these scenarios demands a rethink of how a company goes to market, how it operates, and how the back-office will best support it. Markets, customer requirements, competition, and other conditions shift over time, yet many companies operate as they did 10, 20, even 100 years ago!

What is an operating model?

A good operating model links strategy and execution. Updating the operating model is often the single most transformative action a company can take. Why? A company’s operating model provides the critical link between its market strategy and the execution of that strategy. It defines how the company organizes and aligns decision making, assets, and operations to deliver value to its customers. In essence, an operating model addresses the questions of who does what, where it is done, how best to deploy assets, and how to make decisions. If you get those answers wrong, the chances of success are dismally low.

Operating Model graphic

WP&C’s redesign roadmap

When redesigning your operating model, understand that there is no single blueprint that fits every company. Even within the same industry, operating models vary significantly. Just as your strategy, value proposition, offerings, asset-base, or capabilities differ, operating models can—and should—differ as well. But while operating models should be unique, all organizations can follow the same design journey. WP&C has helped dozens of companies transform their operating model and unlock value and growth through its 3-phase approach:

WP&C’s redesign roadmap

When to act: Triggers for redesign

An out-of-date operating model is often the culprit behind poor performance. It is of critical importance to recognize triggers that warrant a redesign. Examples include:

  • You’ve been moving from local (or multi-local) to global; or conversely, you’re moving from center-led to more local
  • There’s been a significant shift in your value proposition and/or product mix
  • New channels, including digital, have become a bigger factor for your business
  • You are making acquisitions a bigger part of your growth plans
  • Your business has grown significantly in the last few years
  • You are embarking on a significant new strategy
When to act: Triggers for redesign

4 Steps to Ready Your Operating Model for Uncertainty and Change

Operating models define how the business operates, but too often, as conditions change, the operating model fails to keep pace. Today’s environment is no exception. Certain trends are accelerating (e.g., hyper-localization) and new forces are emerging (e.g., flexibility and resiliency) — your operating model will need to adapt to these new conditions. 

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Learn how we developed an operating model to accelerate innovation for a global technology company

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