What is an operating model?

It’s a visual way to understand your management systems in your company and to be able to understand and describe your current and desired way of operating your business. Your operating model definition is dependent on your business strategy and your current and future business models (growth engines).

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Why visualise your operating model?

In the words of Alex Osterwalder, the inventor of the business model canvas, he talks about the importance of visualisation and being able to co-create an understanding of your existing business model and make changes as needed. In addition, to be able to imagine new business models / growth engines.

“You can work like an architect, with a drawing table, maybe with computer-aided design and put your business model together and experiment, prototype your business model just like you would prototype buildings or industrial design”…”it allows you to create computer-aided design for business.” 

“The business model is visual, simple, practical, having an artifact and taking the design thinking approach that means you can shape your business model.”

See interview below with Alex Osterwalder on why thinking like an architect or an industrial designer helps you find strategy and innovation opportunities.

 

In the same way, “the visual representation of your operating model will help you understand the gaps in enabling you to create value from your current and future business models.”

What mindset should you have when thinking about your operating model?

I personally like the vision and ambitions of DBS Bank – the business & technology enablement is one single strategy, one business model, one set of consumer journeys, one digital operating model: DBS Digital Strategy. Excellent key note by Glen

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Digital Transformation and the Responsive Organisation provides a good insight into the importance of technology as a core enabler for your business strategy, new growth engines, the existing business model and therefore your operating model. Assuming your business strategy is right, then your operating model is the new battle ground – how much speed and responsive is your current operating model enabling? How are your management systems designed and defined to ensure the success of your business strategy?

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Knowing where you want to go – how to be “future ready” is necessary in the context of your current and future business models. If you do not actively manage your operating model, you organisation may not achieve its goals (desirability, profitability and longevity).  Operating models must be managed through “purposeful and conscious design.”

The four pathways to Future Ready by Peter Weill, MIT Senior Research Scientist & Chairman:

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