OperatingModels

Operating models are the blueprint by which an organization delivers value to customers and other stakeholders. They describe how a company translates its strategy into day-to-day operations, covering the arrangement of people, processes, information, and technology. An operating model sits between strategy and execution, defining how work is organized and how value streams are enabled in practice. It is distinct from the business model, which explains what value the organization seeks to create and how it captures value.

Key components of an operating model typically include processes and workflows, organizational structure and roles, information and data flows, technology and tools, locations and channels, governance and decision rights, and performance management. Together, these elements determine how capabilities are developed and how work is coordinated across the organization.

Organizations often design operating models to align with different strategic priorities, such as efficiency, responsiveness, or innovation. Common design approaches mix centralized and decentralized elements, functional and product-based structures, and variations in geographic or channel emphasis. The choice depends on factors like customer needs, product complexity, regulatory requirements, and the current capabilities of the organization.

Design and implementation usually follow a disciplined process: assess the current model, define the target model, design the architecture, plan the transition, implement, and measure progress. Common design tools include value stream mapping and capability mapping. Success relies on clear sponsorship, stakeholder engagement, change management, and metrics such as cost-to-serve, cycle time, quality, and customer satisfaction.