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Operating Model

A structure chart shows who reports to whom. An operating model shows how value actually gets created — which is a different picture entirely.

Aim

An operating model (business model) is the highest-level representation of how the organization delivers or fulfills what the target customer (audience) values. It answers the question: how will the organization deliver or fulfill what the targeted customer values? It is a depiction of the strategic workflow of the organization, and is sometimes also called a business model or delivery model.

Results

A visual representation of the organization's strategy and configuration that supports the marketplace strategy.

Pro Tips

  1. Don't think functionally. Operating models may imply functions and departments, but functions do not create value — processes do. The operating model should illustrate strategically how the organization creates value, not how functions are positioned on an org chart.
  2. Although other operating models can be used for illustration, starting with a clean sheet forces the required creativity and out-of-the-box thinking. Have each group member draw how they believe the new organization will work.
  3. Remind participants that it doesn't matter how it looks — just start drawing. Having each team member draw their ideas individually first helps leaders put their assumptions in front of their peers.

What good looks like

A clear picture of how value is created. Most times the team will know it when you get there — "that looks right", "that is great", or "that captures it, but we need to do some more work".