Operating model
An operating model translates strategy into the organization, processes, technology, governance and capabilities through which work is performed and decisions are made.
Definition
An operating model is the integrated design of structures, accountabilities, processes, information, technology, locations, suppliers and management routines required to deliver an organization’s strategy.
Components
Organization
- Roles and structure
- Decision rights
- Skills and workforce
- Performance incentives
Operations
- End-to-end processes
- Service delivery
- Locations and sourcing
- Controls and governance
Information and technology
- Data ownership
- Systems and platforms
- Automation and tools
- Management information
Design process
- Strategic requirements: define customer, economic and control outcomes.
- Current-state diagnosis: identify fragmentation, bottlenecks and capability gaps.
- Design principles: establish rules for centralization, ownership and standardization.
- Target model: design integrated components and critical interfaces.
- Transition: sequence organizational, process, data and technology changes.
Important distinctions
| Concept | Scope | Difference |
|---|---|---|
| Organization structure | Reporting lines and formal units | Only one component of the operating model |
| Business model | How the organization creates and captures value | Describes economics rather than delivery architecture |
| Operating model | How capabilities and work are organized | Connects strategy to execution |
| Process model | Sequence and ownership of activities | Focuses on workflows rather than the whole system |
Common failure modes
Operating-model projects fail when reduced to an organization chart, when technology is designed separately from work, or when governance specifies committees without real decision rights. A viable model must resolve interfaces and be affordable, controllable and usable by the people who operate it.
Related concepts
Sources and further reading
View sources and editorial notes
- ISO 9001, quality management systems.
- OECD, corporate governance publications.
- Professional literature on organization design and enterprise architecture.
Editorial note: Operating-model terminology varies across consulting and technology disciplines. This entry uses the integrated enterprise-design meaning.