Business operating model determines how the organization will operate in order to implement strategy, by aligning people, process and technology, often on a global basis. If strategy is the what, operating model is the how. In effect, it is the way the business is set up to achieve its goals, and meet future challenges.
Restructuring an organization to a new business operating model is a key component of any successful transformation, as it provides a clear direction. Rather than just juggling positions or changing the organizational chart, a business operating model can provide a blueprint for success to which all key executives can connect.
Dimensions of Business Operating Model
Capabilities: These are essential elements of core competence – product development, buying, procurement, pricing and web retailing, but not manufacturing or physical retailing.
Functions: Need to be together but those that can be separated in order to deliver on the essential capabilities (web skills and manufacturing) do not need to be co-located.
Geography: Which areas are best placed to accommodate different functions
Role and process design: It is important to think of these together. Separating them is a fundamental design error that many companies make. It is essential to understand who is accountable for what, what the big roles are, and how the processes will work to string together a truly multinational operation.
Structure: How are the roles and processes integrated? For example, is the organization structured along process lines such as design-to-order process, or order-to-cash process (each of which can have a separate GM), or is it along functional lines (e.g., GM of web development), along geographic lines or some combination of these or more.
Technology: What technologies are required? It is not just obvious tools such as web retailing and catalogue development technology, but also enabling technologies such as those that support effective communication and knowledge management in this very fast-paced fashion business.
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