Operating model for successful business transformation

IT managers could be forgiven for being a little overwhelmed as the pace of technology transformation begins to accelerate, exceeding traditional management capability. With disruptions in the market happening at light’s speed, what does it take to win in such a world where the boundaries between industries are constantly thinning or shifting?   

The answer is pretty simple – sure, one needs to have a good “STRATEGY” , but that alone is not enough. Even the best strategies in the world will not propel the company ahead of its competitors, unless the organization can EXECUTE effectively and adapt as needed. 

It is vital to have an effective and robust Operating Model, for an organization to succeed. 

Operating Model  - Bridge between Strategy and Execution

An Operating Model is the engine of an organization that enables it to deliver value to its stakeholders. If the operating model is not explicitly designed to focus on the strategic priorities of the business, the execution will hit major roadblocks.

A Mckinzey report published in March 2022 suggests that over 70% of large transformation projects fail due to poor execution (organizations moving ahead without an operating model framework). This is not an encouraging statistic, especially when companies invest millions and sometimes billions in the transformation programs. 

Many would ask “why not rely on our best practices?. Well, the problem with ’best practices’ are that they typically take form only after you need them. Few could argue – “why not go with traditional framework like ITIL, ISO2000, Prince 2/PMBOK?”. No doubt that some of the concepts from such frameworks are timeless, but they were created to solve issues which existed a few decades back.  Companies like Amazon, Google, Netflix have moved on and created their own operating model framework to match their business model, and that’s the ’way forward‘ in the world of tech transformation.

7 Elements of an Operating Model

An operating model is less about what a company does, and more about how it does it. The  following seven elements (depicted in the diagram below) need to  work in harmony to unlock the team’s full potential. If integrated flawlessly, employees will be inspired, engaged, motivated and will do all they can for the company’s customers and for the organization. 

It’s important to understand that a business cannot expect to be successful only by implementing few of the operating model elements. Some points to bear in mind include:

1. Many organization go with Plan  Build  Run approach.  They are lifecycle phases and not an operating model.
2. Some organization have this misconception that they have changed their operating model by building a new organization structure. 
3. Creating standalone governance controls will not be too helpful.
4. Creating independent ‘Culture’ change in pockets, will not work.

Generally, leaders love the idea of adapting and implementing an operating model framework,  but often struggle/hesitate to design their own model. 

There is no silver bullet answer when it comes to building an operating model.  It is essential to make continuous tweaks and optimize the operating model to remain relevant and agile in this fast changing environment. Change as always, will not be easy, however do not make any drastic changes to the operating model all at once, and have discussions with key parties involved to understand the feasibility and impact on the stakeholders and end users.

It is indeed hard work, but if executed properly (on all 7 elements), the effort will pay off – it will create positive change and successfully transform the business to next level of maturity.

The article has been written by Saravanan Annadurai,Sr. Principal - Tech Program Management,  Sabre