Creating a new operating model and organisational structure

In brief

• Evaluate how your existing operating model aligns with strategic goals, identify external and internal factors affecting your business, and pinpoint inefficiencies and gaps

• Create a blueprint that outlines how value is created, delivered, and captured, ensuring it aligns with your business strategy, leverages technology effectively, and is adaptable for future growth

• Select a structure that supports your new operating model, define clear roles and responsibilities, and build for agility to promote collaboration and responsiveness

• Involve employees early, communicate transparently, choose an appropriate implementation strategy, and establish KPIs to monitor success and make continuous improvements

Understanding the current state

Before diving into the design of a new operating model, it's important to take a step back and assess your current situation.

Business Goals and Objectives Start by evaluating how well your current operating model aligns with your company’s strategic goals. Are your current processes and structures enabling you to achieve these goals, or are they holding you back? Identify the gaps and limitations in your existing setup to understand where changes are necessary.

Evaluating the External Environment Next, consider the external factors that impact your business. Market trends, competitive dynamics, and regulatory requirements should all inform your decisions. Additionally, assess how technological advancements are reshaping your industry. This understanding will ensure your new model is not only relevant today but also adaptable for the future.

Internal Analysis Evaluate your current processes, capabilities, and organisational culture. How engaged are your employees? Are there inefficiencies in your workflows? Understanding these factors will help you identify areas where your new model can add value and improve performance.

Defining your target state

Once you've assessed your current state, it's time to define your target operating model.

Core Components of an Operating Model An operating model is the blueprint for how your organisation delivers value to customers. It includes the key activities, processes, and resources needed to achieve this. Your operating model should clearly define how value is created, delivered, and captured within your business.

Aligning with Business Strategy Your new operating model must be closely aligned with your long-term business strategy. Consider how the model supports your strategic objectives and whether it is flexible enough to scale as your business grows. The goal is to design a model that not only meets today’s needs but is also resilient enough to handle future challenges.

Technology and Data Considerations In the digital age, technology plays a critical role in operational efficiency. Leverage technology to streamline processes, reduce costs, and improve customer experiences. Additionally, a data-driven approach will enable better decision-making, allowing you to optimise your operations continuously.

Designing the Organisational Structure

With a clear operating model in mind, you can now design an organisational structure that supports it.

Choosing the Right Structure Selecting the right organisational structure is crucial. Whether you opt for a functional, divisional, matrix, or flat structure depends on your business needs and market dynamics. Each structure has its pros and cons, so choose one that best aligns with your operational model and strategic goals.

Defining Roles and Responsibilities Clear roles and responsibilities are essential for avoiding overlap and inefficiencies. Define who is responsible for what, and establish clear lines of accountability and decision-making authority. This clarity will improve efficiency and help your organization operate more smoothly.

Building for Agility In today's fast-moving market, agility is key. Design your structure to promote agility by creating cross-functional teams that can collaborate effectively. Encourage a culture of innovation where employees feel empowered to experiment and adapt to changes quickly.

Cultural Alignment

Organisational changes can significantly impact company culture, so it’s important to manage this carefully.

Cultural Impact of Structural Changes Structural changes can be disruptive, so it’s important to manage the cultural impact carefully. Ensure that your new structure aligns with your organizational culture. If necessary, take steps to evolve your culture in tandem with structural changes to maintain employee morale and engagement.

Employee Engagement and Communication Involving employees in the change process is crucial for ensuring buy-in. Transparent communication throughout the process will help to manage expectations and reduce resistance to change. Engage your employees early and often to build a sense of ownership and commitment to the new structure.

Implementation Strategy

A well-designed model and structure are only effective if implemented correctly.

Phased Implementation vs. Big Bang When it comes to implementation, you can either opt for a phased approach or a comprehensive rollout. A phased approach allows for gradual adjustments and reduces the risk of disruption, while a big bang approach can be faster and provide people with greater certainty and less stress about changes to their role. Evaluate the pros and cons of each method based on your organisation's readiness and the complexity of the changes.

When rolling out changes over time, be considerate of change fatigue.

Change Management Managing change effectively is key to a successful implementation. Prepare for resistance by involving key stakeholders early, providing training, and offering ongoing support. Addressing concerns proactively will help to minimize disruptions and keep the organization focused on the transition.

Monitoring and Feedback Loops Finally, establish KPIs to measure the success of your new operating model and structure. Regular monitoring and feedback loops will allow you to make continuous improvements and ensure the new model remains aligned with your strategic goals.

Common Pitfalls to Avoid Be aware of common pitfalls such as underestimating the cultural impact of change, failing to communicate effectively, or not aligning the new op-model or structure with the company’s strategic objectives. By learning from these mistakes, you can avoid similar challenges in your own implementation.

Summary

Creating a new operating model and organizational structure is a complex but crucial task for business leaders. By thoroughly assessing your current state, carefully defining your new model, and ensuring cultural alignment, you can design a structure that supports your strategic goals and drives long-term success. Remember, the key to success lies in effective implementation and ongoing adaptation.

If you're considering a restructuring or redesign and need expert guidance, our consulting services can help you navigate this process. Reach out to us to discuss how we can support your business transformation.