Sample Management Essays on Operating Models

Operating Models

Every organization has its working strategies, practices, and value. The type of value that a corporation offers to its customers determines the process through which it is delivered. An operating model, therefore, also called the value chain map, is used to provide employees with a visual perception of the role that each part of the organization plays towards the general organizational objectives. Essentially, it is the visual representation of how a company’s value towards its clients is delivered. In most cases, operating models are organized from the top down and can be quite granular. For large enterprises, multiple operating models usually work to show departmental managers the impacts of the decisions and actions of their departments on other departments of the organizations (Campbell, Gutierrez & Lancelott, 2017). Operating models they are usually raised by internal teams, with expertise in visualization in big teams. Alternatively, they could be created using flowcharts in smaller organizations.

The scalability of operating models makes it possible for them to be suited to organizational needs both during start up and at maturity. A simple operating model is just a graphic that provides the conception, which is the mission and vision of a company, whereas the detailed operating model provides a prescriptive description of the elements within the organization. The simple models work for simple firms whereas detailed ones work for complex organizations (Bateman, 2017). However, that is not always the case as situations may change depending on the goals and objectives that a company wants to achieve from the operating model as well as the organizations’ context, which includes the industry, services, life expectancy, and the employees.

Procedure

The process and application of an operating model can be long depending on the size of the target organization. In most cases, the operating models of small firms come about in an ad hoc manner, Organizational goals complexity and the level of detail required in an operating model will determine the duration that it takes to develop the model. Each may take a few days to a few weeks depending on these factors (Campbell et al., 2017). An effective operating model however, has to take into consideration the organizational processes, supplier management systems, and other factors in ensuring that it delivers the expected results and that whatever is presented in the operating model is not only accurate but also has a high level customization to the firm’s goals and objectives (Bateman, 2017).

The commonly used approach to organizational model development is centered on the POLISM model, which is an acronym for processes, organization, location, information, suppliers, and systems management (Al-Ghamdi, 2017). The approach takes into consideration all aspects of the organization from the suppliers to the end-users (entire supply chain). It helps to consider the organization not only in the sense of its goals and objectives but also as a system comprising of different parts, each of which contributes to the overall objective. The processes entail all work and equipment/ machinery that are required to bring value to a customer. The processes are an essential part of the operating model since any breakdown in the processes results in a negative impact on all other parts (Derevenski, 2018). For instance, machine breakdown in a manufacturing plant results in production downtime, which may affect the timelines for fulfilling customer orders and the raw material inventory cost.

The specific steps involved in the process of operations modeling include:

  1. Assessing the Current State

In developing and documenting an operating model, an entrepreneur must asses his/her current state and ask about the current operations of the business. Some of the questions he /she needs to ask himself concern the current operations and what is working and what is not. Interviews on the key stakeholders with a standard set of questions are necessary to identify the available opportunities for improvement and the available strengths and weaknesses that need to be worked on (Murphy, Kirwin & Razak, 2016). Such issues determine whether a company will move forward or not. A solid review of the current documentation is necessary to tell the business owner whether the firm needs improvement or not. The current documentation tells the story of what was done, what needs to be done, and how it is supposed to be done to make the necessary improvements. Such information is important as it enables the owner to know whether the operating model is necessary and how the model should look like and the area it will cover in case it is needed (Ithia, 2015).

The current state of the businesses matters as it determines some issues in making of the operating model. It determines the number of employees, need to change and what needs to be changed, current operating procedures, and the availability for change.  Such information enables one to have a deep understanding of what an organization wants to deliver. The necessary questions include the reason for preparing the operating model and how the model will be finished, the resources that need to be gathered and what should be done, how to execute and how the related groups shall collaborate (Murphy et al., 2016).

The current state shows how the organization has been fairing on and how it will improve or decline owing to the introduction of the operating model. The supervision and the deep analysis of how the organization is doing on help the owners to know the weakness that they need to work on and how to incorporate the strengths and the fewer weaknesses of the firm in the business plan and the operating model (King, 2013). Such helps in the preparing of an operating model that suits the firm, and that can help it in strategizing and making helpful plans.

  1. Determine if There is Need for Change

The burning platform for change is determined, and the necessary implementations are made to ensure that the desired change occurs.  The determination of the current state of assessments shows that what is needed may significant maybe due to the more compelling documentation of the current state. The current state of affairs may unearth pain points that if not solved may impede the achievement of strategic goals hence hinder the growth of the organization, which may lead to business failure in the long-run (Macgregor, 2011). If such issues are unearthed during the determination of the current state, some problems are solved accordingly. They are worked on so that the enterprise may realize its long-term goals to make the necessary profits and realize the motives of the businesses.

After the assessment of the current state, the areas that need urgent amendments are noted, , and the necessary actions are noted to be put down in the operating model, which promotes designing an operating model that will put in place all the problems that the organization may be facing (Murphy et al., 2016). By analyzing the current state of affairs, the organization can determine the pain points, or the risks that may jeopardize the achievement of the organizational goals and subsequently foster work towards the accomplishment of those goals. With an understanding of the said pain points, a strong case for change can be developed including the consequences of failing to undertake the change, and its communication across the entire business (Macgregor, 2011).  Once the employees have understood the need for change and the right way to make changes, and are united in the need and support for change, then the organization is likely to be realized.

  • Get the Right People at the Table.

In order for an organizational operating model to be functional, it has to be created with the right people on board. The organization has to bring together employees and stakeholders are necessary for the future state and collect their opinions noted in order to hasten decisions through collaboration across departments. If the operating model documents the current state or bring about change, the right people who can steer the organization forward are needed to make sure that the operating model is documented in the right way, and the procedures are rightfully documented to adhere to the organizational goals and the way the company needs to work. Bringing the right people at the table enables the stakeholders to implement the right decisions on the operating model to make sure that the areas that require change are altered using the most convenient ways and the best employees (Kumar, 2009). Such a move enables organizations to grow and improve after the documentation of the operating model. The right working team and an effective change management committee can help to attain an extra diversity of thought, which fosters the establishment of a suitable approach to the organization’s performance.

  1. Define the Design Principles

Design principles in operations modeling communicate the principles for the expected outcomes in the future; they are born of organizational strategic goals and are useful in setting the context of operational models (SC & H Group, 2018). The principles help promote the creation of key phrases upon which the operating model can be founded.

  1. Shape the Future State

With the right design principles in place, it is easy to project the state of the organization. The expected state determines the components of the operating model be created. It is essential to find out how the various elements of the operating model contribute to its ultimate objective. A future state can be developed through workshops that focus on the efficiency of each component of the intended operating model.

  1. Document and Implement the Model

The documentation process aids the communication of the operating model to the teams. The first question to ask is who the audience for the model is. After that the team steering the operating model development process can document the important decisions, change opportunities, salient points, and the workshop outcomes that have been used for the operating model development. A clear strategy for the implementation of the operating model is then highlighted, and the model implemented.

Results

An operating model should be available in all companies regardless of their size. It does not necessarily have to be detailed, but it must be available to bridge the gap between the why and how. Various risks are associated with lack of a viable operating model. Some of these risks include lack of alignment between the individual staff objectives and the collective organizational goals, failure to attain process optimization and failure to meet organizational strategies (Deloitte, 2018). The role of the operating model as a bridge is described by DoIT (2018). The operating model provides a connection between the operations plans and the separates organizational strategy by enhancing employee engagement and providing aligning their individual roles with the organizational strategy and clarifying how those roles purpose to achieve the organizational goals. The organization can determine its operational competencies based on its strategic intent and resources.

An operating model helps to define critical organizational elements. The core elements of such a model include design principles (translate the strategy into a set of rules defining how the organization should operate), governance (defines decision making and the authority), culture, and values (Imran, Haeberle & van Husen, C. (2017)). These core components define the key attributes and behavior in an organization thus establishing how to work is to be done and the values the company upholds and the process that defines the key capabilities the organization commonly exemplifies from an end to end perspective (DXC on Cloud, 2018). A hybrid model, therefore, enhances the capacity of an organization to take advantage of its resources and core competencies for building competitive advantage.

An operating model provides a visual yet abstract value representation in a company’s running and value delivery to customers and other stakeholders. An operating model is composed of various elements. The most commonly used definition of systems that make up an operating model is the people, process, and technology. Other definitions include process, organization and technology, process, organization, location, information, suppliers, and management system (Murphy et al., 2016). Wootton (2016) posits that just like a software operating model, the organizational operating one defines how the different components of the system function together to realize the corporate goals and objectives.

 

 

 

References

Al-Ghamdi, A.S.A. (2017). A proposed model to measure the impact of business architecture. Cogent Business & Management, 4. Retrieved from www.cogentoa.com/article/10.1080/23311975.2017.1405493.pdf

Bateman, N. (2017). Operating model: An exploration of the concept. Loughborough, UK: Loughborough University. Retrieved from dspace.lboro.ac.uk/dspace-jspui/bitstream/2134/26654/4/op%20mod%20white%20paper%20III.pdf

Campbell, A., Gutierrez, M., and Lancelott, M. (2017). Operating model canvas. Van Haren Publishing. Print.

Deloitte (2018). Target operating model – TOM. Deloitte. Retrieved from www2.deloitte.com/lu/en/pages/strategy/solutions/target-operating-model.html

Derevenski, K. (2017, August 1). Five benefits of an architected target operating model. LinkedIn. Retrieved from www.linkedin.com/pulse/5-benefits-architected-target-operating-model-kirill-derevenski

DoIT (2017). Operating models and benefits. Illinois Department of Innovation and Technology. Retrieved from www2.illinois.gov/sites/doit/Strategy/Transformation/Pages/OperatingModelAndBenefits.aspx

DXC on Cloud (2018, August 15). Four reasons for adopting a hybrid IT operating model and becoming a broker of services. DX Technology. Retrieved from blogs.dxc.technology/2018/08/16/four-reasons-for-adopting-a-hybrid-it-operating-model-and-becoming-a-broker-of-services/

Imran, S., Haeberle, D., and van Husen, C. (2017). Governance: A new perspective to service design processes. Procedia CRP, 64, 318- 323. Retrieved from www.sciencedirect.com/science/article/pii/S2212827117301658

Ithia, A. (2015, November 25). The benefits of using target operating models in your business. Business Optix. Retrieved from www.businessoptix.com/blog/the-benefits-of-using-target-operating-models-in-your-business

King, N. (2013). Exploring the impact of operating model choice on the governance of inter-organizational workflow: the U.S. e-prescribing network. European Journal of Information Systems, 22(5), 548-568. Retrieved from www.tandfonline.com/doi/abs/10.1057/ejis.2012.47

Kumar, V. (2009). A process for practicing design innovation. Journal of Business Strategy, 30 (2/3), 91-100. Retrieved from www.emeraldinsight.com/doi/abs/10.1108/02756660910942517

Macgregor, S. (2011). Real architecture as competitive advantage. The Open Group. Retrieved from www.opengroup.org/johannesburg2011/Stuart%20Macgregor%20-%20EA%20as%20competitive%20advantage.pdf

Murphy, A., Kirwin, J., and Razak, K.A. (2016). Operating models: Delivering on strategy and optimizing processes. Ernst & Young LLP. Retrieved from www.ey.com/Publication/vwLUAssets/Operating-models/$FILE/Operating-models.pdf

SC & H Group (2018, April 13). Target operating model: Your go-to business strategy to maximize your people, processes & technology. SC & H Group. Retrieved from www.schgroup.com/resource/blog-post/target-operating-model-your-go-to-business-strategy-to-maximize-your-people-processes-technology/

Wootton, B. (2016, November 8). Designing and adopting a cloud operating model. Contino. Retrieved from www.contino.io/insights/designing-and-adopting-a-cloud-operating-model