What is an Operating Model Ashridge Executive Education

What is an Operating Model © Ashridge Executive Education

Operating model and stakeholders Owners Core Employees Employee Offer Business Partners © Ashridge Executive Education Partner Offer Operating Model Customer Offer Target Beneficiaries

The components of an operating model POLISM P rocesses for delivering value O rganisation and people L ocations, property and assets I nformation systems S uppliers and partners M anagement system © Ashridge Executive Education

The Operating Model Canvas Locations Suppliers on iti e lu os Va rop P Value Delivery Chain(s) Customer/ Beneficiary Organisation Information Management System © Ashridge Executive Education

Business model and stakeholders Owners Core Employees Employee Offer Business Partners © Ashridge Executive Education Partner Offer Operating Model Customer Offer Target Beneficiaries

The Operating Model Canvas addresses the back end Back End How? Middle What? Customer Relationships Key Activities Value Proposition Key Partners Key Resources Cost Structure © Ashridge Executive Education Front End For whom? Customer Segments Channels Revenue Streams

The Business Model Canvas Back End (operations) uppliers Middle (value) ocations rocesses rg. © Ashridge Executive Education nfo Financial Model Front End (customers/channels)

High-level operating models Can do in a day © Ashridge Executive Education Locations The elements of the organisation that are most important for delivering the value proposition. Information systems Suppliers Operating Model Canvas ----------- Ten page Operating Model Management system One page Operating Model Can do in a month Organisation chart Processes The main operating activities that deliver the value proposition

Detailed operating models Can do in a 6 months One hundred page Operating Model ING T A R OPE DEL MO © Ashridge Executive Education Likely to take more than a year One thousand page Operating Manual

There are many levels of detail. . Level 1 (one page) Level 2 (ten pages) Level 3 (100 pages) Level 4 (1000 pages) © Ashridge Executive Education Processes Organisation Locations Structure Operating Model Canvas High-level Value Chain Map High-level Organisation Model High-level Locations Footprint More detailed Value Org. Models for lower Chain Maps levels, decision grids, people models More-detailed Locations Footprint Detailed process maps for all processes Square meters of space, site plans, floor layouts, etc Job descriptions for all positions, detailed decision grids, etc 10

… when doing operating model work Information Suppliers Management System Operating Model Canvas High-level IT High-level Supplier Blueprint: applications Matrix and owners High-level Management Calendar/Scorecard IT Architecture High-level attendees, agendas, KPIs More-detailed Supplier Matrix IT security policies, Chosen suppliers, service levels, staffing supplier agreements, rotas, etc © Ashridge Executive Education Detailed agendas, reporting forms, etc 11

Why is a high-level operating model needed • Strategy rarely says much about how. A high-level operating model converts strategy into the first level of how. • When implementing strategy, managers often have slightly different understandings of what is needed, influenced by their different functional perspectives. A high-level operating model helps keep them on the same page. • An operating model, when cascaded to lower levels, is a way of communicating strategy down to lower levels in the organisation and helps create alignment for level 4 decisions. • Strategies are often unrealistic. A high-level operating model provides useful feedback into the strategy process. © Ashridge Executive Education