Understanding Your Operating Model
A well-defined operating model is the foundation upon which any successful business operates. It encompasses:
- Organisational structure – How teams and departments are aligned to deliver value and how responsibilities are distributed.
- Processes – The workflows and systems in place to create and distribute products or services, including dependencies between departments.
- Capabilities – The skills, technologies, and resources available to execute operational tasks efficiently.
- Performance metrics – The key indicators that measure efficiency, productivity, and overall success in delivering value to customers.
Without a firm grasp of these elements, organisations may find themselves implementing changes that address symptoms rather than root causes, leading to inefficiencies and missed opportunities. Establishing an operating model allows leaders to make data-driven decisions, ensuring that every improvement initiative aligns with business objectives.
Conducting a Thorough Assessment
To establish a baseline, businesses must take a structured approach to assessment. This includes:
- Understanding the Service Delivery Model – Organisations must first gain a clear understanding of what they do and how they operate. This means examining their Service Delivery Model and the underlying processes that support it. Mapping out the current business structure is a crucial first step in this process.
- Understanding Customer Needs – Gathering insights from customers through surveys, feedback, and usage data to understand what the customer values and ensures that operational improvements align with delivering better experiences and value.
- Evaluating Performance Metrics – Analysing data on productivity, quality, costs, and customer satisfaction to identify strengths and weaknesses. Performance benchmarking against industry standards can provide further insights into areas needing improvement.
- Assessing Capabilities – Reviewing employee skill sets, technological infrastructure, and operational capacities to determine gaps and potential improvements. This includes evaluating whether existing resources are being optimally utilised.
- Understanding Pain Points and Bottlenecks – Leaders and frontline employees often have differing views on operational challenges. To drive meaningful improvements, organisations must bridge this gap by engaging staff at all levels. Frontline employees offer invaluable insights into inefficiencies that may not be visible from a leadership perspective. Creating a shared understanding across the organisation ensures alignment on key issues and paves the way for effective solutions.
- Analysing Financial Impacts – Understanding cost structures and profitability drivers ensures that improvement efforts are directed at maximising value rather than simply cutting costs without strategic consideration.
A thorough assessment provides a holistic view of the current state of operations, laying the foundation for meaningful and sustainable improvements.
Simplify Before Scaling
Once the baseline is established and the current structures and ways of working are understood, the next step is simplification. Complexity in operations often leads to inefficiencies, higher costs, and scalability challenges. By streamlining processes, eliminating unnecessary steps and wastes, and leveraging technology to automate transactional tasks, organisations can create a more agile and resilient operating model which allows for the development of simpler processes and governance within even complicated and complex environments.
Processes (and therefore their associated governance structures) can be designed to function in simple, complicated or complex environments.
Key areas to focus on when simplifying include:
- Standardising processes to reduce variation and increase efficiency across teams.
- Optimising resource allocation by ensuring you understand the demand and align your resources accordingly in order to deliver the highest value.
- Reducing waste in workflows, whether it be time, materials, or resources, using Lean principles to eliminate non-value-adding activities.
- Enhancing communication and collaboration across teams to break down silos and ensure that improvements are aligned with broader business goals.
- Ensuring agility, flexibility and responsiveness in the delivery solution, platform and supporting processes so that as the business grows, operations can adapt without becoming overly complex or inefficient.
- Leveraging automation to minimise manual effort and reduce the risk of human error in repetitive tasks.
Simplification not only enhances efficiency but also sets the stage for scalability. When processes are clear, repeatable, and efficient, it becomes easier to expand operations without proportionally increasing costs and complexities.
The Path to Sustainable Growth
With a simplified and well-understood operating model, organisations are in a strong position to scale and grow. A streamlined foundation enables:
- Stronger customer relationships – By eliminating inefficiencies, businesses can deliver better, more consistent products and services, improving customer experience and retention.
- Faster decision-making and execution – With clear processes and up to date and timely data, leaders can make informed choices quickly.
- Improved resource allocation and cost efficiency – Businesses can focus investments on areas that drive the most value and align the capacity t the demand.
- Greater flexibility to adapt to market demands – Simplified operations allow organisations to respond to changes more effectively.
- Increased capacity to innovate – When operations run smoothly, employees have more time to focus on creative problem-solving and continuous improvement.
- Better employee engagement and productivity – A well-defined and efficient operating model reduces frustration caused by unclear processes and redundant tasks, leading to higher job satisfaction.
Conclusion
Improvement without a clear baseline is like setting off on a journey without a map. Organisations that take the time to thoroughly understand their operations, simplify processes, and align their capabilities with business goals will find themselves in a much stronger position to scale effectively.
By laying this groundwork, companies can drive sustainable growth, enhance customer satisfaction, and create a culture of continuous improvement that lasts. A strong foundation not only leads to immediate efficiencies but also ensures long-term success in an increasingly competitive business landscape.
If you would like to discuss any aspect of your operations or any challenges you may be experiencing please get in touch today.
