What is Your Team’s Unique Edge? Six Benefits of Designing an Operating Model for Your Function
Do leaders in your organization understand the critical role you and your team play in daily operations and in the pursuit of the organization’s strategic goals and initiatives? How would it impact your team’s culture, alignment across functions, and support from senior leaders if all key stakeholders understood the value your team provides and how that value is delivered?
We recently published an article outlining Switch’s organization design process. In it, we highlighted a critical step in our design offering – the creation of an Operating Model. An Operating Model is a visual representation of who your team serves, what critical and unique value your team offers, and how your team delivers that value. The purpose is to build alignment with your stakeholders around why and how your business functions. Achieving this shared understanding will better enable the execution of your strategy.
An operating model is a critical element between strategy and execution that, when activated throughout your organization, can play a role in helping your team achieve your goals. In this article, we take a high-level look at what an operating model is, how it is designed, and highlight six benefits that your team is likely to experience when you work with Switch to redesign (or develop for the first time) your operating model.
We recently worked with a client to design operating models for several of their functions. While similar in style, every design was unique because each model was created out of each function’s vision and how each of them engaged with and served the organization. What we heard from each executive was that their operating model told their story in a way that had not been clearly communicated previously. The response from their fellow C-suite peers was to move from a position of outsider (observing the other’s function but not understanding it with a deep appreciation) to being able to stand alongside each other in understanding, support, and even ownership as they realized that one function could not exist without the other. One executive stated, “I don’t think we’ve ever been able to show this clearly why [our function] is so critical to the organization. My peers now understand why we are so passionate about what we do and why we push for the resources we need. And, frankly, I now see the same for my peers’ organizations, as well.”
““I don’t think we’ve ever been able to show this clearly why [our function] is so critical to the organization. My peers now understand why we are so passionate about what we do and why we push for the resources we need. And, frankly, I now see the same for my peers’ organizations, as well.””
What is an operating model?
The scope of what defines an operating model varies depending on the purpose of the work. But no matter how complex or straightforward an operating model is, it is always driven by purpose and strategy. An operating model communicates the answers to questions such as:
Who are we?
What matters to us?
What are our goals?
Who do we serve?
Who relies on us?
How do we do it?
The most important question an operating model answers is, “What is the critical value we offer that no one else does?” These questions, in part, guide the design of the picture that represents how your team delivers value – at a high level, how your team works together to execute your strategy.
“The most important question an operating model answers is, “What is the critical value we offer that no one else does?” ”
For your operating model to be effective, it must be utilized by your senior leadership and their teams. It serves as a critical source of truth that will help you gain alignment and continually recalibrate stakeholders back to the unique value only your team can deliver. We work with clients to not only create this visual representation of your team’s work and the value you deliver, but also to strategically leverage the model to tell your story to your team and to the organization, and to activate it in a sustainable way. The answers to the above questions are the argument for why your team exists and the model is the picture to drive continuous alignment around that argument (your value).
How is an operating model created?
Participating in the process of creating your operating model delivers as much value as the final product. Switch works with executives and their leadership teams to design a model that tells the story of who you serve, how you serve them, and why what you do for them is critical. While every client is different, the production process for the operating model typically includes these key components:
Understanding Your Organization: It is critical for us to understand your organization’s goals, strategy, critical initiatives, organization chart, etc. Through documentation review and conversation with you, we are treasure hunting – looking for the gold nuggets that serve as the key components to the story your operating model will tell. We seek to understand the purpose of your team, why you exist, who you serve and why you are critical to each client group. We clarify how your sub-functions work together and how you partner with those outside your team to deliver a value that only you can deliver.
Designing Through an Iterative Process: Designing an operating model is an iterative process. While we tailor the design to each client’s unique situation and needs, the multi-step aspect of the build-out is important because it enables a collaborative experience. Your operating model is unique to your organization’s strategy, goals, and culture. One goal of this co-creation process is that those involved have an “ownership mindset” of the finished product. This enables them to socialize the operating model with confidence, clarity, and excitement. Collectively, you’ve put your DNA on paper; the ability for you and your leaders to communicate an aligned message of who you are to all stakeholders is powerful.
Including the Right People: Speaking of leaders, it is important to have the right people at the table through the design process. We work with you to understand who those people are. Often this is your leadership team. You might also consider including other key stakeholders from across the business. Involving “outsiders” will provide a valuable point of view and can increase adoption if changes need to be implemented.
Ultimately, it’s important to ask, “Will stakeholders outside of this team be able to understand who we are and our level of criticality to this organization when we walk them through our operating model?” We know we’ve landed the plane when the answer from you and your leaders is a resounding “Yes!”
What can an operating model do for my organization?
A well-designed operating model that is built through a collaborative process will help you, your team, and the broader organization align around the critical value your team offers and how it is delivered. Through the design process, and as you utilize the final design on an ongoing basis, your team is likely to experience improved performance, decision making, scalability, risk management, innovation, and sustainability. These do not happen simply because you have an operating model or only because you have one, but an active operating model can play critical role in your team’s ability to level-up in each of these areas.
Performance: A visual model that tells the story of who your customers are, how your team works together (and with external partners) to serve them, and what value you deliver to them will enable greater flexibility and quicker responses to changes. Whether changes are needed because of challenges or opportunities, your team’s clear understanding of the operating model will unlock their ability to be more agile, thus improving the operational performance.
Decision Making: This increases when a team understands who they are - and who they are not. The operating model enables your team to choose the best “yes” every day with every decision. Clarity of purpose, goals, processes, and partnerships creates a highly efficient organization.
Scalability: Focus will also increase impact. Many organizations are not unlocking the full potential of their workforce because their team members do not understand how their individual or sub-function work fits within the greater puzzle. Your organization is putting together a single picture, that’s your mission or purpose statement. An operating model shows each person where they fit and why what they do matters far beyond their individual metrics. When this is clear, there is now room to scale more efficiently and with less pain points.
Risk Management: Imagine everyone on your team moving in the same direction, acting with one mind and purpose. That’s the power of a well-designed operating model. Also, when you have a new team member or senior leader join the organization, you can use your operating model to tell your story. This will help them understand your team’s value, purpose, goals, and high-level processes. This one-page visual is the first conversation towards bringing them into alignment. It’s powerful to be able to say, “I want to introduce you to who we are, what we do, why we do it, and the value we deliver.” When there is shared clarity and an open channel for communication, risks are managed more appropriately, and even minimized.
Innovation: When your team spends less time in friction, they can spend more time innovating, iterating, and serving as thought partners to each other. Less friction also typically results in less fear and, therefore, more courage and confidence to be intrapreneurs.
Sustainability: A wholistic view of your team’s operating model that shows how your team fits within and enables the larger organization’s strategic plan will highlight which areas are most important to sustain, where growth is needed, and what does not need to be maintained. Sustainability is driven by alignment around value and is accomplished in response to the question, “Why do we exist? And how can we continue to exist by being good stewards of our resources and partnerships to increase the collective value over time?”
At Switch, we work with organizations to make change easier. An operating model makes it easier for your team to pursue transformational growth. It’s the type of change we love to enable and support, and we believe every leader and their team can benefit from this work.
Reach out to us if you’d like to schedule a complimentary conversation about your needs and how an operating model could benefit your team.
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