I had a conversation recently with a client who was about to undergo a large transformation. Their competitors were moving at pace, using digital technologies to help predict outcomes and provide real-time support on market conditions to their teams whilst my client was still very much a one to one relationship business.
They had a plan to change, they had a strategy and their strategy listed a range of different technologies that would support their team and move them to a digital method of engagement. The strategy was sound, they had their roadmaps aligned for the technology implementation but there was something large that was missing. They hadn’t factored in how this would impact the way they work, now I am not talking about the actual work, yes they realised that there would be new skills required with more tools and insights but what they lacked was how this would fundamentally change who they were as a business – their operating model.
What is an operating model?
An operating model is how a business adds value to its customers and how it is positioned internally to deliver that value. An operating model is not a structural change, it is looking at how all the parts come together to produce that value.
If we think of your vision and purpose as your why, your strategy is your what and your operating model is how you get it done!
So before you start your transformation you need to understand what changes you need to make to your operating model. Even with the best implementation and change management plan, it won’t be a sustainable success. Why? Because if you don’t know your operating model of your future state then you don’t know what you are changing to.
So where do you start?
There are many different models and approaches to this. We recommend starting with:
- Your customer value chains; where are you delivering value?
- What are the services that you need to deliver those customer requests?
- What capabilities do you need in your people to deliver those requests? These capabilities can be both human and technical skills.
- What platforms do you need to deliver these holistically?
- Ultimately, know your people, process and technology!
In parallel, you also need to understand your performance objectives:
- What does the market need?
- What is happening in your environment or ecosystem?
- What is changing that you need to bring in?
These all need to be aligned back to your customer value chains.
Finally, what are the performance objectives that you want to make as your differentiator? Is it going to be speed to delivery, or quality, or human interaction? All of these are valid and need to be considered in your operating model.
The overlap of these provides a clear direction for your how, therefore your operating model and therefore the extent of the change that you need to communicate.
Knowing this and building your operating model, and bringing your people along for the ride gets you one step closer to sustaining a successful digital transformation.