Design a robust operating model to dramatically improve performance
A study published by Harvard Business Review stated what many under-fire executives intrinsically feel – 60-90% of strategic initiatives never fully launch. While there are many external conditions that obstruct business success (hyper-competition, tech disruption), it is often the business stimuli inside the org that most stifle strategic execution and impede turnarounds.
The primary reason businesses fail can be attributed to a single word: alignment
As a recovering strategist and experienced business operator, I maintain that the primary reason most businesses fail can be attributed to a single word – alignment. More than ever, it is the lack of alignment about a business’s goals, operating principles, and desired outcomes that inhibits success. The juxtaposition is ironic. On the one hand, these factors are internal to the org, and therefore should be the easiest for executives to shape and fix. On the other, they are often the primary and principal barriers to goal attainment.
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Certainly, developing a strategic plan – including goals, priorities, timelines, and project sponsors – is an invaluable first step to generating alignment. However, it’s important to note that most strategies don’t detail how the work gets done. Consider a B2B software firm that seeks to improve its Customer Experience. Assigning a CSAT metric to a single functional leader is usually a recipe for disaster. After all, numerous departments interact with clients – Marketing sends them content, Sales sells the work, Operations fulfills the service, and Finance bills them – each of whom has a unique window into their people and organization. Without agreed-upon objectives, decision-making governance, and ways of working, the team will work laboriously – and fruitlessly – to reverse engineer a solution that satisfies all sides. The end of the story is a given: blame, resentment, and a solution that doesn’t fulfill the org’s goals.
Struggling with Execution? Design an Operating Model
Businesses with persistent execution challenges should consider designing an operating model that governs how different functions work with one another to achieve a company’s strategy. Designed purposefully, an operating model can unlock enormous new pockets of business value and dramatically improve productivity. Designed poorly – or worse, not designed at all – companies will likely remain misaligned as they continue to struggle to achieve even the most basic tasks and objectives.
Designing a robust operating model for your business requires the purposeful alignment of the following core elements:
- Strategy & Goals: A company’s strategy governs where its time, investments, and resources should be placed to achieve a set of goals. The CEO – and senior leaders – must be more than simple advocates for the plan. They need to be vocal stewards of the strategy in public and unrelenting champions behind closed doors. Words matter here. So do details. A strategy that is not thorough, well-articulated, or well-understood is a leading cause of business discord.
- Decision Making & Governance: Each discrete function in a company must operate skillfully and collaboratively for a business’s strategy to succeed. Still,many departments work side by side without ever really working together. This is a silent killer for many organizations as they reach scale. Revaluating roles, decision-making, reporting, and accountabilities can ensure that leaders have appropriate and complimentary controls to streamline execution and run the business.
- Ways of Working and Processes: Executing a new strategy usually requires material (and often uncomfortable) changes to the way a company operates. For example, improving a company’s return policy might require new processes and cadences between organizations that don’t typically collaborate closely (e.g., Supply Chain and Support). Using a ‘systems thinking’ approach can help unite different, often competing, functions based on the value they generate so everyone in the org knows their role in the process – and marches to the same beat.
- People and Skills: Many failed strategies can be attributed to leaders spending too much time salivating over new potential markets and products, and far less time on the internal competencies required to execute effectively. Cultivating your people capability should be prioritized based on the strategy being formulated – whether professionalizing a sales org to sell larger deals or optimizing support to better delight customers.
- Data and Technology – Wherever you are on your digital journey, it is critical that orgs align their technology roadmap to their business’ strategy and goals. At the same time, all orgs should consider designing a robust operating model that encourages continuous business disruption and reinvention based on technological innovations.
- Culture and Norms – Every business is a unicorn. Companies should be mindful to incorporate their unique ethos and character directly into their ways of working. At the same time, don’t be afraid to challenge ‘sacred cows’ that no longer have the desired impact they once did. Above all, put your people first when planning your operating model to ensure employees feel respected, appreciated, and protected.
An operating model is the central nervous system of a business. It governs the way organizations operate collectively to achieve a set of goals and fulfill its business strategy. Many companies, large and small, who struggle with business execution have likely grown out of their previous operating model and need to reimagine the way they ‘perform work’ to succeed.
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