Business architecture

Business Architecture and Operating Models: Four Imperative Steps

08 August 2018Matt Berry

To effect real transformation you need to have the right business capabilities in place. Here Matt Berry sets out the four key considerations you need to bake into your operating model.

In a fast -moving, digitally-enabled world it’s easy to be distracted by the bright lights of technology and innovation. However, to truly leverage technology, and to really reap the benefits of innovation, it’s essential to have the right organisational capability in place. 

You can pick your buzzword: ‘digital first’, ‘data driven’ or ‘customer centric’ but it boils down to how. And business capability is at the heart of how a business delivers against its targets and strategic objectives. Capability can take many forms but ultimately, it needs to seamlessly provide a service to itself, to its customers and to its partners. 

Without the right capabilities, correctly integrated and designed into consumable services, a business cannot and will not succeed. Capability is made up of process, people and technology underpinned with the right data and information, all working in harmony. The best operating model design aims to create holistic services and service groups to power success in the most efficient manner.

To build an operating model which encompasses the capabilities needed, in the right service wrapper, there are four steps you need to consider:

  1. Strategy, Scope & Definition
    • Scope and distil relevant aspects of your strategy
    • Define the services your business needs to provide
    • Consider the capabilities you may need to provide these
    • Align your objectives and associated wider business challenges to the services and capabilities that may achieve them
  2. Current Operating Model Assessment
    • Assess your current ways of working and your service capability and if these already exist in your business in any form
    • Analyse current operating model strengths and weaknesses
    • Conduct root cause analysis
    • Create high level recommendations to support the re-design of your operating model. 
  3. Target Operating Model Design
    • Define services you require with the right capabilities and processes, people and skills, technology and platforms and using the right information and data
    • Design target services of seamlessly integrated capabilities and processes wrapped up into an operating model
    • Ensure target design creates the service and capability you desire while overcoming the challenges you face in your existing model
  4. Transition, Implementation & Evolution
    • Assess the impact of the proposed change based on the variance of the current status and target
    • Prioritise changes based the value and challenge versus the return
    • Understand your capacity for change and create a roadmap for the launch of your desired business services
    • Manage the implementation of your new operating model
    • Evolve your continual capability improvement
    • Continually measure your value realisation

This may seem obvious but breaking down business capability and design into these four steps will facilitate lasting transformation in your organisation and  make a real difference.

Too many businesses waste money with large investments in technology that is then not utilised and leveraged properly or culture change initiatives that are not fully adopted or embraced. These companies are forgetting the fundamental principle that should guide transformation projects - it has to be useful to and used by people. While businesses are often willing to invest money in eye-catching technology, or fashionable culture programmes, they can often forget to invest in adapting the design of the business to ensure adoption.

Demonstrating a willingness to change and adapt ways of working, creates a cultural expectation of possible change. This can make a business more agile, flexible and able to respond to future technological, social, economic and political changes to their industries and markets.

Author: Matt Berry
Published: 08 August 2018
operating modeldesigndigital marketingdigital transformationsuccess measurement

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