Aligning your operating model with strategy

Changes to the operating model are meant to align with the organisation’s strategic priorities. If the strategic intent is vague or fragmented, the design work will mirror that uncertainty, often sparking debates about reporting lines, resource allocation, and functional politics driven by personal preferences rather than strategic goals.

Consider this example: A retail company aimed to enhance customer centricity while growing new business. Early in the process, uncertainty about the playing field and exploration guidelines surfaced, sparking debates about strategic priorities in the midst of the organisational design work. This delayed the process and highlighted how quickly design efforts can derail without clear strategic direction.

Clear strategic choices are essential before aligning the operating model. In particular, your strategy must spell out your competitive advantage – how you deliver value in a way competitors either cannot or will not match.

Too many redesigns start by asking, “What structure do we need?” instead of “What capabilities must we excel at to win?” The result is a structure optimised for functions, not for truly embodying the strategy.

Ultimately, a clear strategy with competitive advantage translates into organisational capabilities – the key activities where you must invest disproportionately and perform distinctively to make your competitive advantage real.

For example, a wholesale company identified performance-oriented steering of its different business models as a critical capability. To reinforce that capability, the company separated its business models into distinct business units, proving that capabilities can provide an obvious starting point and serve as the main bridge between strategy and operating model.

All too often, leaders assume that simply aligning the org chart with the strategy will do the trick. This misconception overlooks other dimensions of the operating model that may also require adjustment.

The operating model defines how an organisation delivers value to its customers and extends beyond boxes and lines, encompassing eight dimensions: structure and location, organisation and people, suppliers and sourcing, business processes, information and technology, culture, risk and compliance, and performance management.

To resist the temptation to act like a box-moving company, aim to consciously redesign the dimension(s) that matter most in the context of your strategic priorities.

Even the best design on paper will fail if people do not buy into it. That is why the process of shaping the operating model matters as much as the outcome. A co-created approach taps into the organisation’s knowledge, creativity, and energy, ensuring that those who will implement the new model are genuinely committed.

Co-creation involves actively engaging leaders and employees in shaping, testing, and refining solutions. It builds ownership along the way, ensuring the design is both strategically sound and energises the right people, i.e., those who will bring it to life.