We recently examined business models, the three major categories in which these can be classified and the critical questions to address in order to map out a company’s business model. Today, we will discuss how to develop a business operational model and the advantages attached to it.
Generally, when the term operating model is brought up, it is often viewed as one of the fancy terms used in business to refer to its day-to-day activities and, consequently, not much emphasis is placed on how it should be structured. However, an operational model provides the step by step process to deliver value to customers that includes the type of technology it adopts and the strength of its staff. Therefore, as defined by Wikipedia, ‘An operating model is both an abstract and visual representation (model) of how an organization delivers value to its customers or beneficiaries as well as how an organization actually runs itself.’
Why do you need an operational model?
The importance of having a structured business operating model cannot be over emphasised. Some benefits are highlighted below:
It allows for easy integration within a company
It serves as a guideline for decision making
It provides a clear picture of who does what and enables activities being tracked.
How to develop an operating model?
Identify the goals and objectives of the company It goes without saying that in order to craft an operational model, an organisation needs to clearly state where it is coming from and where it intends to go. This is simply to ensure an alignment of the company’s existing structure, i.e organisational structure, values and philosophy, established processes, and its ability to adapt to changes. Questions in this stage will be centred around: what is working for us? And what do we need to change?
Identify a unique value proposition Next step is to come up with a value proposition that will be communicated internally to ensure everyone is on board with what is expected of them. This might take a while to perfect, as getting the ideal value proposition will require many refining processes.
Define the process This entails drawing up a structure which shows those involved in the operations, their key performance indicators (KPIs) and the expected outcomes.
Implement the operating model and monitor its performance overtime.
In summary, an operating model involves all hands-on deck to ensure efficiency in its execution. Email us at equiries@ovacgroup.com for a free consultation.