Operating Model Canvas: How To Deliver Great Value To Your Customers and Beneficiaries

1
Chapter
Operating Model
CH1 Canvas
Business model canvas 14
Transformation 20
Design steps 24
Tips 32
How to deliver
great value to your
customers and
beneficiaries
2 OPERATING MODEL CANVAS

Copyright protected. Use is for Single Users only via a VHP Approved License.
For information and printed versions please see www.vanharen.net
An operating model is ...
CH1
.. a visual representation (i.e. a model) The journey to success has
four parts:
.. in the form of a diagram or map ➤ The strategy part: deciding what the
or chart or collection of diagrams, organization will do
maps, tables and charts

➤ The operating model part:
designing the organization so that it is able to
execute the strategy
.. that show the elements of the ➤ The build or transformation
part: creating the target operations and
organization, such as activities, organization
people, decision processes, information ➤ The doing-the-business part:
systems, suppliers, locations, and

running the organization so that the strategy is
achieved
assets,
This book is about the operating model part:
the design part. It is not about the strategy,
.. that are important for delivering the transformation or doing-the-business parts
organization’s value proposition(s)
Different Other authorities include a
.. and how these elements combine authorities define mission, vision and values step
to successfully deliver the value operating model before strategy. We include

differently. There this as part of strategy.
proposition(s) is no standard
definition. This is
our definition.
AN OPERATING MODEL IS ... 3

High-level operating models
This book is about high-level operating models. It focuses on the link
CH1 between strategy and operations and between business models and
operating models.
One page Operating Model Ten page Operating Model

…Zara
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Outsource Design a collaborative agreement
1. The annu No
Is this a key activity in delivering value?
Yes
al timetable
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managers
meetings, of key
such as
the Most organizations depend on suppliers for raw materials and many other inputs. Fortunately
e h ou Managem or executive board and/

CH3many of these supplies, making it possible to have ‘transactional’
war
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between
System Jan Feb
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Mar Apr
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Value Chain e.g Design Buy Make Market Sell Etc
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ct Review
‐‐‐‐‐‐‐‐‐‐‐‐
IT blueprint
of their typical 6. The cont Mexico
Org Units e.g
a map s MP MP er. These uctive

Product business Owner,
Make warehouse manag MP MP used for a more constr

units ERP stand
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order from
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Design
R&D Owner,
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Spec
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Purchasing Owner,
or Impro is. But these , typically distributors in

ERP Stand
reception desk, the the importMP MP MP

(product
Scheduling Owner,
n, some of a central
ERP Stand
vemenzation who revie
garments
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toolbox
t
Marketing Owner,
MP MP
Spec
each locatio team

and fulfill 7. The peop w operational proc smaller countries)
Etc
or widely spread unicate the role of

ERP Stand = Standard module
collections
MP
ERP Bespoke = Bespoke module
Integrated into the enterprise system Spec = Special stand-alone application
collections stores purpose: to

comm
are located
and why. le review esses Information technology is a crucial part of nearly all modern organizations because it enables
managers)
that asses process
model
ant assets ses peop information sharing and communication across the normal functional and locational boundaries,
where import developm le, their
ent
career path needs and their
operating
and because it can help automate processes. A high-level IT blueprint is created by placing the
Up-to-the- galvaniz
ed stee
l s process steps from the value chain map along the top of a table, and the organization’s units
CH3 lier of Europe excluding
minute
down the side. The table shows the IT applications that are needed, who ‘owns’ each and
Global supp USA (create a JV)
Canvas • The
Spain (use non‐
which need to be integrated into an enterprise system.
CH3 exclusive distributors)
ORGANIZATION
fashion
Worse
119 Manufacturer
Information
Model
affordable
Outsource Design a collaborative agreement
CHART
No Yes
Operating
Organization
Empowered prices Is this a key activity in delivering value?
ered No online
Empow ns store sales
106
io
Four types of support work
collect s Organization Model
Operating Model Canvas • The operating model toolbox

Head of structure
Key accounts
Finance
managers
HR Lean/ Operating excellence
Policy e.g. Champion/Coordinate e.g.
Core resource e.g. Shared service e.g.

Research Shared services division
PROCES
HR services
Marketing
am
Finance services
te
toolbox
al
Business Units
Centr
© Ashridge Executive Education 2016
Organization charts are common. They provide a helpful visual guide to the organization. But
SES
ng model
rm they do not give as much information about how the organization operates as they could. An
platfo
‘organization model’ is a way of drawing an organization: an organization chart distinguishing
• The operati
between the ‘operating work’ and the ‘support work’, and clarifying the relationship between
store Value chain map

All Value Chain Steps
Build Quote/ Adjust Deliver
Design Market Admin Follow
Clients Sell design /do up
Segments
the support functions and operating units. In this way, an organization model shows how the Open courses
Tailored
* *
* * What is an IT blueprint? The
phrase IT blueprint
al
Issue
Qualifications qual
POS
Conferences
oduct Centr gn
Weddings
people reporting to the same boss work together. * *

+ design
has been used widely in a

Research publish
range of contexts. The

Combine/manage together
Source of advantage
Model Canvas
Link or standardise
* Problem/Opportunity
Store pr link
CH3
Separate and manage by segment
analogy is with a building

blueprint. IT blueprints
desi system
typically show the architecture
Typical large company structured The value chain map displays the operating processes that create and deliver value. hardware and communication
of the IT applications,
rs pipes. The use of the
manage
into business units It represents the heart of the operating model – the middle arrow in the Canvas. term here is very high-level.
Operating
In fact it is little more
than a visual way of representing
to HQ
the principles for
102 designing the IT systems.
stores
However it is a vital step
and benefits from being kept
at this high-level.
53
104 Ashridge Executive Education
CH3
W
TWW OOWOWWWOO MOOWO CWOOWW TOO ZWO
model toolbox
Explained and illustrated

All Value Chain Steps
operating
Build Quote/ Adjust Deliver

Design Market Admin Follow
Clients Sell design /do up
Segments
Open courses
*
Canvas • The
Tailored
* *
in Chapters 2 and 6
*
toolbox
Issue
Qualifications qual
Conferences
model
Model
Weddings
* *
+ design
Research
operating
Operating
publish
Combine/manage together
Source of advantage
Link or standardize
Canvas • The
100 Separate and manage by segment * Problem/Opportunity
Model
Operating
98
Explained and illustrated in

4 OPERATING MODEL CANVAS Chapters 3, 4 and 5
Detailed operating models
For an organization to function, many hundreds of design decisions
need to be made. Our belief is that these decisions – the detailed CH1
operating model decisions - are better made if there is a high-level
operating model guiding them.
One hundred page Operating Model One thousand page Operating Mannual
OPERATING
MODEL
OPERATING
MODEL
Not covered in this book

HIGH-LEVEL OPERATING MODELS DETAILED OPERATING MODELS 5
When do you need to work on
CH1
When you When you are When you have

are starting changing performance
something new strategy problems
➤ Helps test the practicality of what you want ➤ Helps test the practicality of what you want ➤ Helps you find the root causes
to do to do. Often leads to better strategies. ➤ Helps you see the connections between
➤ Helps you understand costs, resources ➤ Helps you understand costs, resources symptoms and causes
and timing, and hence develop a better and timing, and hence develop a better ➤ Helps ensure your implementation plan is
business case business case complete
➤ Helps you align your team and your ➤ Helps your people understand the new ➤ Helps your people see why all the changes
stakeholders strategy are needed
➤ Helps ensure you focus on the important ➤ Helps ensure your implementation plan is
complete

your operating model?
CH1
When your team When you are When you are

is not aligned finding it hard implementing
to implement major change
your plans
➤ Helps those with different views explain ➤ Enables you to check that your plans are ➤ Enables you to check that your project
their thinking practical sequence is practical
➤ Provides the senior team with a shared ➤ Helps those who are dragging their feet ➤ Helps explain the plan and the business
blueprint of what they are trying to build explain their position case
together ➤ Often results in re-sequencing the ➤ Helps those who are concerned about the
➤ Provides a line of sight between purpose implementation plan plan to explain their position
and activity ➤ Helps align the leaders of different projects
WHEN DO YOU NEED TO WORK ON YOUR OPERATING MODEL? 7

This book will help you ...
Who are you?
CH1 ➤ A manager in operations or in any function who wants to design how the operation works
➤ A CEO or COO or entrepreneur who wants to review his or her organization and plans
➤ A lean practitioner or process excellence manager who wants to be more strategic
➤ A manager in strategy or planning who wants to make the plans more practical
➤ A project manager or change specialist working on a transformation project
➤ A leader who wants to make sure her team members are all on the same page
➤ A business partner in HR, IT or Finance who wants to improve the business
➤ A business development manager who wants to design a new business
➤ A Business Architect, Enterprise Architect or Operations Strategist
➤ A manager tasked with cutting costs or improving service or quality
➤ A customer experience or user experience specialist Design a target
➤ A manager in charge of post merger integration operating model
➤ A consultant helping organizations improve

Design improvements
➤ Anyone responsible for performance to your current
operating model
Document your current
operating model
Understand what an
operating model is

Be more
successful
Achieve your
strategic
CH1
objectives
Discover ways of
improving your
Better align strategies
managers from
different functions,
Improve the countries and
dialogue with cultures around a
those resisting or common view of Yes, operating model
concerned about what they are jointly work can result in better
change trying to do strategies: more practical,
more connected with
capability, more profitable
THIS
THIS
BOOK
BOOK
WILL
WILL
HELP
HELP
YOU
YOU
... 9
Strategies engage 5% ...
CH1
% of employees who think the strategy is their responsibility
100% 100% 100%
Sales Operations R&D
Double Reduce cost of Develop new

international sales by 20% products
sales

... operating models engage 95%
All these functions are CH1
involved in the operating
% of employees who think the operating models needed to deliver
these strategies
model is their responsibility
100% 100% 100%
Marketing Finance Customer Service
Finance IT HR
HR HR Marketing
Logistics Logistics Purchasing
R&D Product Sales

Development
Operations Purchasing Operations
Sales Operations R&D
Double Reduce cost of Develop new

international sales by 20% products
sales
STRATEGIES ENGAGE 5% OPERATING MODELS ENGAGE 95% 11

How to use this book
The Operating Model Canvas is a tool
CH1 that will help you think about and
make changes to your operations.
Design improvements
It is a simple tool. You may be able referring to the case
to grasp the tool and start using it by studies (chapters 4 and 5)
reading this chapter and the first few
pages of Chapter 2 - “The Operating
Model Canvas - Examples”.
Look at the
However, you will gain the most
from this book if you first identify a examples of other
challenge or opportunity you have
in your current situation. As you
organizations to get
insights (Chapter 2)
5
read, try creating a Canvas for your
4
organization. Write a few post-it
notes that capture some of the
things you think are important about
Identify a
your organization (i.e. important to
delivering the value proposition) and challenge or 3 Decide which
stick them on the Canvas. Then look opportunity tools will help
at the examples provided (Chapter 2).
Then look at the tools (Chapter 3)
2 you most
(Chapter 3)
and try using some to understand
your challenge and develop ideas for
resolving it. Then explore the two big
1
Try creating an
case studies (Chapters 4 and 5).
Operating Model
Have fun! Canvas of your current
situation (Chapter 2)
Chapters
4 6 CH1
1 2 CREATING 5 EXAMPLES OF
Operating A TARGET CREATING AN OPERATING
OPERATING M
ODEL
Model Canvas 3 OPERATING MODEL OPERATING MODEL MODEL
CANVAS examples Tool box FOR A BUSINESS FOR A FUNCTION CHANGE
Business model POLISM 38 Five core tools 96 Industry and EEI’s IT function 180 Change process 200
canvas 14 How to use 42 Value chain map 98 challenges 136 Steps in design 182 Sales force 202
Transformation 20 Business 48 Organization Steps in design 146 Value chain 184 Design team 204
Design steps 24 - Uber 50 model 100 Processes 148 Suppliers 186 HR function 206
Tips 32 - Zara 52 Locations Organization 154 Locations 188 Unemployment
- McKinsey 54 footprint 102 Location 158 Organization 190 benefit 208
- Van Haren 56 IT blueprint 104 Information 164 Decision rights 191
Functional 64 Supplier matrix 106 Suppliers 168 Scorecard 193
- IT 66 Thirteen additional Scorecard 172 Summary 196
- HR 68 tools 108
Multi-business 70
- Shell 72
- Ashridge 74
Public Sector 80
- Qualifications 82
- Benefits 84
Other 86
- DEF CON 88
- Cardboard
Citizens 90
13
The Operating Model Canvas is
a one page operating model
CH1 The Canvas is fully The Operating Model Canvas does not
explained in Chapter 2 include the Financial Model. But, of course, the operating
model does drive most of the organization’s costs.
Operating Model Canvas

SUPPLIERS Locations
S L The link is roughly

P = Key Activities
S = Key Partners
Value Delivery Chain(s)
Pr
Va sition
O + L + I + M = Key Resources
P opo
lue (s)
Customer/
Beneficiary
Operating Model Canvas

erating
Andrew Campbell
Operating
Aligning operations and organization with strategy
rating Op
The journey from strategy to operating success depends on
Operating
Aligning operations and organization with strategy
Information Ope
Mikel Gutierrez
Organization
creating an organization that can deliver the chosen strategy.
This book, explaining the Operating Model Canvas, shows you Mark Lancelott
how to do this. It teaches you how to define the main work
Model
Model
Model Canvas
Model Canvas
processes, choose an organization structure, develop a high-
level blueprint of the IT systems, decide where to locate and
how to lay out floor plans, set up relationships with suppliers
Canvas
Canvas
and design a management system and scorecard with which to
run the new organization. The Operating Model Canvas helps
O I
you to create a target operating model aligned to your strategy.
Locations
The book contains more than 20 examples ranging from
SUPPLIERS
large multi-nationals to government departments to small Shopping
s centers
charities and from an operating model for a business to an cturer
Manufa Transport for
operating model for a department of five people. The book Spain Product
Companies HQ and e sit
describes more than 15 tools, including new tools such as ous managers
wareh between
the value chain map, the organization model and the high- designers
level IT blueprint. Most importantly, the book contains two
fully worked examples showing how the tools can be used to
Processes
Sense what Stores
develop a new operating model. is selling Make warehouse order from Sell
Design Design
(product garments and fulfill collections
collections stores
managers)
This book should be on the desk of every consultant, every
strategist, every leader of transformation, every functional
M
Mark Lancelott
Mikel Gutierrez
Andrew Campbell
business partner, every business or enterprise architect, every Empowered
red No online
Lean expert or business improvement champion, in fact
Information
Empowe s
Management
store sales
Organization
tion
everyone who wants to help their organization be successful. collec managers
teams l
Centra m
platfor
l store POS
product Centra ign
System
Store des system
rs link
manage
to HQ
stores
www.vanharen.net

It covers the back end of
the Business Model Canvas
CH1
Business Model
Back end Front end
Value Target
Proposition Customer
Key Customer
Activities Relationships
GAIN CREATORS GAINS
Key Value Customer
Partners Proposition Segments
PRODUCTS
& SERVICES CUSTOMER
Key JOBS
Channels
Resources
PAIN RELIEVERS PAINS
Cost Structure Revenue Streams
Are CHANNELS and

CUSTOMER RELATIONSHIPS
part of an operating model?
Yes in so far as they involve
KEY ACTIVITIES or KEY
PARTNERS
THE OPERATING MODEL CANVAS IS A ONE PAGE OPERATING MODEL 15

What is the ...
The Business Model Canvas Key Partners Customer Segments
CH1 is a framework developed by External organizations who provide important The different groups of people the
Alex Osterwalder, Yves Pigneur and inputs to the organization. They may be organization is trying to serve.
co-authors to describe the main suppliers of raw materials or distribution
elements of a business. It describes services or IT support. Equivalent to the Value Propositions
suppliers box in the Operating Model Canvas. The offer to the customers or beneficiaries of
how an organization creates, delivers
the organization.
and captures value, what value is being
Key Activities
delivered and to whom. The most important work steps needed to Channels
deliver the value proposition. Equivalent to How the organization communicates with and
You do not need to be familiar with the the processes arrow in the Operating Model distributes to customers or beneficiaries.
Business Model Canvas to understand and Canvas.
work with the Operating Model Canvas, Customer Relationships
but you will find it useful. Key Resources How customers are acquired, engaged with
The most important assets, such as people, and retained.
The book Business Model Generation, technology, machinery, brand, buildings and
published in 2010, provides more locations. Equivalent to the locations box
(which includes assets), the organization box
information and there are on-line
(which includes people) and the information
resources at strategyzer.com/bmg
box (which includes data assets) in the The four items in this column
Operating Model Canvas. are about market strategy
– what to offer to whom
through which channels. They
have implications for the
Operating Model Canvas.

... Business Model Canvas?
Designed for: Designed by: Date: Version:
The Business Model Canvas
Key Partners Key Activities Value Propositions Customer Relationships Customer Segments CH1
Key Resources Channels
Cost Structure Revenue Streams $
© Strategyzer AG
WHAT IS THE BUSINESS MODEL CANVAS? 17
How does the Operating
CH1
Model Canvas link to ...
The Operating Model Operating Model Canvas
Canvas has six elements:
the work that needs to be done
➤ SUPPLIERS Locations
to deliver the value proposition
(value chain);
the people who do the work
➤
and how they are organized
(organization);
S L
where the people will be located and
➤ Value Delivery Chain(s)
Pr
Va sition
opo
the assets they need to help them
lue (s)
(locations);
what information systems the
➤
Customer/
people need to help them
(information);
Beneficiary
Organization Information
the suppliers who support the work
➤
O I
(suppliers); and
the management system used to run
➤
the organization (Management
system).
M Management
System

... an enhanced Business
Model Canvas CH1
Back End Middle Front End

(operations) (value) (customers/channels)
The Operating Model Canvas has icons

for value proposition and customer.
These are treated as inputs to the
operating model design rather than as
part of the design challenge. The book
“Value Proposition Design” shows how to
design these inputs.
Financial Model
The Operating Model Canvas with SIX elements is a more powerful “back-end”
than the three elements - Key Activities, Key Resources and Key Partners -
of the Business Model Canvas.
HOW DOES THE OPERATING MODEL CANVAS LINK TO AN ENHANCED BUSINESS MODEL CANVAS 19
From strategy ...
CH1
Understand
Environment Develop Strategy
Customer preferences
Market & economic

trends
Competitor performance
Supplier capabilities
Technical, legal,
environmental,
and political factors
All good strategy is founded on a deep A strategic plan explains who Strategies need to be converted into a
understanding of the environment, the organization will serve, business design. This is best done by working
economic trends, consumer trends, what will be “offered” and on the elements of the business model: value
technology possibilities, etc ... how the “value” will be proposition design, operating model canvas
created. and financial model. This work can result in
adjustments to the strategy.

... towards transformation
Develop CH1
detailed designs
Design value proposition Summarize and test as a business model and transform
GAIN CREATORS GAINS

Project
Key Customer
PRODUCTS
& SERVICES CUSTOMER Activities Relationships
JOBS
PAIN RELIEVERS PAINS Key Value Customer Project

Partners Proposition Segments
Key
Channels
Resources
Project
Design operating model
SUPPLIERS Locations Cost Structure Revenue Streams
S L Project
Value Delivery Chain(s)

Pr
Va sition
opo
P
lue (s)
Summarize financial model

Customer/ Project
Beneficiary
Organization Information
O I
Project
M Management
System
FROM STRATEGY TOWARDS TRANSFORMATION 21

Designing the operating model ...
CH1
This book is about how to Design the

design (at a high-level) transformation journey
the “to be” or “target” or
and work on lower-level
“future” operations.
operating model details
Design the
high-level ‘to be’
operating model
Identify a
reason to
change

... not the transformation journey
But the Operating Model Canvas can also be CH1

used as a guide during transformation; as a
way of communicating both the ‘as is’ and ‘to
be’; and to help stakeholders build engagement
around changes at any level of detail.
Start
transforming from Transform from
‘as is’ to ‘to be’ Run the ‘to be’
‘as is’ to ‘to be’
…. organization
….
while designing …
while running a
more details and while improving it
mix of ‘as is’ and Identify another
running the ’as is’ ‘to be’ reason to
organization change
DESIGNING THE OPERATING MODEL NOT THE TRANSFORMATION JOURNEY 23

Typical activities in an ...
CH1
Initiate Diagnose Design Principles

➤ Clarify issues ➤ Understand strategic objectives ➤ Clarify strategic objectives
➤ Clarify stakeholders ➤ Understand front end of business model ➤ Define design principles
➤ Clarify scope • Target segments/geographies ➤ Test and get agreement
➤ Define team • Channels/relationships
➤ Define governance • Product/service value propositions
➤ Plan project ➤ Understand current operating model
➤ Agree plan ➤ Understand sources of advantage/
excellence
➤ Understand problems/issues/challenges
➤ Develop case for change
These are the typical

steps that you might
see in any proposal for
operating model work.

... operating model design project
CH1
Develop Options Evaluate Plan changes

➤ Define critical choices ➤ Check against design principles ➤ Revise case for change
➤ Develop options ➤ Test against other criteria ➤ Review communication/engagement plan
• Organization options • Cost/capital expenditure for each stakeholder group
• Location options • Ease of implementation ➤ Plan pilot
• Information options • Political support ➤ Do gap analyses
• Supplier options • Constraints ➤ Plan rollout projects
• Management system options • Risks ➤ Create governance for implementation
➤ Check alignment • Etc. ➤ Allocate resources
➤ Check against principles of a good
operating model (see page 132)
Don’t be put off doing operating model work or assume that it is so much work that it has to be done by a
consultant. You do not have to go through all of these steps to do useful work. High-level design options can be
created in 6 hours or 6 days or 6 weeks. Designs that are detailed enough to get commitment may take weeks.
If it takes 6 months, you are doing detailed operating model work – not high-level work.
TYPICAL ACTIVITIES IN AN OPERATING MODEL DESIGN PROJECT 25

But design work is a journey ...
Who should be in the design team?
CH1 People who are open, creative and good in workshops. A mix of
experiences and perspectives: customer, operations, environment,
Start by defining
finance, HR. No more than can get round a table to discuss
the scope and the
reason for the
design project
Diagnose the
situation. Make
sure you get
close to the
action
Identify and align
the stakeholders
Plan the work

and assemble
the resources
For more on the design journey For help with design thinking

... rather than a set series of steps
CH1
Confirm that
the high-level
option and the
detail will work
Define design together
principles
Choose a high-
level option
Generate
design How to plan and control
Generate
ideas/options
design ideas at the work?
a more detailed ➤ An operating model, sufficient to get commit
level ment and funding, takes weeks not days.
➤ Detailed project management is unproductive.
Who to involve? Use timed gates for steps like diagnostic,
➤ The boss of the organization. design principles, options.
➤ Stakeholders, especially customers. ➤ Stakeholder availability often sets the
➤ Those who will make it happen drumbeat because stakeholder working
➤ High flyers and influencers who will sessions need to be hours not minutes.
give energy to the changes ➤ The process should be intense.
BUT DESIGN WORK IS A JOURNEY RATHER THAN A SET SERIES OF STEPS 27

Design is a messy process until ...
CH1 Design work is always messy at the start,

whether it is 6 hours, 6 days or 6 weeks.
Shorter processes ensure you remain
strategic (stop you getting bogged down
in detailed design) and help you initiate
changes before it is too late.

... a preferred option emerges
Design work is not just an CH1

intellectual problem solving
activity. It is a critical part
of the change process.
It drives new and better
ways of operating. It must
build, with stakeholders, a
compelling case for change
Early on in a design project, the focus is on
that creates understanding,
clarifying the problem, the scope and the
acceptance, adoption and
design principles. Often it feels like work is
ultimately commitment to new
being done without any progress being made ways of working.
towards a solution. But, messiness is good.
It ensures that we look at the problem from
different angles.
Clarity arrives slowly as the problem becomes

clear and ideas start to emerge that might
form part of the solution. Messiness helps to
get unusual ideas onto the table.
At some point a preferred option becomes

clear. Now the design work can go forward
with confidence.
There is still a lot of work to do on the design

details and on change plans. But now every bit
of work is improving the design and moving
you closer to being able to start implementing.
DESIGN IS A MESSY PROCESS UNTIL A PREFERRED OPTION EMERGES 29

13 possible work steps for ..
Confirm that
CH1 Generating design ideas/options is the high-level
not a paint-by-numbers process. Each option and the
project will be unique. Sometimes the Define design detail will work
focus will be organization; sometimes principles together
location; sometimes processes and
Choose a high-
decision rights. So do not treat level option
the following 13 steps as gospel.
They are provided as an aid not a
straightjacket.
Generate
design
ideas/options Generate
design ideas at
a more detailed
level
1. Draw a value delivery chain for each “segment” (a group of customers looking for the Don't forget to make
sure you have some
same value proposition) and highlight where there are problems and what are or could be
design principles before
sources of advantage/excellence
you start designing
2. Consider what “activities” will be combined or linked across value chains and which (see page 140)
will be kept separate or outsourced
3. Convert the resulting value chain map into an organization model

4. Add support functions (HR, IT, etc) to the model and highlight “challenges” (issues,
constraints, difficult links and sources of advantage). Use the challenges to give focus to the
rest of the design work.

... generating a design option
Think of yourself as a
carpenter with a bag of
tools. Each job you do is
CH1
different requiring you to
use different tools and in
a different order. Chapter
3 describes the tools.
5. Develop a decision grid for the big decisions
6. Develop people models for important skill groups
7. Think about where people and important assets will be located
8. Identify owners of key cross organization or cross location processes
9. Develop a high-level IT blueprint: what core applications and who owns them
10. Identify those suppliers that need a collaborative relationship with the
organization
11. Review the “challenges” and “design principles” to make sure all have been
addressed
12. Define a scorecard including projects and KPIs

13. Design the management calendar of planning and performance review meetings
Don't worry if some of

these steps are not
clear. They will become
clear as you work
through the book.
13 POSSIBLE WORK STEPS FOR GENERATING A DESIGN OPTION 31
ng
g uidi
a k
Use mewor
a l
f r Mode
p e r ating o n e! Mak
CH1 The O is a good hav e sure
s e a y
Canva spo ou
nso
Desig r
nn
leade eeds clear
rs
direct hip to set
ion, de
politic a
s and l with
m
Design T
Be clear on the decis ak
ions. e
level of detail
Avoid committing to
too much detail. Good
design is often about
confronting a few
critical high-level
issues.
e how
Decid cisions
n de Be clear on the
desig e mad
e
case for change
will b
e,
m, wher
By who n? Are Link to changes in
and whe uired, strategy or problems
req
options hat that can’t be solved
and w through continuous
will
criteria improvement.
be u s e d?

t team Man
e righ age
Get th to g t
nce, not
plan tes
a No righ
o r in s ig h t, experie s ans w e r
Look f inds,
, open m Desig
influence h ambiguity, n
be pla work can Don’t searc
h for
wit nned. no k for a
comfort smarts and But it t perfection.
Lo o
analy l o simplify.
ti c a be lat
e. can lution that CH1
h with t So manage practical so
people w imed
gates will work.
.
n Tips
Don’t open the
melon unless you are
ready to eat it
If you say you are thinking of
changing the organization, Don’t have the
everyone stops working and decision maker
starts worrying about their at the meetings
positions. If the decision maker
is at the meeting, it
will reduce openness
and creativity.
Note: Mark does not
Embrace agree with this tip!
options
Options are healthy.
Look for extremes.
Get opinions from a
wide range. Don’t
limit your thinking.
DESIGN TIPS 33

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1

2 OPERATING MODEL CANVAS

maps, tables and charts

systems, suppliers, locations, and

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6 OPERATING MODEL CANVAS

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WHEN DO YOU NEED TO WORK ON YOUR OPERATING MODEL? 7

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8 OPERATING MODEL CANVAS

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10 OPERATING MODEL CANVAS

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14 OPERATING MODEL CANVAS