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 Operating Model Canvas

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 Other publications by Van Haren Publishing
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Colophon Foreword
Nigel Slack, Emeritus Professor of Operations Management and
Strategy, Warwick University, and author of best selling text books
TITLE Operating Model Canvas Operations Strategy and Operations Management.
SUBTITLE Aligning operations and organization with strategy
AUTHORS Andrew Campbell, Mikel Gutierrez, Mark Lancelott
PUBLISHER Van Haren Publishing, Zaltbommel, www.vanharen.net
TEXT EDITOR Steve Newton (Galathea) There is an enduring dilemma that follows anyone charged This is an important book for two reasons. First, it provides a
BOOK AND COVER DESIGNED BY Coco Bookmedia, Amersfoort - NL with making strategy have a real impact. ‘How do you think big first-class guide on how to put an effective operating model
NUR CODE 801, 982 while keeping your feet on the ground?’ ‘How do you translate together. Andrew Campbell and his co-authors have taken
ISBN HARD COPY 978 94 018 0071 6
the broad vision of where the enterprise wants to be into a the proven idea of a Business Model Canvas and created an
ISBN EBOOK (PDF) 978 94 018 0072 3
set of practical and realistic plans and actions?’ This is where Operating Model Canvas as a way of extending the number of
the idea of the operating model fits in. It is a concept that operating elements that are considered from three (activities,
EDITION 
First edition, first impression, March 2017 has been gathering momentum in the strategy field – and for resources, partners) to six (processes, organization, location,
First edition, second impression, June 2017 good reason. Operating models have the potential to provide information, suppliers and management system). Of course
First edition, third impression, with minor corrections, July 2017 a high-level design for any type of organization that both there are many other ways of defining and presenting the
COPYRIGHT © Van Haren Publishing, 2017 defines its structure and style and enables it to meet its business idea of operating models. Every consultant has his or her own
objectives. Done well, an operating model should provide a “model”. But Operating Model Canvas is the first attempt, as
clear, ‘big-picture’ description of what the organization does, far as I am aware, to document and share both the concept, a
All rights reserved. No part of this publication may be reproduced in any form by print, photo print, microfilm across both business and technology domains. It should provide complete set of tools and worked examples. Second, the book
or any other means without written permission by the publisher. a way to examining the business in terms of its key relationships, is exceptionally well illustrated, with easy-to-follow steps and
Although this publication has been composed with much care, neither author, nor editor, nor publisher can
especially those between the business functions, processes a wealth of engaging and insightful examples from all types of
accept any liability for damage caused by possible errors and/or incompleteness in this publication.
and structures that are required for the organization to fulfil enterprise. I commend it to anyone involved in turning strategy
its mission. It should fit alongside the organization’s business into operational designs and choices.
Trademark notices
model in a way that helps convert strategy into a working model
ITIL® is a registered trademark of AXELOS Limited. of how things need to be done in practice. A good operating
Business Model Canvas is a registred trademark of Strategyzer AG model is a prerequisite for building effective change in the
organization.
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 Endorsements ,
a t r ic k v a n der Pijlor
P els Inc. and au
th
CEO Busines
s Mod
ess
Yves Pigneur ,
Better Busin co-author Busines
of Design a sk . Bo oks like s Model Generatio
n and
Richard Koch, author of the bestselling titles ess is a difficult ta Value Proposition
Designing a busin th ro ug h the Design
Canvas help cut Andrew Campbell and
Simplify and The 80/20 Principle Operating Model e step de ep er beyond co-authors have focuse
d on the
m pl ex ity. It he lps you to go on os iti on. This
left-hand side of the Bu
siness Model Canvas for
co e Prop creating
es s M od el Canvas and Valu s an Operating Model Ca
nvas. Their canvas consist
the Bu sin a family book
of
co ul d be co ns idered as part of iti on
components such as loc
ations, organization str
s of
I have followed Andrew’s Campbell’s work with pleasure for And third, it provides a bridge for managers from the strategy to book lue Propos uct
el Generation, Va people models, inform ure,
many years. Every time he takes on a topic, he contributes a portfolio of transformation projects, all pointing in the same like Business Mod need to have ation systems and perfo
n a Be tte r Business as e w management systems. rm ance
valuable new insights. This book is no exception. direction – forward! Too often managers push their pet projects Design, De sig scape. All are The book contains illustr
ar ou nd th e How. All are land and worked examples, ations
conversatio ns ples. They and has a nice landscap
and huge value is lost by the firm and its customers. That will
l ar e fu ll of to ols and case exam design. Let yourself be e
easy to read. Al your desk. charmed by the thoughts
Andrew and his co-authors start from a firm’s value proposition not happen with this approach.
yo ur bo ok sh elf or the side of techniques and case stu , pra ctical
– its distinctive advantages for customers – and then use their should all be on dies proposed by the au
thors.
‘Operating Model Canvas’ as a simple and practical way to work I also love the messy look and feel of the book. The charts are
out HOW to deliver the value proposition the best way. drawn freehand by managers themselves, there are lots of post-
Thomas H. D
it notes all over the place, the whole thing appears chaotic but is
Dis
avenport,
tinguished Pro
fessor, Babso ich,
I see three huge advantages of this approach. One is that it brilliantly cohesive. You can tell that the participants had a lot of College, and au
thor of Com
n William Ulriness
us
peting on President, B
actually does find the best feasible way to deliver the value fun – and you can too. Analytics and
Only Humans Guild
Need Apply Architecture
proposition consistently. If you liked Osterw
alder et al.’s Busin ten
ess Model Canvas s have been writ
and Value Propos
ition Design, you’ Operating model O pe ra tin g
The second advantage is that it helps managers in different areas ll also want to years. The
spend time with
this one. All three about for many le fo rw ard
get aligned so that the whole organization and its suppliers are books have a oves the need
light and engaging
tone and are co-c Model Canvas m m in g
trying to do the same thing. reated with by further fra
practitioners. But
Operating Model in this discussion nvas. As
where the earlier Ca nv as picks up concepts in a ca
books leave off, ta operating model nsider
king the thinking readers should co
about activities, re
sources, and partn with most tools, they
ers to the next lated concepts as
level. It’s critical fo
r making a busines the canvas and re ing
s model work. urney of streamlin
continue their jo sin es s.
eir bu
and improving th
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 Mark Smalley, Ambassador,
ASL BiSL Foundation
Andrew Campbell has produced a very useful
book that can be used in its own right or in
combination with the Business Model Canvas.
John Webb, Vice President &
I had the pleasure of reviewing the book and
Program Lead Mars Operating Stephen Bungay, author of
learnt a lot in the process. For most people,
Model, Mars Incorporated The Art of Action
Freek Duppen, Senior Manager, the term operating model is poorly defined
I have just led a review and redesign of the My work and teaching on strategy execution
Joe Spadaford, Chief Operating Model Development, The and loosely used. Operating Model Canvas
global operating model for Mars Incorporated. is about how organizations make things
Operations Strategy Officer, LEGO Group Dr Graham Edwards, retired does a good job in pinning it down in simple
Andrew Campbell was a significant help to happen in line with their intentions. It focuses
Computershare Many people are going to find the insights CEO, AECI but well-grounded language. The guidance
me in this, and I learned a lot from applying on the ‘software’ – how to set direction and
I have led many change and transformation in this book really valuable. Whether you are At AECI we got a lot of use out of the is practical and attractively presented. I used
some of the tools and processes that are in align people so as to create unity of effort.
projects that supported an overall business new to the topic or a seasoned practitioner, Business Model Canvas. Every business or the principles and structure in my work for
this book. I can see that the thinking has But every company has made commitments
strategy. These are always difficult projects the book offers plenty to help you on your proposed new acquisition had to present The Open Group’s IT4IT Forum to create an IT
developed even further since then and this to doing things in a certain way that is
both in the design and the execution. operating model journey: a clear framework its Canvas to the Exco, and managers were operating model and I am pleased with the
book would have been hugely helpful as I reflected and constrained by their ‘hardware’.
Operating Model Canvas is a useful for thinking about operating models, a basket subjected to a fairly rigorous grilling to ensure results. I have no hesitation in recommending
worked through the operating model scope Operating Model Canvas addresses the
and pragmatic aid to this work, full of of tools, and copious examples ranging from they really did understand their business this book.
and critical analyses with the Executive question of how to change that hardware
tools and examples and helpful ways Zara to Snapfish and from a government model. If we had had the Operating Model
Committee. and design an organization with the right
of simplifying complexity. It provides a department to an IT function. There are Canvas, those sessions would have been
I will certainly use this approach next time I operational capabilities. I find the simplicity of
framework to consider the change elements alternative ways to approach the concept of more penetrating on operating issues. This Michel Berthus, Group Vice
have similar work to do. It simplifies what can the canvas, the wealth of examples in Chapter
holistically, giving you the opportunity to operating models, but I can highly recommend book is another important step forward in President - Head of Quality
be a complex and intimidating task, helps to 2 and the quality of the tools explained in
create an implementation plan that will more the approach in this book. It is easy to read, management thinking. Management, ABB
put the work in the right context and provides Chapter 3 both practical and powerful. The
likely be successful. practically relevant, and touches upon all the Operating Model Canvas is both simple and
tools that ensure rigor and focus. authors’ innovative and engaging approach
important aspects. powerful. It provides a simple framework (the
If you have an operating model project to do, turns the hard work involved into fun, and
Canvas) and some powerful tools (value chain
you need this book. redefines what a ‘how to’ textbook should be.
map, organization model, supplier matrix,
It is a great companion to The Art of Action.
etc.). I cannot imagine anyone involved in
working on organization design or operating
models or even process improvement that will
not gain a great deal from this easy to read
and engaging book.

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Jeroen De Flander, author
of the bestsellers Strategy
Execution Heroes and The
Execution Shortcut
Operating Model Canvas helps you in a
practical and fun way to design the best
possible operating model for your strategy.
Highly recommended!
Professor Gunter Muller-
Stewens, Institut fur
Betriebswirtschaft,
Universitat St.Gallen
Strategies often fail to get implemented. We
already have ways to convert strategies into
scorecards and KPIs, but we have fewer tools
to help convert strategies into portfolios of
transformation projects. Operating Model
Canvas fills this gap. Andrew Campbell and his
co-authors seem to understand both strategy
and operations and have created an ideal
companion to the Business Model Canvas. It is
an easy and fun read. And it encourages and
supports the reader in applying the ideas on
real projects.
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Marc Lankhorst, Managing
Consultant & Chief Technology
Evangelist, BIZZdesign, and
developer of the ArchiMate®
standard for enterprise
architecture modeling
Our company BiZZdesign does many
projects that involve designing the business
architecture and operating activities of a
business or organization. The design of
business models has been very successfully
addressed by Alex Osterwalder and Ives
Pigneur in their famous book Business Model
Generation. But to make your business
model work, you also need an operating
model, describing how the elements of
your organization together deliver its value
proposition. The Operating Model Canvas
proposed by Andrew Campbell, Mikel
Gutierrez and Mark Lancelott extends the
thinking behind the Business Model Canvas
to provide a practical tool for designing such
operating models. This book will help anybody
involved in business design, target operating
models, business architecture and operational
improvements.
Kirill Derevenski, Strategic
Business Architect, ex-Sodexo
I have carried out a number of jobs
transforming strategy into operational results
in mid-sized and large companies. I wish I
had had Operating Model Canvas by my
side. It is comprehensive, straightforward
and accessible. It is written by people who
understand strategy and who know how
to connect strategy with operations to
drive measurable results. It contains tools
and methods that are effective and easy to
apply while using the language that senior
managers talk. A ‘must have’ to get your
project right from the start, and to get it
to a successful finish. A perfect operational
‘nuts and bolts’ companion to Business
Model Generation, when you need concrete
guidance on operating model design.
Graham Dalton, Independent
Management Consultant
I have used Andrew’s OD tools over a hundred
times, both at PwC and as an independent
management consultant. They make sense to
clients and give great insight and clarity.
This new contribution brings similar clarity to
the complex topic of operating models.
Andrew’s book is very visual and easy to read;
and the great client examples bring the topic
to life.
This book and its Operating Model Toolbox
will be invaluable to consultants and
executives alike, guiding them in how to
align their organization and operations with
their strategic aims. I was part of a team that
developed PwC’s approach to operating model
work and I wish I had had this book to help
me.
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Amy Kates, Kates Kesler
Organization Consulting and author
(with Jay Galbraith) of Designing
Your Organization
As organization designers, we help leaders
make smart decisions about ‘organization
models’. A prerequisite to this work is a clear
‘operating model’. The operating model
articulates the business framework and how
the organization components will relate to
one another. A clear operating model makes
selecting among organization options much
easier.
Andrew Campbell brings a designer’s eye
to demystifying the steps for creating an
operating model. This book is filled with tools,
examples, and a wide variety of case studies. It
will be an essential guide for anyone working
on organizations.
Naomi Stanford, Organization
Design Practitioner, author,
speaker
Andrew Campbell, more typically known
for his strategy and organization work, has
focused his attention on the task of turning
strategy into operations. He and co-authors
explain, through illustrations and examples,
the six elements of the Operating Model
Canvas - value delivery chains, organization,
information systems, locations, suppliers
and management systems - in a beautifully
clear and fun way that takes the pain out
of operating model development and
implementation. It’s a substantial contribution
designed in an engaging way showing the
working steps as they actually progress and
giving helpful tips, guidance and resources
along the way. A great addition to any
organization designer’s toolkit.
Contributing authors
Important contributors (alphabetical): Examples provided by: Our course ‘Designing Operating Laura Worboyes, Amlin Investments Yana Meltser Shaer, HSBC
Marcus Alexander, London Business School Dev Mookerjee, Ashridge The authors, and Models’ at Ashridge Executive Jeremy Faint, NHS Vanessa Ryan, Royal Mail
Stephen Baishya, Consultant Gillian Morris, Jaguar Land Rover Marc Baker, Ofqual Education has been a huge learning Paul Hill, Manheim Steve Curry, NHS
Martin Bartram, Royal Bank of Scotland Rupert Morrison, Concentra Andrew Freiman, Department of Work experience for us. Here are some Eric Smith, Calmac Sandra De Sousa, MMI Holdings
Nicola Bateman, School of Business and Economics, Guenter Muller-Stewens, Universitat and Pensions of the participants (about a third - Frances Hall, Corbar Consulting Jan Luyten, DSM
Loughborough University St Gallen Roberto Gil, Velatia random order). Charlotte Eimer, BBC Monitoring Sumit Mistry, Salesforce
Marcia Blenko, Bain & Co Peter Murchland, Enterprise Architect Alex Graham, Egremont Sebastian Pordomingo, Akzo Nobel Stephen Ogundere, Consultant Rachel Honey, John Lewis
Stephen Bungay, Ashridge Strategic Management Centre Mark Palmer, OEE Consulting Adam Laurie, DEV CON Dean Genade, Sanlam Damian Pearson, Ernest and Young Sam Airey, Weightmans
Christoph Burtscher, Yodel Joseph Paris, Opex Society Jamie Lopez, Faes Farma Jonathan McDonnell, British Red Cross Abdulaziz Aladwani, ELM Consulting Mike Lynn-Jones, Lowell Group
Alan Crawley, Optima Partners Anish Patel, Patel Miller Wendell Mitchell, Guardian Group Rob Adsley, Xl Catlin Alan Crawley, Optima Partners Matthew McClelland, The Nursing and
Kirill Derevenski, Strategic Business Architect Anca Raines, PA Consulting Howell Schroeder, Schroeder Forbes Wendell Mitchell, Guardian Group Helen Own, Pasque Consulting Midwifery Council
Joao Dolores, Sonae Richard Rawling, Nous Group Deborah Strazza, John Lewis Andrew Milbourne, Cambridge English Eric Thiam Sebates, Imperial Tobacco Andreas Kroepfli, Swiss Federal Department of
Freek Duppen, Lego Howell Schroeder, Schroeder Forbes Partnership Collette Roche, Manchester Airport Janice Paterson, NIHR Clinical Research Finance
David Favelle, ValueFlowIT Mark Smalley, IT & ASL BiSL Alex Szekely, Wilson Perumal Scott Schoenbrun, SPX Network Nigel Paling, Manheim
Chris Fox, StrategicLearningApp.com Foundation Ricardo de los Rios, IESE Sardip Sandhu , Walgreens Boots Alliance Vikki Harmon, Grant Thornton John Hall, Swagelok Manchester
Allan Gasson, Independent (ex Deloitte) Joseph Spadaford, Computershare David Winders, Lecturer and Business Deborah Strazza, John Lewis Christian Harm, Kion Group Fred Creighton, World Duty Free
Geoff Grace, AXA Jonathan Tidd, OEE Consulting Architect Ian Todd, Independent Police Complaints Mike Fisher, Matthew Clark Jeeti Chauhan, Shell
Alex Graham, Egremont Conrad Thompson, PA Consulting Commission Hester Gudmunsen, ACCA Sam Lewens, myBBC
Ben Gray, Guild Consulting William Ulrich, Business Architecture Phil Merrell, Willis Towers Watson Laura Lee Oliver, Red Apple Consulting Naresh Mongroo, Guardian Shared Services
Ben Groom, Capgemini Guild Carol Madeley, Belron Karen Moore, University of Sydney Devand Singh, Cambridge English
Jonathan Hammond, Knadel John Webb, Mars Tammy Tawdros, Ashridge Paras Sood, SAB Miller Maher AlHaidary, The Capital Market Authority
Steven Han , China David Winders, Lecturer and Business Else Marie-Brekke, DNVGL Kate Bendon, K8B Consulting Ltd Chantal van der Ginste, Delaware Consulting
Amy Kates, Kates Kesler Architect Louise Wade, Project Delivery Excellence Adrian Twyning, British Gas Olutoyin Orefuwa, TransmissionFour
Marc Lankhorst, BiZZdesign Nicolay Worren, Norwegian University Carlos Alpizar, Grupo Cuestamoras Imm Law, Royal Mail Consulting
Carl Lloyd, Royal Bank of Scotland of Life Sciences Hannah Crossley, Egremont Group Fiona Evans, Zoological Society London Mohammed Omar Baqais, ELM
Peter McClure, Vodafone Geoff Grace , AXA Insurance Ben Groom, Capgemini Oliver Landgraf, Consultant
Andrew Blundell , Walgreens Boots Alliance Michael Donaldson, Standard Life Mary Kennedy, Consultant
Martin Bartram, RBS Charlotte Wedd, Manchester Airport Group Kathleen Versland, Deutsche Bank
Alhaidary Maher Monsour, CMA Andy Aitkenhead, Kuoni Travel Mark Bellamy, PA Consulting

Course website: www.ashridge.org.uk/dom

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 Contents
CH1

Operating Model Canvas

1 CH3

Toolbox
94 CH5
178
Creating an operating model
An introduction to operating models, The tools you need to do operating model for a function
business models and the design process work, divided between core tools and A fully worked example of a high-level
additional tools operating model for the IT function of EEI

CH2

Operating Model Canvas -

34 CH4

Creating a target operating

134 CH6
198
Examples of operating model
Examples model for a business change
How to use the operating model canvas A fully worked example of a high-level Five examples of ‘as is’ and ‘to be’
and a dozen examples, from Uber to Shell target operating model for EEI, a company operating model canvases
to Cardboard Citizens in the business of making equipment for
the electricity industry

... And last but not

least: About the
authors 210

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 1
Chapter

Operating Model An operating model is ...

CH1 Canvas .. a visual representation (i.e. a model) The journey to success has
CH1

Business model canvas 14 four parts:

.. in the form of a diagram or map
Transformation 20 ➤ The strategy part: deciding what the
or chart or collection of diagrams, organization will do
Design steps 24 maps, tables and charts
➤ The operating model part:
designing the organization so that it is able to
Tips 32 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:

How to deliver systems, suppliers, locations, and

running the organization so that the strategy is
achieved
assets,
great value to your This book is about the operating model part:
the design part. It is not about the strategy,
.. that are important for delivering the
customers and
transformation or doing-the-business parts
organization’s value proposition(s)

beneficiaries .. and how these elements combine

Different
authorities define
Other authorities include a
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.

2 OPERATING MODEL CANVAS

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AN OPERATING MODEL IS ... 3
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 High-level operating models Detailed operating models
This book is about high-level operating models. It focuses on the link For an organization to function, many hundreds of design decisions
CH1 between strategy and operations and between business models and need to be made. Our belief is that these decisions – the detailed CH1
operating models. operating model decisions - are better made if there is a high-level
operating model guiding them.

One page Operating Model Ten page Operating Model One hundred page Operating Model One thousand page Operating Mannual
…Zara

CH2 MANAGEMENT SYSTEM Go to

SUPPLIERS

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for mo peratin

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re on gm
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calenda

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There is

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ent calen lising the
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rs

OPERATING
acture
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visual is
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Mexico

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be prese or circle
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distributors in

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a table –

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Companies

Worse
n a

HQ a se
Outsource Design a collaborative agreement

1. The annu No
Is this a key activity in delivering value?
Yes

al timetable
sit
managers
meetings, of key
such as
the Most organizations depend on suppliers for raw materials and many other inputs. Fortunately
hou Managem or executive board and/
e CH3many of these supplies, making it possible to have ‘transactional’
r ent committeeestablished markets exist for

MODEL
a 2. The strat

between
System
w Board and
Jan Feb
Mar Apr
May Jun
Jul Aug
reviewing
egy proc
performan matrix
meetings with most suppliers. But some relationships need to be ‘collaborative’, and this
esses,relationships
both
helps identify them.
Committee Executive Sep Oct strategy ce again

designers
EC Nov and deve st

NS
EC EC Dec strategy loping new
B EC EC 3. The budg

LOCATIO
Strategic B EC EC
process, CH3 and target-set
Planning EC eting
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B EC EC
B EC usually an

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Budgets * B
B 4. The perfo annu al
and Target rmance process
*

t cale
Setting operation mon
al guidance itoring and

footprint

men
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monthly

INFORMATION
Monitoring
* 5. The oper meet

catio ns

Manage
P
ational decis ings

How good are we compared to others?

P
Processes

We do, if it does not distract

Better
P
* We do

Sense what
People Review P and align ion-making

Lo
P

OPERATING
P P the ment proc
P behind a monthly ess, typic
wall P
Spain and Latin
e, or on the
Stores Major Projec
locations on
their*websit
P
internationa
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or week
ly executive
ally
America (work
is selling
ly show how
Value Chain e.g Design Buy Make Market Sell Etc

Sell
‐‐‐‐‐‐‐‐‐‐‐‐

t Review

IT blueprint
a map of their MP MP er. These typical 6. The cont Mexico
Org Units e.g

s uctive
Product business Owner,

Make warehouse constr

units ERP stand

s have manag MP MP used for a more inuous impr with exclusive

Selling unit by Owner, ERP

order from zation

country Stand

Many organi Contin office of a senior be MP ctions and

Design
R&D Owner,

maps can processes ovement

Spec

in theuous MP ant conne

Design
Purchasing Owner,

or Impro is. But these , typically distributors in

ERP Stand

reception desk, the the importMP MP MP

(product
Scheduling Owner,

of a
ERP Stand

vemenzation n, some who centr

garments
organi t

toolbox
revie
Marketing Owner,

MP MP al team
Spec

each locatio
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)
MODEL
that asses process

ng 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 and because it can help automate processes. A high-level IT blueprint is created by placing the
Up-to-the- l

• The operati
ed stee
s process steps from the value chain map along the top of a table, and the organization’s units
galvaniz
CH3 lier of Europedown excluding
minute
the side. The table shows the IT applications that are needed, who ‘owns’ each and
Global supp Spain (use
whichnon‐
USA (create a JV)
need to be integrated into an enterprise system.

Model Canvas
CH3 exclusive distributors)

ORGANIZATION
fashion

Worse
119 Manufacturer
Information

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

team
Finance services

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
e
Value chain map
All Value Chain Steps

al stor
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
Qualifications Issue
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.

st or es 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
toolbox

Explained and illustrated

ng model

All Value Chain Steps

Build Quote/ Adjust Deliver
Design Market Follow
• The operati

Clients Admin
Sell design /do up
Segments
Open courses

* *
Tailored
*
in Chapters 2 and 6
*

toolbox
Model Canvas

Qualifications Issue
qual

Conferences

ng model
Weddings

* *
+ design

Research
Operating

publish

• The operati
Combine/manage together
Source of advantage
Link or standardize
100 Separate and manage by segment * Problem/Opportunity

Model Canvas
Operating
98

Explained and illustrated in Not covered in this book

4 OPERATING MODEL CANVAS
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Chapters 3, 4 and 5
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HIGH-LEVEL OPERATING MODELS DETAILED OPERATING MODELS 5
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 When do you need to work on your operating model?
CH1 CH1

When you When you are When you have When your team When you are When you are
are starting changing performance is not aligned finding it hard implementing
something new strategy problems to implement major change
your plans
➤ Helps test the practicality of what you want ➤ Helps test the practicality of what you want ➤ Helps you find the root causes ➤ Helps those with different views explain ➤ Enables you to check that your plans are ➤ Enables you to check that your project
to do to do. Often leads to better strategies. ➤ Helps you see the connections between their thinking practical sequence is practical
➤ Helps you understand costs, resources ➤ Helps you understand costs, resources symptoms and causes ➤ Provides the senior team with a shared ➤ Helps those who are dragging their feet ➤ Helps explain the plan and the business
and timing, and hence develop a better and timing, and hence develop a better ➤ Helps ensure your implementation plan is blueprint of what they are trying to build explain their position case
business case business case complete together ➤ Often results in re-sequencing the ➤ Helps those who are concerned about the
➤ Helps you align your team and your ➤ Helps your people understand the new ➤ Helps your people see why all the changes ➤ Provides a line of sight between purpose implementation plan plan to explain their position
stakeholders strategy are needed and activity ➤ Helps align the leaders of different projects
➤ Helps ensure you focus on the important ➤ Helps ensure your implementation plan is
complete

6 OPERATING MODEL CANVAS

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WHEN DO YOU NEED TO WORK ON YOUR OPERATING MODEL? 7
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 This book will help you ...
Be more
Who are you? successful
Achieve your
CH1 ➤ A manager in operations or in any function who wants to design how the operation works CH1
strategic
➤ A CEO or COO or entrepreneur who wants to review his or her organization and plans objectives
Discover ways of
➤ A lean practitioner or process excellence manager who wants to be more strategic
improving your
➤ A manager in strategy or planning who wants to make the plans more practical strategies
Better align
➤ A project manager or change specialist working on a transformation project managers from
➤ A leader who wants to make sure her team members are all on the same page different functions,
Improve the countries and
➤ A business partner in HR, IT or Finance who wants to improve the business
dialogue with cultures around a
➤ A business development manager who wants to design a new business those resisting or common view of Yes, operating model
➤ A Business Architect, Enterprise Architect or Operations Strategist concerned about what they are jointly work can result in better
change trying to do strategies: more practical,
➤ A manager tasked with cutting costs or improving service or quality more connected with
➤ A customer experience or user experience specialist Design a target capability, more profitable

➤ 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

8 OPERATING MODEL CANVAS

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THIS BOOK WILL HELP YOU 9
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 Strategies engage 5% ... ... operating models engage 95%
CH1 All these functions are CH1
involved in the operating
% of employees who think the operating models needed to deliver
% of employees who think the strategy is their responsibility
these strategies
model is their responsibility

100% 100% 100% 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

Sales Operations R&D

Double Reduce cost of Develop new Double Reduce cost of Develop new
international sales by 20% products international sales by 20% products
sales sales

10 OPERATING MODEL CANVAS

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STRATEGIES ENGAGE 5% OPERATING MODELS ENGAGE 95% 11
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 How to use this book
Chapters
The Operating Model Canvas is a tool
CH1 that will help you think about and 4 6 CH1
make changes to your operations. 1 2 CREATING 5 EXAMPLES OF
Design improvements Operating A TARGET CREATING AN OPERATING
It is a simple tool. You may be able referring to the case OPERATING M
ODEL
Model Canvas 3 OPERATING MODEL OPERATING MODEL MODEL
studies (chapters 4 and 5) CANV AS FOR A FUNCTION
to grasp the tool and start using it by examples Tool box FOR A BUSINESS CHANGE
reading this chapter and the first few
pages of Chapter 2 - “The Operating
Model Canvas - Examples”.
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
Look at the Transformation 20 Business 48 Organization Steps in design 146 Value chain 184 Design team 204
However, you will gain the most
examples of other Design steps 24 - Uber 50 model 100 Processes 148 Suppliers 186 HR function 206
from this book if you first identify a
Tips 32 Organization 154
5
challenge or opportunity you have organizations to get - Zara 52 Locations Locations 188 Unemployment
- McKinsey 54 footprint 102 Location 158 Organization 190 benefit 208
in your current situation. As you insights (Chapter 2) Information 164
read, try creating a Canvas for your - Van Haren 56 IT blueprint 104 Decision rights 191
Functional 64 Supplier matrix 106 Suppliers 168 Scorecard 193
4
organization. Write a few post-it
- IT 66 Thirteen additional Scorecard 172 Summary 196
notes that capture some of the
things you think are important about - HR 68 tools 108
Identify a Multi-business 70
3
your organization (i.e. important to ASSESSING THE
challenge or Decide which - Shell 72 OPERATING
delivering the value proposition) and
stick them on the Canvas. Then look opportunity tools will help - Ashridge 74 MODEL 132
at the examples provided (Chapter 2).
Then look at the tools (Chapter 3)
2 you most
(Chapter 3)
Public Sector 80
- Qualifications 82
and try using some to understand - Benefits 84

1
your challenge and develop ideas for Other 86
resolving it. Then explore the two big - DEF CON 88
Try creating an - Cardboard
case studies (Chapters 4 and 5).
Operating Model Citizens 90
Have fun! Canvas of your current
situation (Chapter 2)
12 OPERATING MODEL CANVAS
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13
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 The Operating Model Canvas is It covers the back end of
a one page operating model the Business Model Canvas
CH1 CH1
The Canvas is fully
explained in Chapter 2
The Operating Model Canvas does not
include the Financial Model. But, of course, the operating
Business Model
model does drive most of the organization’s costs.
Back end Front end
Value Target
Proposition Customer
Operating Model Canvas Key Customer
Activities Relationships
SUPPLIERS Locations GAIN CREATORS GAINS
Key Value Customer
Partners Proposition Segments
PRODUCTS

S L The link is roughly

P = Key Activities
Key
Resources
Channels
& SERVICES

PAIN RELIEVERS PAINS

CUSTOMER
JOBS

S = Key Partners
Value Delivery Chain(s)

PO
VW WWWWOO
O + L + I + M = Key Resources

P OOO
OuW (W)
Cost Structure Revenue Streams

CuWWOmWO/
BWOWTWcWWOy

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.

Are CHANNELS and

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

CUSTOMER RELATIONSHIPS
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
part of an operating model?

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
Yes in so far as they involve

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

KEY ACTIVITIES or KEY

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

PARTNERS
to HQ
stores

www.vanharen.net

14 OPERATING MODEL CANVAS

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THE OPERATING MODEL CANVAS IS A ONE PAGE OPERATING MODEL 15
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 What is the ... ... Business Model Canvas?
Designed for: Designed by: Date: Version:
The Business Model Canvas
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 Key Partners Key Activities Value Propositions Customer Relationships Customer Segments CH1
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 Key Resources Channels

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 Cost Structure Revenue Streams $
Operating Model Canvas.

© Strategyzer AG
16 OPERATING MODEL CANVAS
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WHAT IS THE BUSINESS MODEL CANVAS? 17
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 How does the Operating ... an enhanced Business
CH1
Model Canvas link to ... Model Canvas CH1

Back End Middle Front End

The Operating Model Operating Model Canvas (operations) (value) (customers/channels)
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
The Operating Model Canvas has icons
where the people will be located and
➤  Value Delivery Chain(s)

PO
for value proposition and customer.

VW WWWWOO
OOO
the assets they need to help them

OuW (W)
These are treated as inputs to the
(locations); operating model design rather than as
what information systems the
➤  part of the design challenge. The book
CuWWOmWO/ “Value Proposition Design” shows how to
people need to help them
(information);
BWOWTWcWWOy design these inputs.
Organization Information
the suppliers who support the work
➤ 

O I
(suppliers); and
the management system used to run
➤ 
the organization (Management
Financial Model
system).

M Management
System 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.

18 OPERATING MODEL CANVAS

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HOW DOES THE OPERATING MODEL CANVAS LINK TO AN ENHANCED BUSINESS MODEL CANVAS 19
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