We live in an era marked by rapid technological advancements, geopolitical shifts, unforeseen black swan events and the ever-evolving and dynamic nature of business and customer culture. As a result of this, organisations often find themselves having to navigate a fluid, complex and unpredictable global environment. The considerable challenge is to develop sustainable outcomes for the long-term when faced with such uncertainty. With that context is your operational model fit for a changeable future?

An operating model is the blueprint for how value will be created within a business and subsequently delivered to the target customers. It is a blend of Relationships, Operations and Infrastructure and it brings the business model to life enabling its execution. The question therefore that arises in boardrooms is whether your current business operating model is robust enough to withstand the constant and heavy winds of change. As the world continues to transform, it becomes imperative for businesses to assess and recalibrate their operating models to ensure they remain not only relevant, but also resilient in the face of emerging challenges and opportunities. However, it is equally true to say, that over 75% of European organisations have not amended their operating models post the COVID-19 pandemic (McKinsey Quarterly, Dec 2020).

The Essence of an Operating Model

A well-designed operating model aligns the organisation’s strategy with its day-to-day operations, enabling it to achieve its goals efficiently and effectively. However, the key challenge lies in ensuring that the operating model remains relevant and adaptable to change. What has worked well in the past may not be suitable for the present or future. Therefore, organisations must periodically reassess and adjust their operating model to stay ahead of the curve. Failure to do so can have catastrophic consequences.

An operating model that prioritises adaptability will empower your organisation to respond to market shifts, supply chain issues, technological advancements and regulatory changes with agility and pace. The ability to pivot in response to external and internal factors has proven to be a defining trait of successful companies whilst the opposite can be said of many companies that are no longer with us. Organisations that embrace a culture of continuous improvement and innovation are better equipped to not only survive but thrive in the face of change.

The Role of Technology

Technology is fuelling the evolution of operating models, with AI, data analytics, cloud computing, and IoT playing pivotal roles. Companies must harness these advancements to improve efficiency and create new value propositions. A digital-first approach is becoming standard practice, demanding a reassessment of traditional operating models. Organisations that optimise their operations with technology are better equipped to navigate the modern business landscape. However, many organisations overlook the necessary development of their operating model when transitioning to digital.

Environmental and Social Considerations

In addition to technology, organizations need to consider the environmental and social aspects of their operations. Sustainability is now a crucial factor in consumer preferences, regulations, and long-term business success. Businesses are facing pressure to adopt environmentally and socially responsible practices to stay competitive and mitigate risks.

Balancing Stability and Flexibility

Organisations need to find a balance between stability and flexibility in their operating models. A modular and scalable approach allows for adaptation without sacrificing stability, enabling innovation and responsiveness. It will probably come as no surprise that some well-know industry leaders can provide valuable insights into successful adaptation strategies. Leading companies such as Amazon, Google and Tesla continue to demonstrate the effectiveness of operating models that prioritise innovation, customer-centricity and rapid iteration.

Amazon’s customer-centric approach, characterised by continuous experimentation and a relentless focus on user experience, has allowed the company to consistently evolve and expand its offerings. Google’s commitment to innovation and its agile development processes have positioned it as a leader in the technology sector whilst Tesla’s ability to disrupt the automotive industry is rooted in its combination of cutting-edge technology, sustainability goals and a willingness to challenge industry norms.

These examples highlight the importance of aligning the operating model with the organisation’s strategic goals, fostering a culture of innovation, and embracing change as a constant, However and unfortunately, many more examples can be found of where organisations have exhibited linear, tactical, or static operating models that have resulted in business failure. This long list includes well know high street names such as Toys R Us, Blockbuster, Tie Rack, Borders, Staples, Maplin and many more.

Conclusion

In a world where change is the only constant, organisations must regularly evaluate the fitness of their operating models for the evolving global environment. The ability to adapt, innovate, and embrace new technologies is paramount for sustained success. By taking a proactive approach to assess and transform your operating models, you can position yourself to thrive amidst uncertainty and contribute to a more resilient and sustainable future. The journey towards an optimised operating model is not a one-off effort, but an ongoing commitment to agility, innovation and strategic alignment. As you navigate the complexities of the modern business landscape, the question will remain: Is your operating model fit for purpose in the changing global environment?

If you would like to understand more about 4C’s Operating Model service offering and/or want to benchmark your organisation’s position against over 300 companies within our Annual Procurement Survey, please contact Jonathan Williams (jonathan.williams@4cassociates.com) or Paul Ireland (paul.ireland@4cassociates.com).