It’s Your Operating Model—Focus on It!
Geoffrey Moore
Author, speaker, advisor, best known for Crossing the Chasm, Zone to Win and The Infinite Staircase. Board Member of nLight, WorkFusion, and Phaidra. Chairman Emeritus Chasm Group & Chasm Institute.
Like any consultant, I love to talk about strategy. But strategies can change only slowly, and they operate within a myriad of constraints, many of which are not under your control. When you are in a tight spot, you may need to change your strategy, but there is simply no time to do so. That’s why it is so important to know how to focus on your operating model.
Your operating model is the day to day manifestation of your strategy. It is how you act in the world, how your customers and partners and suppliers experience you. It is the thing they focus on when they compare you with your competition. And most importantly, it is something that you can change quickly, that indeed you should be changing—or at least tweaking—frequently. Here’s why.
Every operating model has one or more bottlenecks, gating elements that keep it from functioning even more efficiently or more effectively. In mature industries, everyone gets used to the prevailing bottlenecks, and they even give them a name: the status quo. But no bottleneck is exempt from reengineering. Every one of them can be eliminated if you get creative and try hard enough. The question is, why don’t we do it more often?
Part of the challenge is that it is hard. Part is that any change will gore someone’s ox and so will encounter inertial resistance from some direction. But the biggest problem is our own lack of focus. We simply don’t think about our operating models as things we ought to be continually refurbishing. Instead, we think of execution as squeezing more efficiency out of an increasingly less effective set of standard operating procedures. We shovel like crazy and neglect to sharpen the shovel.
So how can we focus better? Here are some key questions to ask:
- What are the gating elements in our current business model today? We have to at least be looking in the right direction if we are to have any impact at all.
- How much value is getting trapped behind these gates? If we are going to get a decent return on all the disruption our reengineering efforts are going to cause, there needs to be a pent up pool of trapped value we can release. This might be in the form of marketing that gets ignored, shopping carts that get abandoned, sales conversations that never get to the customer’s real pain points, designs that cause end users to misuse the product and call customer support, pricing that misses the sweet spot in our target market, or the like.
- IF we can see the bottleneck clearly, and if we can sense there is significant trapped value to release, then how could we reengineer things to work better? This is a great problem to give a cross-functional team of mid-level managers who are close enough to the operating model to know how it really works and senior enough to realize there has to be a better way.
- If we have a way to reengineer things better, how can we get this done ASAP? One good accelerant is to point to a disruptive innovator who is making waves in your market because their operating model is simply much better than yours. Sure, today they are small potatoes, but the point is, the market is sending you a signal. There is real trapped value here, and we would really like to see it eliminated. Getting your own customers to testify to this is a great way to get the attention of your entire franchise.
What I love about operating models, what makes them so distinctly different from strategies, is that they are so accessible to management change at all levels of an organization. This was the brilliance behind the Japanese Kaizen approach to quality improvement. But that approach tended to focus on one’s own process only, the work right in front of one. That may or may not be where the most value is getting trapped today. It is more important to maximize the amount of trapped value release than to continuously improve what a process that is not the current bottleneck.
So the next time you find yourself fretting about your performance and wondering if you need to change your strategy, ask yourself first, what have we done recently to upgrade our operating model? If the answer is, not much, focus there first.
That’s what I think. What do you think?
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Geoffrey Moore | Zone to Win Book | Geoffrey Moore Twitter | Geoffrey Moore YouTube
Photo: Yuri / Getty Images
Accenture | SaaS Startups | SLB | Non-profit President
6 年Good read Geoffery. I have briefly touched on the points you discuss in my recent blog. I talk about Relentless Pursuit of Excellence, as an operating model for oneself. https://www.dhirubhai.net/pulse/relentless-pursuit-excellence-shamanth-shankar
Entrepreneur, executive, consultant/coach/thought partner for transformation, and occasional tilter at windmills.
7 年Happy to see several others mention TOC. Goldratt could always tell the bottleneck by how much inventory (trapped value) piled up behind a bottleneck machine (gate). We did a little brainstorm on this article yesterday and found it can be confusing to define "trapped value". We're so used to thinking of value in terms of the customer - in this case value is very much about throughput, which might incidentally benefit the customer but is really about internal benefit first. How many quotes are past their follow-up date? What might our customers be waiting for us to do, repeatedly? Etc.
CEO & Co-Founder | Taming Complexity | Master Practitioner in Lean Enterprise / Operational Excellence
8 年Great points Geoffrey, your article highlights the need for modern workforces (managers and "workers") to be fully conversant in the core disciplines of Enterprise Excellence and managing the enterprise as a "Whole System" of which Lean is a subsystem of Enterprise Excellence and Kaizen is in turn a subsystem of Lean. Larry Miller (https://www.dhirubhai.net/in/lmmiller) has a great model that he calls "whole system architecture" that can be found at https://www.lmmiller.com/2011/01/24/organization-design-and-process-improvement/lean-organization-whole-system-architecture/ The Enterprise Excellence suite of methods and tools encompasses a much broader management and improvement ecosystem than just Kaizen, which by the way, is not limited to "one’s own process only". Kaizen workshops generally consist of cross functional teams who are tasked with understanding and then improving an end to end process, usually a Value Stream. Local, individual improvement would generally come under the "standard work" methodology with the next, higher level of improvement being the SIPOC where the interactions between people and teams are explored and improved. SIPOC's in turn can be combined to create an end to end process, usually limited in scope to within a function or location. These in turn can be aggregated into a full Value Stream whose scope is the full end to end process and usually encompasses multiple functions, locations and often, organisations. Another interesting emerging field is that of “Adaptive Resilience in Organisations” https://www.resorgs.org.nz/ This folows the research done in New Zealand following their massive earthquake in 2011 where some organsiations showed exceptional adaptive resilience while others became paralysed. Finally, I would be remiss in not mentioning the great work being done by Dave Snowdon at https://cognitive-edge.com/ and his Cynefin Framework for understanding the 4 different kinds of problems facing organisations. These are classified as Simple, Complicated, Complex and Chaotic for which Dave recommeds 4 differnt approaches. Regards Alex McDonnell Master Practitioner in Enterprise & Operational Excellence www.xpertivity.com
Founder | Entrepreneur | Advisor | B2B & B2C Marketing Strategist | Eco Advocate
8 年As an operational model, I like the approach, the simplicity, Important to add is the context of the market, the competitive landscape, is the company designed right, are the product / services designed to lead a market category. Getting the operational model "right" without a clear view of customers and the outside world has high risk.
Chief Executive Officer at OptiRTC, Inc.
8 年While many leaders focus on strategy, it is the operating model that enables that strategy. Equally as important is connecting the budget to your operating model. If you can't afford the budget, then you must question the operating model. If you need to cut too deeply into the Operating model to make it affordable, then examine your strategy. Is your strategy focused or is it opportunistic? A key take away for me in this article is the involvement of cross functional teams and middle management. This points to the heart of the operating model. All too often we get silo'd within our departments, however, its the cross functional processes and interactions that truly determined the effectives of the operating model. This is a terrific article that I plan on sharing with my leadership as we continue to evolve our business and its operating model.