The Agile Organization's Secret: Operating Models

An operating model is essentially a blueprint of how an organization delivers value to its customers. It encompasses various dimensions and elements, such as structure, processes, tools, and even expected behaviors. Due to its inherent complexity, some operating models may look good on paper but fail to deliver results.

Effective and customized operating models facilitate the development of what I refer to as the 3A's of Business Agility: Anticipate, Adapt, and Accelerate. Anticipate involves envisioning and experimenting with the future while balancing opposing forces like predictability and short-term results. Adapt means the organization can change its way of working to cope with uncertainties and possesses the flexibility and speed to learn. Accelerate refers to the competence required to reduce time to market, expedite development, and realize value.

Successful and effective operating models depend on various internal and external factors. Through my experience assisting organizations in their business transformation programs, I have identified some key characteristics of successful operating models, which include:

Organized by Value Stream

Womack and Jones, in their classic book on Lean Thinking, emphasize that leadership should focus on managing whole value streams for specific goods and services rather than spending time managing aggregates like processes, departments, or multiple products simultaneously. It is crucial to assess the following questions for your business:

• Are the business purpose and drivers clearly defined?
• What are the core business value streams (products or service families)?
• What are the pain points of the value streams?
• What are the macroprocesses, KPIs, and supporting systems?
• Which teams and individuals should own the value stream?

Right Team Structure

Building high-performing teams remains a complex task for executives, despite the abundance of research and guidelines available in the literature. Consider the following key aspects, which, in my experience, should be prioritized:

• The structure should align with the type of product and value to be delivered, rather than the other way around. Remember that the team structure is likely to reflect (mirror) the product results.
• Keep teams small and build a team of teams, while maintaining simplicity in the structure of single and multiple teams. Avoid adopting trendy "silver bullet" approaches, as one approach does not suit all situations.?Explore different ways of organizing and building teams.
• If you have geographically dispersed teams or members, distribute tasks across locations based on the best possible architecture and integration requirements to achieve modularity, improve communication and speed up decision making.

Agile Governance?

Effective operating models rely on the adoption of an agile governance model and structure. This includes the right mechanisms, responsibilities, authority, indicators, rituals, and tools. Start with these three key principles:

• Business driven: Ensure that the governance model is guided by and aligned with the company's strategy, business priorities, and value, avoiding excessive restrictions and indicators that do not contribute to strategy implementation.
• People focused: Acknowledge that every organization is fundamentally a people organization (“not a technology company”). Make individuals feel valued and incentivized within the governance approach and operating model.?Recognition and fair incentives are crucial.
• Multiple levels: Adopt the 3R model, encompassing the identification and definition of the right Roles, definition and description of the right Rituals, and definition of key Results to be achieved and measured. This model should cover multiple levels, from the Strategy, to Portfolio, Program, and Team levels.

Culture of Autonomy

Building an effective and successful operating model depend on developing and nurturing a culture of autonomy. Here are three key recommendations:

• Value over output: Avoid the common mistake of measuring outputs rather than value when defining and implementing the operating model. Focus on the value generated by operations and processes instead.
• Context over control: Resist the urge to micromanage work and refrain from attempting to control all decisions across all levels. Micromanagement is prevalent in large and complex organizations, but it stifles autonomy.
• Permission to fail: It may sound weird to ask “permission to fail” when companies desperate need to innovate and reinvent themselves. Granting permission to experiment (and fail) is crucial for fostering innovation and will help the company find new opportunities. The operating model should help and encourage teams and individuals to make decisions and learn from their mistakes.

I hope these recommendations assist leaders in thinking and developing more efficient and successful operating models for their organizations.

I published an extended version of this article with more tips and recommendations in the book?Building Resilient Organizations – Best Practices, Tools, and Insights to Thrive in Ever-changing Contexts, published internationally by the Brightline Project Management Institute and Thinkers50. Get your book copy here.