Build #35 - WTF is an operating model?

I tried googling to learn about operating models.

I waded through the hundreds of complicated consultants’ charts that said so little in so many slides.

I found myself reminded how I feel when I get drawn into a discussion about wine.

Everyone has an opinion. Most people are bluffing.

And there’s always someone who claims to be an expert but can’t quite explain why.

A bit like choosing wine, getting your operating model right can make the difference between successful scaling and a gnarly hangover.

I digress. Let’s get back to operating models.

What isn’t an operating model?

Maybe we can shed a bit of light on what an operating model is by ruling out some things it’s not:

• an operating model is not an organisational structure
• an operating model is not a process or standard operating procedure (SOP)
• an operating model is not your business strategy
• an operating model isn’t a roadmap for action
• an operating model isn’t outsourcing or partnering.

That gets a few common areas of confusion off the table.

A simple definition for an operating model

So what actually is an operating model then?

Strip away the consultant-speak and things become a lot clearer.

Your operating model is simply how your business runs day-to-day to create value.

It’s the connective tissue between your vision, strategy and execution - a blueprint that shows how decisions get made, work gets done, information flows, people collaborate, and resources get allocated.

It’s how work happens and value gets created.

Think of it as like your company’s central nervous system.

When it works well, signals flow smoothly, responses are coordinated, and everything functions in harmony.

When it doesn’t, you get the business equivalent of a cheap red wine headache.

Signs of an effective operating model

If your operating model is in good shape, you’ll notice (or maybe even take for granted) things like:

• Decisions happening at the right level of decentralisation, by the right people, at the right speed. You as the founder aren’t a bottleneck, and teams move forward confidently with authority and autonomy.
• Information flows freely but doesn’t overwhelm. People have the relevant context they need without drowning in Slack notifications or emails.
• Your resources (usually people, money and time) get deployed where they create the most value.
• Your teams understand their priorities, can make good trade-offs and access what they need without friction.
• Problems getting solved close to where they happen. Teams are empowered to handle issues without everything escalating to leaders or the founder.
• Everyone understands how their work connects to the big picture company goals. There’s a clear line of sight from daily tasks to bigger objectives.

Failing operating model symptoms

And watch out for these symptoms of an ill-fitting operating model:

• Decisions bouncing around or get stuck in endless discussions.
• Too many meetings about meetings (pre-meets, post-meets etc).
• Teams are unclear who owns what.
• Good ideas die before or during execution.
• People feel blocked or frustrated (leading to higher employee churn)
• Everything needs founder input.
• Simple things take forever.
• Different parts of the business feel disconnected.
• Teams optimise for their self-selected goals at the expense of others
• New hires take an age to become productive.

In my experience, if three or more of these sound familiar, your operating model probably needs attention.

Developing your operating model

The key is to think about your operating model as a living thing that needs regular attention, not a one-time exercise. As you scale from 10 to 100 people, you’ll likely need to revisit and refine it several times.

When delivering operating model projects it’s super important to keep things simple.

Start small. Pick one area of your business to pilot changes. Then learn and iterate before rolling out more widely.

The more collaborative your approach the better. Your teams probably know where the problems are better than you. Get their input and buy-in early.

Don’t copy operating models from other companies without context. Just because a model worked for Spotify or Google doesn’t mean it’ll work for you. Context matters.

Be culture-conscious. Your operating model needs to work with your culture, not against it.

Don’t over-engineer things. Keep your model as simple as possible. Complex models create their own problems.

Unlike your expensive wine, your operating model isn’t something to keep locked away.

Share it, discuss it, and refine it with your team. The more people understand how and why things work the way they do, the better your operating model will work for you.

And if you’re still not sure where to start?

Like a bottle of wine, sometimes you just need to open it up and try it.

Remember, the goal isn’t perfection – it’s about evolving an operating model that helps your business scale efficiently while maintaining what makes it uniquely special.

Until next time,

-sw

ps I only ever recommend one book for clients that want to learn about operating models - Operating Model Canvas by Andrew Campbell, Mark Lancelott and Mikel Gutierrez.

pps This time of year means new engagements and opportunities in my work as an independent COO. I've got three slots for specialist operational leadership coaching for a January start. I'm also likely to be available for a new fractional COO engagement from January/February too.

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