The Digital Age of Business Requires a New Operating Model

Today’s business climate requires speed, agility, and, above all, alignment. Yet nearly all organisations are siloed and operate from outdated operating models. To compete in the digital age, you need an operating model that can keep pace with shifting industry boundaries, empowered employees, customers who are increasingly informed, connected, and demanding, evolving customer preferences, and heightened brand expectations and risks; to name just a few.

What Is an Operating Model?

An operating model is, basically, your company’s theory of business. It answers questions such as, "What are we good at?" And how will we make money? Who are our customers? These questions may sound elementary, but they bear a lot of weight. For example, if you can’t answer, "What are we good at?" You might be tempted to spread yourself too thin by trying to do everything instead of focusing on what you do best. Likewise, if you don’t know how you plan to make money, you could end up spending a lot of time chasing revenue that doesn’t actually support your core objectives. And if you don’t have a clear idea of who your customers are, you might overlook an important segment or fail to meet their needs effectively. Finally, without knowing where you want to go—and why—you won’t be able to measure progress along the way.

Why does it Matter?

If you’re at all familiar with conventional, functional organisational structures, then you know that they’re fairly rigid and resistant to change. As an organisation scales, it becomes harder to adapt quickly in order to deliver on customer needs. In recent years (specifically as more and more companies have gone digital), there has been a significant movement away from these models towards flat or horizontal organisations that allow for seamless communication across silos. The key is to create an operating model that allows for easy collaboration between departments and functions — something that can be achieved through various frameworks such as Agile and DevOps. Both of these strategies emphasise speed over process, which allows organisations to respond much more quickly to changes in their market. For example, if your company has historically operated as a traditional corporation but now finds itself facing competition from nimble startups, adopting agile methods could help you develop products faster than your competitors. Similarly, if your company operates like a startup but now finds itself competing against larger corporations that are embracing digital technologies, adopting DevOps could help level the playing field by allowing you to scale faster than your slower-moving competitors.

Why Does Your Company Need a New Operating Model Now?

The digital age is upon us, and your company must shift or fall behind. Digital forces are blurring industry boundaries, changing consumer expectations and creating new ways to compete. The only question is whether you’re ready for it or not. Are you getting on board? If not, time is running out. It won’t be long before your competitors take advantage of these trends. How can you stay ahead in such an unpredictable business environment? One way is by shifting to a new operating model that aligns with today’s business climate.

For many organisations, switching from an outdated operating model to one that better suits today’s market will require an overhaul – and perhaps even significant organisational change. But it’s worth it. Here are three reasons why your company needs a new operating model now:

1. The digital age is upon us: Today’s consumers are digital natives who expect seamless experiences across all channels. They want personalised interactions with brands that don’t feel robotic or impersonal. And they want to engage with businesses via their preferred channel—whether it be on social media, email, or mobile devices—and at their convenience. Companies must be able to meet these demands while also providing consistent brand messaging and maintaining high-quality service.?
2. Industry boundaries are blurring: It used to be easy for companies to define themselves by industry and stay in their lane. But today’s business climate requires agility and flexibility. As industries blur together, companies need operating models that allow them to pivot as needed without sacrificing consistency or quality of service.?
3. New ways to compete are emerging: While some traditional marketing tactics will still work in today’s market, new opportunities have emerged thanks to technological advances. Many of these emerging trends offer great opportunities for your company – but only if you have an operating model that allows you to seize them quickly and effectively. An outdated model could put your company behind before it even gets started. If you find yourself frustrated by missed opportunities or falling behind competitors, consider switching up your operating model now.

A Framework for Aligning Your Company and Creating Speed, Agility, & Flexibility

The first step in achieving speed, agility, and flexibility is to align your people, processes, and technology by adopting an operating model that allows you to operate at web speed. Today’s leaders must move quickly to compete in an environment where technology is evolving faster than ever before. Organisations need new business structures that fit into today’s landscape. The key characteristics of these new structures are outlined below.

?#1: Rapid response capabilities: In order to meet customers’ needs and make real-time decisions based on market insights, companies need operational systems that allow them to act with confidence and transparency. While rapid response capabilities will always be critical for companies facing uncertainty or disruption, they have become even more important when it comes to changing customer expectations due to technological advances such as mobile computing, social media, and big data analytics.?

#2: Interoperability between internal departments: For organisations to be successful in today’s digital age, they need a flexible structure that enables collaboration across functions while also maintaining accountability. This means having access to relevant information from any department or team member without having to go through multiple levels of approval. It also means being able to easily share information with external partners and customers—allowing everyone involved in a transaction (whether B2B or B2C) to see all the relevant details about their interaction.?

#3: Information sharing: When organisations adept a new operating model, they can provide employees with greater visibility into projects and other activities happening throughout their organisation. This increased visibility makes it easier for employees to understand how their work fits within broader company goals, giving them greater control over how they complete tasks and ultimately increasing engagement.?

#4: Increased connectivity between teams and departments: As mentioned above, one of the main benefits of an agile structure is its ability to foster collaboration across different groups within an organisation. To do so, businesses need to ensure that every employee has access to relevant information from other parts of their organisation. This means not only having easy access to information but also ensuring that it’s accurate and up-to-date. By connecting employees across different departments, businesses can create a collaborative culture where people feel like they have a stake in each other’s success.?

#5: Accountability: Because everyone in an organisation has access to relevant information and understands how their work fits into overall company goals, it’s much easier for managers to hold employees accountable for meeting deadlines and reaching milestones. Employees know what’s expected of them because they understand what each part of their job contributes toward accomplishing larger objectives. With clear objectives and roles, there’s no room for ambiguity.?

#6: More efficient operations: With a streamlined structure and simplified reporting process, businesses can reduce costs associated with unnecessary meetings, paperwork, and redundant efforts. This efficiency gives organisations more time to focus on innovating and growing their business.

?#7: Transparency: This is perhaps one of the most important aspects of an agile operating model. If employees don’t trust that they’re working toward a common goal, they won’t be motivated to reach their full potential. A transparent structure creates a sense of shared ownership among employees and fosters a sense of community and belonging.?

#8: Collaboration: One of the biggest challenges for many organisations is getting people to work together in a way that leverages their individual strengths and talents. This is especially true for companies that operate in a siloed structure, where employees from different departments aren’t encouraged to work together. An agile operating model encourages collaboration between employees from different departments and teams, creating a more dynamic and productive work environment.?

#9: Flexibility – The final characteristic of an agile operating model is its ability to adapt to change. As business conditions shift, it’s important for organisations to be able to respond quickly and efficiently. With an agile structure, employees can quickly adjust their workflows and procedures to accommodate changes in their environment.?

# 10: Continuous improvement – The final characteristic of an agile operating model is its ability to adapt to change. As business conditions shift, it's important for organisations to be able to respond quickly and efficiently. With an agile structure, employees can quickly adjust their workflows and procedures to accommodate changes in their environment.?

# 11: Strategic alignment – Many companies today struggle with strategic alignment. Without a cohesive strategy, it's difficult for employees to understand how their work fits into a larger vision. This lack of alignment can lead to confusion and frustration, making it harder for employees to do their best work. With an agile operating model, everyone in an organisation has access to information that helps them understand how their role fits into company goals. This strategic alignment leads to greater productivity and more engaged employees.?

# 12: Improved communication – With an agile structure, organisations can encourage collaboration between teams and departments. This means that everyone in an organisation has access to relevant information from other parts of their organisation. This is important for two reasons: A) it ensures that employees can access current and accurate information, and B) it makes it easier for people to understand how their work fits into larger company goals.?

# 13: Better decision-making – The final benefit of an agile operating model is its ability to facilitate better decision-making. With a more transparent structure, organisations can empower employees to make decisions quickly and efficiently.

Steps to Build Your Own Modern Operating Model

By leveraging technology to connect every facet of your business, you can create an effective operating model that keeps pace with shifting industry boundaries. Here are eight steps to take so?

1. Assess Your Current State: Conduct a comprehensive review of all internal and external touch-points within your organisation. What’s working? What isn’t? Take stock of where your business stands in terms of digitisation and technological integration, and pinpoint areas for improvement moving forward.
2. Build Consensus Around Goals: The first step in building an effective operating model is establishing clear goals for what you want to achieve them getting everyone on board with those goals. Establishing a common vision will ensure that your efforts are focused and aligned, and will help motivate team members to work toward shared objectives. It’s also important to keep these goals realistic; don’t bite off more than you can chew!
3. Identify Key Areas of Focus: Once you have established consensus around your organisation’s goals, identify key areas of focus where technological integration can have the biggest impact. What are some pain points or weaknesses within your business? How can technology help solve them? What tools do you need to get there? (Remember: Start small!)
4. Assessing Current Tools & Technologies: Now that you know which areas of focus to prioritise, assess how well current tools and technologies meet your needs. Are they up-to-date? Do they provide the functionality necessary for achieving your goals? If not, determine whether they should be replaced or augmented.
5. Select Appropriate Technology Solutions: With your priorities and assessment in mind, select appropriate technology solutions to address the gaps identified in Step
6. Develop a business case for the new operating model and ensure alignment across the three pillars of success - finance, operations, growth, and innovation.
7. Designing an agile operating structure and governance: Agile operating structures are a methodology for changing the way teams, departments, and organisations interact. An Agile operating model. They improve your ability to collaborate and innovate by facilitating new ideas in shared spaces, planning across multiple teams, and streamlining all operations.
8. Establish clear metrics of success: You can keep referring to the predefined metrics of success to understand progress, the quantum of success or failure.?

Achieving business agility demands rethinking the operating model, culture and processes that have been the norm for decades. This is a complex change. It requires more than piecemeal fixes to legacy systems and siloed stove-piped organisational structures. It requires a new way of thinking about how knowledge flows, who gets involved in decision-making and how your organisation behaves dynamically over time. The organisations that can achieve this are exploiting their innovation potential, securing sustainable results and often beating the competition in the market. Whether you’re a small startup or an established international conglomerate, one thing is for certain: the way that you do business is changing. Between globalisation, new technology, and changing consumer expectations, there are innumerable challenges to keeping up with the times. But don’t be afraid of change—the right business model can not only help you win in your market, but it can also help you create a thriving company that improves both the bottom line and your brand reputation.