In the earlier article we spoke about placing value delivery chains at the heart of a Target Operating Model. We continue in this post with clear identification of necessary prerequisites for subsequent detailed operating model design using the Operating Model Canvas methodology.
An optimal Target Operating Model (TOM) is the final outcome of all design efforts stemming from the Architecture of Business. Having previously discussed the benefits of an architected operating model to any organisation, this article addresses value delivery chains, a key element at the very heart of any TOM.
The 5 key contexts of Strategic Business Architecture series continues with a fresh look on how Strategic Business Architecture plays a critical buffering and enabling role between the internal company context and its Target Operating Model. Subtly adjusting critical aspects of underlying organisational culture gives the optimal Target Operating Model its capability and agility to deliver expected economic results through the people side of Transformation & Change equation.
Every single organisation, whether a commercial, non-profit or government body, has an operating model. For as long as there is purpose for an organisation to exist and deliver results, it will be organised in some shape or form around structures, procedures, processes and similar. The operating model concept is not limited to organisations of, or above, certain size. Even if a company consists of just one single person, it already has an operating model in place with certain way things are done and results delivered by that organisation. Another single-person organisation will have a different operating model, because its raison d’être and objectives will be different, and even if not, the person in charge will have a different view on how they should be achieved.
MOST BUSINESS LEADERS we know agree with the famous Darwin-inspired quote that, ‘in the struggle for survival, the fittest win out at the expense of their rivals because they succeed in adapting themselves best to their environment’. They also agree that the rate of market change we are witnessing is unprecedented and complex. Disruption is all around – in politics as well as in economic trends – and even the most established players are no longer guaranteed relevance. Business and operating models are in constant change and in order to prosper, not just survive, companies are looking for innovative, agile and market responsive solutions to offer to their customers and partners today and tomorrow.
One research paper by McKinsey concluded ‘that 70 percent of change programs fail to achieve their goals, largely due to employee resistance and lack of management support’. It also noted that ‘when people are truly invested in change it is 30 percent more likely to stick’.
I find both of these numbers shocking. The former because the failure rate is so high. The latter because even with fully invested people the change success rate seems so low. I do not doubt McKinsey’s research, yet there must be a way to improve the odds of change surviving and taking hold in a corporate setting.
Business Architecture is critical in identifying which organisational assets exist, how they are used, and what can be done to improve their income generation, both operationally and through strategy driven (re)deployment. It enables organisations to do something that otherwise they would not be able to do, again and again.
Many organisations do not have a Business Architecture function because they believe it represents an unjustified overhead cost. I could not disagree more. In reality, centralised architecture is an indispensable asset, connecting strategic planning with operational teams (and operational teams between themselves) to create measurable value for the organisation.