HOW TO BUILD AN
AGILE OPERATING MODEL
What is an Agile Operating Model?
An Operating Model is the glue that connects the why (strategy), the how (people & resources) and the what (the work). An agile operating model aims to achieve this using agile ways of working. An Operating Model brings clarity to how the organisation will use its resources to execute the strategy and deliver value to customers.
Your organisation would already have an operating model, even if you can’t exactly put your finger on it. How your teams are structured to deliver the work, how they interact and even what they choose to do are all aspects of Operating Model.
Organisations that seek to leverage every possible advantage use Operating Model design to organise themselves in a way that delivers maximum value, while balancing a range of trade-offs. Do you value customer experience or cost reduction?
Team engagement or speed to serve? To be clear: there is no perfect Operating Model. But there is a best Operating Model for you. Just as every aspect of a widget is carefully considered before it is assembled and sold, so too every aspect of an organisation must be considered before it is assembled and asked to deliver on the strategy.
Consider Operating Model design at times of change
A good rule of thumb: have you recently experienced change? A new strategy, shifting resources or new products could all be indications that the Operating Model may need to be considered, or at least a high-level review. What worked in the past isn’t going to be what works in the future, and the more competitive your industry, the more every second and dollar counts.
Operating Models work best when they are co-designed
Before we start, we need to make sure we have the right people in the room. In practice this works best when you involve the leadership team at the high-level or Portfolio level stage and hear more from teams as we get deeper into the organisation or Project level.
The true value here is taking the team on a journey to understand the challenges faced by the current ways of working, the trade-offs of a range of options, before settling on an agreed way forward. The buy-in and cooperation secured from this process makes any potential transition 10x easier.
Of course, there is only so much capacity for people to contribute toward Operating Model design on top of their day job. Dropping in and out of the process can make it worse for all involved. A clear timeline on when active participation is needed & agreement from all involved to be committed to the co-design will help you to keep decision-making moving forward at pace.
Discovery – Understanding what works well & pain points in current Operating Model
Beginning design with a Discovery Phase could help inform your thinking as you progress. Sticking points exist in every organisation; being clear on what they are can help to frame your decision-making going into the design process.
Discovery usually consists of a diagnostic, using tools such as a survey, deep dive interviews or interview workshops. It provides precise guidance on what is working well in the organisation and where pain points are occurring.
Even without an Operating Model design, Discovery can be an effective way to get under the hood of the organisation to understand how it is working and areas to improve.
Step 1: Assess the Why
You almost certainly have an idea of why you are considering an updated Operating Model but does everyone else? Get to the crux of the matter early in the process – what do we want to be different coming out of this process? What are the challenges we are seeking to solve? What organisations inspire us? The above Discovery step can help inform this discussion.
This is also the right time to answer any questions about the journey itself. Many people would not have participated in a design process and may have questions on what to expect.
Step 2: Be clear on organisational purpose
It is impossible to organise ourselves if we are not clear on the purpose we are striving toward. Your organisation may already have a clear purpose and this step may be cursory. For others, this step can be extensive but rewarding. The greater your breadth of offering, the greater the potential for misalignment on what your true purpose really is. As we head toward understanding the trade-offs of a range of organising options, a clear purpose will help you sort the wheat from the chaff.
Step 3: Develop and agree on Design Principles
Up until now we have thought about ourselves; here we consider the customer. Ensuring all workshop participants have a shared understanding of what is important to the customer and what the customer experiences when engaging with your organisation, will inform your thinking as you consider Design Principles.
At this stage we have a strong understanding of our existing pain points, why we are looking at an updated Operating Model, what our purpose is and what our customers want. These inputs will frame our thinking as we decide our Design Principles – our north star through the rest of the journey. Of all the steps, this is the most crucial because it is here we must make a series of choices as to what sort of organisation we want to be going forward.
It is likely you will find that your Design Principles may even contradict each other. Do you want to be both a customer service excellence organisation as well as one that keeps costs down? You can’t have everything – what Design Principles matter most? The clearer you can be here, the easier it will be to make decisions later.
Step 4: Designing your Operating Model shell
Defining the Work
To do a stress test, you need an understanding of all the kinds of ‘work’ that your business does at the high-level. For instance, some people might research customers, others might design products and others sell those products. Having an understanding of the top 20-40 buckets of work that occur will give you something to test a range of organising options against.
Stress testing a range of organising options
There are six broad ways you can organise at the top level of your organisation: by strategic pillar, customer journey, customer segment, function (Eg: tech, HR, marketing), pool of resources (Eg: drawing from a team for discrete projects) or a mix of each option.
Stress testing ways of organising teams (IE ways of delivering the work, as we defined above) against each of these options helps you to understand the trade-offs that inevitably occur. While there is no perfect way of organising, some options work better than others under varying scenarios. The trick is to understand when the model works well and when it doesn’t, and when that matters to you, so that you can make an informed choice as to which is best for your business.
The Design Principles from the previous step will be what you test each option against. If you said you wanted to be a customer-first organisation, then you would expect teams to be organised in a way that delivers excellent customer experience, even if it comes at a cost.
Agreeing on Capabilities
Once we have an idea of how we want to organise our teams at a high-level, we then need to consider the people capabilities to deliver the work. As we dive into more detailed design with teams, having a range of pre-agreed capabilities to draw from will make it easier to decide on roles and who fills them.
Step 5: Aligning on the purpose and Ways of Working of each team
As we co-design a new way of organising, we need to explicitly understand the contribution of each team to the organisation. What do they do or not do and how will they know they are successful? Where does their work come from and where does it go? What cadence should they operate under to work well with other teams?
Unwritten ways of working need to be clarified to prevent your organisation from falling into old patterns. Now is the time to be clear on the expectations we have for each team, so that they understand their part of the value chain.
Even if you do not step through an Operating Model design, you may find that you benefit from ways of working conversations if you are in an organisation where work doesn’t have a clear owner or where teams struggle to action their agenda.
Step 6: Iterate
We now have a high-level Operating Model – we simply repeat the above process, going one step at a time from Portfolio, to Program, to team level, stress testing along the way.
While you might have a top-level design that is focused on client journey, you might find that at the Program level it makes more sense for one of the teams to be organised by client segment. There really is no one-size fits all approach – it is about what works best for your organisation at this time, based on the resourcing you have and the work you need to do.
At this step we want to get even more specific, deciding how many roles are needed to deliver on the team purpose and the capabilities required against each role.
Step 7: Develop a rollout plan and implement
We now need to assign a person to each of the roles we have created. This will give us an understanding of the potential change implications across the organisation. This is where you will need to bring in your internal change team, if not already involved, as they need to be in the detail in co-designing a roadmap to transition.
A rollout plan that allows you get quick wins and foster champions of the new Operating Model will help you achieve a successful rollout. As we have co-designed the new Operating Model with key leaders and team members, you already have the buy-in and support to move ahead. As you implement, not everything will go perfectly to plan. Keeping a light touch on updating the design as needed will ensure the Operating Model you implement is the one that works.
Learn more about how ADAPTOVATE can help you with transforming your Operating Model accross the enterprise.
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