The role of processes in an operating model

How far should an operating model include information about processes? The answer to this comes from two directions. First it is a question of levels of design. At the highest level of design, the only process that is relevant is the overall value chain – how value is created. At the lowest level of design, every process needs clarifying at whatever level of detail is needed. Its like the design of a house. At the highest level of detail you do not need to know where the kettle is going to be plugged in. But, at the lowest level, this is important because you may need an extra electric socket above the kitchen surface. So one answer is that “it depends”.

The other answer to the question came to me today as I was wrestling with some issues in a business where assets and infrastructure are critical. The issue we were discussing concerned the process for developing the business case for a new asset. The process was complicated because it involved at least five functions, each contributing important elements not only to the numbers, but also to the design of the asset and to the commercial importance of the asset.

The person I was talking to was the head of asset management. He was gradually putting in place processes and roles around these decisions. He pointed out that this was happening between peers at two levels below the top management team. He did not want the top management team to get too closely involved because he was afraid that they would impose impractical solutions. This was, in his opinion, an issue that could only be resolved at his level. The analogy is that you do not want the architect to decide where the kettle will sit.

However, because asset decisions are important, and because the top management team are often influential in these decisions, they do need to understand the process, even if they have not designed it. If they understand, they are less likely to disrupt the process with inappropriate interventions and they are more likely to be able to make helpful contributions. In other words a description of the main processes does need to be part of the operating model at a high level.

This means that it is important to identify and do some design work on the four or five most important decision or management processes, especially those that enable the organisation to work across the boundaries of the primary structure. Within the boxes of the current structure, the leader of each box can design the processes. To go back to the house analogy, the architect does need to understand how the heating system will work, how the family like to entertain and which room the occupants are likely to be in at different times of day. But, he does not need to know how the family prepare tea for breakfast.

Armed with this insight, I am going to encourage the group I am working with this week to identify the four or five main processes in their company and whether a commonly understood process exists or not.

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About andrew campbell

Ashridge Strategic Management Centre Focus on strategy and organisation Currently working on group-level functions and group-level strategy
This entry was posted in Lean, Op Excellence and Op Model, Levels of design, Value chain. Bookmark the permalink.

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