I thought it would be helpful to add some of the further comment from the LinkedIn thread on diagrams for operating models. This is for those interested in the issue of language. See the first blog on this.
In the LinkedIn discussion I upgraded my summary of what we are talking about in response to some challenge from a participant called JD. The summary was my attempt to be jargon free!
“I think everyone is talking about the same stuff:
* you have a strategy that focuses you on certain products and markets and channels and pricing and value proposition(s);
* to deliver this strategy you need capabilities (bit of a jargon word);
* the capabilities involve processes, people, technology, information, locations, buildings, machinery, working capital, brands, suppliers, etc;
* many of the above elements need organising further. So processes need to be organised into a hierarchy or model, people need to be organised into structures, informaton needs to be organised into data models, etc.
All of this thinking needs to be done at a high level and at increasing levels of detail until you get down to the lowest level of detail such as sentences in job descriptions or code in software applications or terms in contracts with suppliers.”
First a comment by Steve Kerzman (with an edit or two),
“Having read your blog post I would agree that most of us are probably talking about (mostly) the same stuff but that the definitions, naming conventions and resultant hierarchies are fluid and can sound quite different. As I guess might be expected in a fairly nascent discipline.
But of course that does us all no favours with clients who just ‘hear’ complications and confusions between various practitioners. As non-cognoscenti clients generally don’t see it as ‘all the same stuff’ really (why would they) and can be forgiven for thinking we are all just spouting management techno-babble.
For my part I am reasonably ambivalent about whether business model is part of business architecture (or operating model), or encompasses it, or is something else…..the concepts involved just have to live somewhere in some form of appropriate and coherent framework. In my earlier post I was simply expressing the split I have most often come across and hence have come to use myself (based also on my experiences of what has worked best) in the absence of any firm agreement on terms and definitions. As ever the mileage of others may vary 🙂 ”
Here is a comment from Fiona Lamb (I have cut out bits that are not focused on the main thread in this blog) – thanks Fiona.
“Agree with Steve K that I’m reasonably ambivalent about whether a business model is part of business architecture (or operating model). What is appropriate & coherent to a particular organisation is what is important. It’s not necessarily valuable to agree hierarchies etc to a low level of detail in a developing science (& art!). However, I do not agree that a business model = strategy. The time frame of these views is usually different, strategic pictures being an evolving thing whereas a business model can be very exact indeed. Also, very much agree with Steve K that each construct forms part of a translational bridge for the organisation (usually described as a transformation programme).
What we are doing, any of us working in this sphere, is helping to structure the thinking of organisations at a given point in time by giving tangibility to things we can’t see. To that end I don’t think we should get too hung up on terminology & maybe it helps to focus on the generics of the science in this field & not forget some artistry is needed too, to create a scaffold for each organisation to help them to clarify their thinking at any particular point in time.” [I like the scaffold term!]
These comments contrast with one by JD Beckingham who is much more committed to a particular set of definitions (comments in square brackets are added by me)
“The reality is that Business Models and Operating Models are intended to address different things and serve different purposes. (We can avoid any “whose reality” questions by accepting that there is a very extensive literature on both business and operating models.) [Yes but it is very extensively confusing!]
In my opinion, there is no practical way that an operating model could be considered a subset of a business model. The best one could say is that an operating model is a superset of a business model.
Business models do not include actionable Business Strategy in any detailed sense. And yet, it is the business strategy which the operating model operationalizes. [This is where I got lost]
The operating model is, literally, a model of how we operate and contains all the information necessary to describe ‘how we operate’. Included in this information might be (in my opinion should be) links back to the business strategy indicating which aspects of the strategy are implemented/supported by the various operating model components.”
Then a calming thought from Steve Kerzman
“It seems to me that we all broadly understand what we are trying to help our clients do – enable them to achieve their desired outcomes by helping them structure their thinking and actions effectively. We probably also have a fairly common understanding of all the ‘atoms’ in the mix – products, channels, customers, processes, metrics, systems, data, security, etc and the place and use of approaches like lean six sigma, project management, etc. We would probably also agree on the broad sequence of activities in a transformation programme.
Where the wheels seem to come off the wagon….and I admit I am simplifying for clarity here…..is how we all define, cluster, order and arrange meta-concepts like operating model, business model, business capabilities, the various ‘architectures’ and so forth. Or am I being too simplistic? In a sense I guess I am broadly agreeing with Andrew. We all have a sense of what we are doing as per his bullet points…..we just don’t seem to agree on the ‘table seating plan’…… “