The impact operating model work has on strategy

I am working with a client at the moment on an “operational review”.  I am still at the “explain the methodology” stage:  one of my roles is to skill up the project team so that they can use the Operating Model Canvas and associated toolbox.

The session today demonstrated the power of operating model work in helping challenge and crisp up strategy.  The organisation has a mission statement, three strategic priorities, corporate values and so on.  But the work we were doing today on a stakeholder map and a value chain map demonstrated some weak or unclear thinking in the strategy.

When we laid out the stakeholder map we had a hard time distinguishing between those stakeholders that are “customers” or “beneficiaries” from those that are “business partners” or “suppliers”.   The organisation is a charity.  Some of the confusion was about the funders and don0rs.  Were these funders suppliers or customers?  This depended on whether the charity decided what work to do and then looked for funders to support the work (making funders into suppliers/business partners) or whether the charity was offering its services to funders and it was the funders who decided what work should be done.  Frustratingly the strategy did not make this clear: the charity seemed to be doing both but the words in the strategy suggested that the charity was focusing on the first.

Another confusion was about the logic for the charity work.  When we picked a specific beneficiary and asked why the charity was doing work for this beneficiary, we were not sure whether it was to help the beneficiary as the end objective or to achieve some larger goal through helping the beneficiary. Again, the strategy documents and mission statement did not help us resolve this.

Some similar confusions occurred as we worked on the value chain map. We tried listing the different types of customer/beneficiary that the organization seeks to help; so that we could articlate value propositions (services) and draw out value chains (processes) for each beneficiary.  But this depended on answers to the previous questions.  Was the organization trying to help funders spend their money or was the organization trying to help a particular beneficiary? Also, was the primary beneficiary the person receiving the service or the people who benefited at one level removed? Think for example of helping a disabled child in order to ease the burden on a family.  Was the objective “ease the burden on families” or “help a disabled child”.

In a future blog, I hope to be able to illuminate this example with more specifics.  But, at the moment, the work is confidential and hence this material is well disguised.   The core point I am making, though, is that tools like the stakeholder map and the value chain map, force strategists to make choices, construct hierarchies of objectives and clarify mission in a way that is often missing from the tools used in strategic planning. This is because it is hard to design the operations without making these choices.  As a result, working on the operating model can lead to clearer and better quality strategies.   Maybe all strategic plans should include, at the back end, an Operating Model Canvas, as a forcing device to encourage crispness and clarity.

One conclusion we were able to make today: the first step in the project will need to be focused on clarifying the strategy.  Once this is done, we can then consider whether the current operating model will need to change.

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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
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