Art in Designing Global Operating Model
“How doth the little crocodile
Improve his shining tail,
And pour the water of the Nile
On every golden scale!
How cheerfully he seems to grin,
How neatly spreads his claws,
And welcomes little fishes in,
With gently smiling jaws!”
- Lewis Carroll
Having a proper operating model is a key prerequisite of business success, a starting point for making organizational design decisions. The model first works as a spine to frame relevant business processes and governance environments. Second, it brings transparency to organization structure. Third, it allows businesses to create effective motivation systems and management practices. Finally, the model enables companies to pursue a deliberate set of business priorities.
It is critical to apply a holistic approach when designing a global operating model. Some perspectives and interconnections may be clear and straightforward, while others seem puzzling. Leaders should employ proper theories, models and techniques; most important, leaders must possess relevant experience in organization design. In Table 1 we suggest a leadership palette of theories, techniques and methods important to consider in operating model design efforts. The table provides a framework for diagnosing challenges and improving decision making. The list of theories, techniques and methods is by no means an exhaustive one.
Table 1
A leadership palette for global operating models
Figure 1 visually summarizes the eight fundamental principles that should inform the design of the global operating model.
Figure 1
The eight fundamental principles
Therefore leaders, like artists, should use the proper colours of theories, models and techniques, as well as apply a framework of fundamental principles. Figure 2 visually represents the global operating model.
Figure 2
The global operating model
The above example of an operating model provides a guide for connecting key internal and external stakeholders. In addition, it helps stakeholders work together in a spirit of partnership, openness and trust for their mutual benefit. Also, assigning accountability, responsibility and end-to-end process ownership enables prescriptive and relational governance to blossom. Further, the operating model helps 1) organize stakeholder management and issue resolution 2) resolve uncertainties and challenges 3) drive continuous improvement initiatives and digital agendas. The following table consolidates the roles and responsibilities of key stakeholders in the global operating model.
Table 2
The roles and responsibilities of key stakeholders in the global operating model
Indeed, introducing a proper operating model helps create a solid business system and achieve additional benefits. The benefits include a positive impact on working capital, optimized operational performance and, in the long run, avoidance of business inefficiencies. With embedded management reporting solutions, a global operating model becomes a single source of truth. Management reporting data integrates both efficient standard reporting and ad-hoc analysis. Importantly, the proper operating model helps to improve the quality of management reporting. This by itself reduces business risk, limits penalty exposure, and ensures compliance treatments. Moreover, it secures adequate and potentially advanced digital agendas.
Taleb (2012) emphasises, “We can certainly attribute the fragility effect of contemporary globalization to complexity, and how connectivity and cultural contagions make gyrations in economic variables much more severe…” (p. 288). A proper operating model helps to reengineer end-to-end business processes: it assigns process ownership, bringing transparency in accountability and responsibility. Furthermore, it enables stakeholders to 1) centralize operational activities in a global hub and/or satellite 2) cluster knowledge and experience in a centre of expertise (CoE) and 3) introduce a single point of contact (SPOC) for high business and market complexity cases.
We can conclude that first, introducing the global operating model will address the root causes of globalization failures. Second, it will create considerable long-term value for a much larger stakeholder community. Third, it will organically improve and develop relational and prescriptive governance frameworks. Fourth, it will enable businesses to implement high-end technological solutions. And fifth, it will unlock emerging opportunities for the organization. Overall, introducing the global operating model helps establish transparency when formulating strategic responses to global market complexities and business uncertainties.
References
Taleb N. Anti-fragile: Things that Gain from Disorder (New York: Random House, 2012).
