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Operating Model Canvas: How To Deliver Great Value To Your Customers and Beneficiaries
Operating Model Canvas: How To Deliver Great Value To Your Customers and Beneficiaries
Chapter
Operating Model
CH1 Canvas
Business model canvas 14
Transformation 20
Design steps 24
Tips 32
How to deliver
great value to your
customers and
beneficiaries
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. But it can in
distributors in
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smaller countries)
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Europe excluding
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Worse
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HQ a se
Outsource Design a collaborative agreement
1. The annu No
Is this a key activity in delivering value?
Yes
al timetable
sit
managers
meetings, of key
such as
the Most organizations depend on suppliers for raw materials and many other inputs. Fortunately
between
System Jan Feb
egy proc meetings with most suppliers. But some relationships need to be ‘collaborative’, and this
Mar Apr
May Jun reviewing esses,relationships
both
Board and Ex Jul Aug performan matrix helps identify them.
Committee ecutive Sep Oct strategy ce again
ne rs EC Nov Dec and deve st
NS
EC loping new
de sig B
EC EC EC 3.
strategy
LOCATIO
Strategic Pla B EC EC The budg
process, CH3 and target-set
nning EC eting
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B EC EC
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B 4. The perfo annual proc
Target rmance ess
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al guidance itoring and
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men
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monthly
INFORMATION
Monitoring
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Manage
P
ational decis ings
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w P P the ment proc
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ly executive
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America (work
is selling
ly show how
Value Chain e.g Design Buy Make Market Sell Etc
Sell
ct Review
‐‐‐‐‐‐‐‐‐‐‐‐
IT blueprint
of their typical 6. The cont Mexico
Org Units e.g
order from
country Stand
n, some of a central
ERP Stand
garments
organi
toolbox
t
Marketing Owner,
MP MP
Spec
collections
MP
ERP Bespoke = Bespoke module
Integrated into the enterprise system Spec = Special stand-alone application
model
ant assets ses peop information sharing and communication across the normal functional and locational boundaries,
where import developm le, their
ent
career path needs and their
operating
and because it can help automate processes. A high-level IT blueprint is created by placing the
Up-to-the- galvaniz
ed stee
l s process steps from the value chain map along the top of a table, and the organization’s units
CH3 lier of Europe excluding
minute
down the side. The table shows the IT applications that are needed, who ‘owns’ each and
Global supp USA (create a JV)
Canvas • The
Spain (use non‐
which need to be integrated into an enterprise system.
CH3 exclusive distributors)
ORGANIZATION
fashion
Worse
119 Manufacturer
Information
Model
affordable
Outsource Design a collaborative agreement
CHART
No Yes
Operating
Organization
ered No online
Empow ns store sales
106
io
Four types of support work
Key accounts
Finance
managers
HR Lean/ Operating excellence
PROCES
HR services
Marketing
am
Finance services
te
toolbox
al
Business Units
Centr
© Ashridge Executive Education 2016
Organization charts are common. They provide a helpful visual guide to the organization. But
SES
ng model
rm they do not give as much information about how the organization operates as they could. An
platfo
‘organization model’ is a way of drawing an organization: an organization chart distinguishing
• The operati
between the ‘operating work’ and the ‘support work’, and clarifying the relationship between
the support functions and operating units. In this way, an organization model shows how the Open courses
Tailored
* *
* * What is an IT blueprint? The
phrase IT blueprint
al
Issue
Qualifications qual
POS
Conferences
oduct Centr gn
Weddings
Model Canvas
Link or standardise
* Problem/Opportunity
Store pr link
CH3
Separate and manage by segment
desi system
typically show the architecture
Typical large company structured The value chain map displays the operating processes that create and deliver value. hardware and communication
of the IT applications,
manage
into business units It represents the heart of the operating model – the middle arrow in the Canvas. term here is very high-level.
Operating
In fact it is little more
than a visual way of representing
to HQ
the principles for
102 designing the IT systems.
stores
However it is a vital step
and benefits from being kept
at this high-level.
53
104 Ashridge Executive Education
CH3
W
TWW OOWOWWWOO MOOWO CWOOWW TOO ZWO
model toolbox
Tailored
* *
in Chapters 2 and 6
*
toolbox
Issue
Qualifications qual
Conferences
model
Model
Weddings
* *
+ design
Research
operating
Operating
publish
Combine/manage together
Source of advantage
Link or standardize
Canvas • The
100 Separate and manage by segment * Problem/Opportunity
Model
Operating
98
One hundred page Operating Model One thousand page Operating Mannual
OPERATING
MODEL
OPERATING
MODEL
➤ Helps test the practicality of what you want ➤ Helps test the practicality of what you want ➤ Helps you find the root causes
to do to do. Often leads to better strategies. ➤ Helps you see the connections between
➤ Helps you understand costs, resources ➤ Helps you understand costs, resources symptoms and causes
and timing, and hence develop a better and timing, and hence develop a better ➤ Helps ensure your implementation plan is
business case business case complete
➤ Helps you align your team and your ➤ Helps your people understand the new ➤ Helps your people see why all the changes
stakeholders strategy are needed
➤ Helps ensure you focus on the important ➤ Helps ensure your implementation plan is
complete
Understand what an
operating model is
THIS
THIS
BOOK
BOOK
WILL
WILL
HELP
HELP
YOU
YOU
... 9
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For information and printed versions please see www.vanharen.net
Strategies engage 5% ...
CH1
Finance IT HR
HR HR Marketing
4
organization. Write a few post-it
notes that capture some of the
things you think are important about
Identify a
your organization (i.e. important to
delivering the value proposition) and challenge or 3 Decide which
stick them on the Canvas. Then look opportunity tools will help
at the examples provided (Chapter 2).
Then look at the tools (Chapter 3)
2 you most
(Chapter 3)
and try using some to understand
your challenge and develop ideas for
resolving it. Then explore the two big
1
Try creating an
case studies (Chapters 4 and 5).
Operating Model
Have fun! Canvas of your current
situation (Chapter 2)
12 OPERATING MODEL CANVAS
Copyright protected. Use is for Single Users only via a VHP Approved License.
For information and printed versions please see www.vanharen.net
Chapters
4 6 CH1
1 2 CREATING 5 EXAMPLES OF
Operating A TARGET CREATING AN OPERATING
OPERATING M
ODEL
Model Canvas 3 OPERATING MODEL OPERATING MODEL MODEL
CANVAS examples Tool box FOR A BUSINESS FOR A FUNCTION CHANGE
Business model POLISM 38 Five core tools 96 Industry and EEI’s IT function 180 Change process 200
canvas 14 How to use 42 Value chain map 98 challenges 136 Steps in design 182 Sales force 202
Transformation 20 Business 48 Organization Steps in design 146 Value chain 184 Design team 204
Design steps 24 - Uber 50 model 100 Processes 148 Suppliers 186 HR function 206
Tips 32 - Zara 52 Locations Organization 154 Locations 188 Unemployment
- McKinsey 54 footprint 102 Location 158 Organization 190 benefit 208
- Van Haren 56 IT blueprint 104 Information 164 Decision rights 191
Functional 64 Supplier matrix 106 Suppliers 168 Scorecard 193
- IT 66 Thirteen additional Scorecard 172 Summary 196
- HR 68 tools 108
Multi-business 70
- Shell 72
- Ashridge 74
Public Sector 80
- Qualifications 82
- Benefits 84
Other 86
- DEF CON 88
- Cardboard
Citizens 90
13
Copyright protected. Use is for Single Users only via a VHP Approved License.
For information and printed versions please see www.vanharen.net
The Operating Model Canvas is
a one page operating model
CH1 The Canvas is fully The Operating Model Canvas does not
explained in Chapter 2 include the Financial Model. But, of course, the operating
model does drive most of the organization’s costs.
Pr
Va sition
O + L + I + M = Key Resources
P opo
lue (s)
Customer/
Beneficiary
Operating
Aligning operations and organization with strategy
rating Op
The journey from strategy to operating success depends on
Operating
Aligning operations and organization with strategy
Information Ope
Mikel Gutierrez
Organization
creating an organization that can deliver the chosen strategy.
This book, explaining the Operating Model Canvas, shows you Mark Lancelott
how to do this. It teaches you how to define the main work
Model
Model
Model Canvas
Model Canvas
processes, choose an organization structure, develop a high-
level blueprint of the IT systems, decide where to locate and
how to lay out floor plans, set up relationships with suppliers
Canvas
Canvas
and design a management system and scorecard with which to
run the new organization. The Operating Model Canvas helps
O I
you to create a target operating model aligned to your strategy.
Locations
The book contains more than 20 examples ranging from
SUPPLIERS
large multi-nationals to government departments to small Shopping
s centers
charities and from an operating model for a business to an cturer
Manufa Transport for
operating model for a department of five people. The book Spain Product
Companies HQ and e sit
describes more than 15 tools, including new tools such as ous managers
wareh between
the value chain map, the organization model and the high- designers
level IT blueprint. Most importantly, the book contains two
fully worked examples showing how the tools can be used to
Processes
Sense what Stores
develop a new operating model. is selling Make warehouse order from Sell
Design Design
(product garments and fulfill collections
collections stores
managers)
This book should be on the desk of every consultant, every
strategist, every leader of transformation, every functional
M
Mark Lancelott
Mikel Gutierrez
Andrew Campbell
business partner, every business or enterprise architect, every Empowered
red No online
Lean expert or business improvement champion, in fact
Information
Empowe s
Management
store sales
Organization
tion
everyone who wants to help their organization be successful. collec managers
teams l
Centra m
platfor
l store POS
product Centra ign
System
Store des system
rs link
manage
to HQ
stores
www.vanharen.net
© Strategyzer AG
WHAT IS THE BUSINESS MODEL CANVAS? 17
Copyright protected. Use is for Single Users only via a VHP Approved License.
For information and printed versions please see www.vanharen.net
How does the Operating
CH1
Model Canvas link to ...
The Operating Model Operating Model Canvas
Canvas has six elements:
the work that needs to be done
➤ SUPPLIERS Locations
to deliver the value proposition
(value chain);
the people who do the work
➤
and how they are organized
(organization);
S L
where the people will be located and
➤ Value Delivery Chain(s)
Pr
Va sition
opo
the assets they need to help them
lue (s)
(locations);
what information systems the
➤
Customer/
people need to help them
(information);
Beneficiary
Organization Information
the suppliers who support the work
➤
O I
(suppliers); and
the management system used to run
➤
the organization (Management
system).
M Management
System
Financial Model
The Operating Model Canvas with SIX elements is a more powerful “back-end”
than the three elements - Key Activities, Key Resources and Key Partners -
of the Business Model Canvas.
HOW DOES THE OPERATING MODEL CANVAS LINK TO AN ENHANCED BUSINESS MODEL CANVAS 19
Copyright protected. Use is for Single Users only via a VHP Approved License.
For information and printed versions please see www.vanharen.net
From strategy ...
CH1
Understand
Environment Develop Strategy
Customer preferences
Competitor performance
Supplier capabilities
Technical, legal,
environmental,
and political factors
All good strategy is founded on a deep A strategic plan explains who Strategies need to be converted into a
understanding of the environment, the organization will serve, business design. This is best done by working
economic trends, consumer trends, what will be “offered” and on the elements of the business model: value
technology possibilities, etc ... how the “value” will be proposition design, operating model canvas
created. and financial model. This work can result in
adjustments to the strategy.
Key
Channels
Resources
Project
Design operating model
S L Project
P
lue (s)
O I
Project
M Management
System
CH1
Design the
high-level ‘to be’
operating model
Identify a
reason to
change
Start
transforming from Transform from
‘as is’ to ‘to be’ Run the ‘to be’
‘as is’ to ‘to be’
…. organization
….
while designing …
while running a
more details and while improving it
mix of ‘as is’ and Identify another
running the ’as is’ ‘to be’ reason to
organization change
CH1
CH1
Don’t be put off doing operating model work or assume that it is so much work that it has to be done by a
consultant. You do not have to go through all of these steps to do useful work. High-level design options can be
created in 6 hours or 6 days or 6 weeks. Designs that are detailed enough to get commitment may take weeks.
If it takes 6 months, you are doing detailed operating model work – not high-level work.
For more on the design journey For help with design thinking
CH1
Confirm that
the high-level
option and the
detail will work
Define design together
principles
Choose a high-
level option
Generate
design How to plan and control
Generate
ideas/options
design ideas at the work?
a more detailed ➤ An operating model, sufficient to get commit
level ment and funding, takes weeks not days.
➤ Detailed project management is unproductive.
Who to involve? Use timed gates for steps like diagnostic,
➤ The boss of the organization. design principles, options.
➤ Stakeholders, especially customers. ➤ Stakeholder availability often sets the
➤ Those who will make it happen drumbeat because stakeholder working
➤ High flyers and influencers who will sessions need to be hours not minutes.
give energy to the changes ➤ The process should be intense.
Generate
design
ideas/options Generate
design ideas at
a more detailed
level
1. Draw a value delivery chain for each “segment” (a group of customers looking for the Don't forget to make
sure you have some
same value proposition) and highlight where there are problems and what are or could be
design principles before
sources of advantage/excellence
you start designing
2. Consider what “activities” will be combined or linked across value chains and which (see page 140)
11. Review the “challenges” and “design principles” to make sure all have been
addressed
Design T
Be clear on the decis ak
ions. e
level of detail
Avoid committing to
too much detail. Good
design is often about
confronting a few
critical high-level
issues.
e how
Decid cisions
n de Be clear on the
desig e mad
e
case for change
will b
e,
m, wher
By who n? Are Link to changes in
and whe uired, strategy or problems
req
options hat that can’t be solved
and w through continuous
will
criteria improvement.
be u s e d?
n Tips
Don’t open the
melon unless you are
ready to eat it
If you say you are thinking of
changing the organization, Don’t have the
everyone stops working and decision maker
starts worrying about their at the meetings
positions. If the decision maker
is at the meeting, it
will reduce openness
and creativity.
Note: Mark does not
Embrace agree with this tip!
options
Options are healthy.
Look for extremes.
Get opinions from a
wide range. Don’t
limit your thinking.
DESIGN TIPS 33
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