What Is an Operating Model and How Do You Design One?
- Richard Keenlyside
- 1 day ago
- 3 min read
By Richard Keenlyside | Global CIO & Transformation Expert
TL;DR:
An operating model defines how an organisation delivers value to its customers and stakeholders. It bridges strategy and execution by aligning people, processes, and technology. Designing an operating model involves assessing current capabilities, identifying gaps, and creating a blueprint that supports future growth. In this guide, I share how to practically design and embed an effective operating model from decades of global transformation leadership.
Understanding the Operating Model: Foundation of Transformation
At its core, an operating model is the organisational blueprint that explains how a company functions—how it creates, delivers, and captures value. It covers:
Structure: How teams are organised.
Processes: How work gets done.
Governance: Who makes decisions and how.
Technology: The systems that enable operations.
People: Skills, capabilities, and culture.
In simpler terms, if your strategy is the 'what', the operating model is the 'how'.
For over three decades across sectors including retail, engineering, utilities, and financial services, I've found one truth holds: strategy without a clear operating model is just ambition.
Why Designing an Operating Model Matters
Designing an operating model isn’t just a box-ticking exercise—it’s about engineering fit-for-purpose agility. Here’s why it’s critical:
1. Aligns Strategy with Execution
Businesses often set ambitious goals but fail in delivery. A well-designed operating model translates strategic intent into operational capability.
2. Enables Business Transformation
During M&A, carve-outs, or digital initiatives, an updated business operating model ensures continuity, scalability, and synergy.
3. Optimises Performance
When you design an operating model that works, it reduces silos, increases transparency, and improves service delivery across every department.
How to Design an Operating Model: Step-by-Step
1. Define Strategic Intent and Business Capabilities
Start by understanding:
What value do we deliver?
What are our customer journeys?
What core capabilities do we need?
This forms the foundation of the target operating model (TOM).
2. Assess Current State
Benchmark existing functions across:
Processes
People
Systems
Governance
Data flow
Use diagnostic tools, capability maps, and maturity models.
3. Identify Gaps and Opportunities
This is where transformation begins. Look for:
Duplicated processes
Redundant systems
Skills mismatches
Governance bottlenecks
4. Design the Future-State Operating Model
Include:
Organisational structure: Hierarchies, teams, and roles
Process flows: Standardisation and automation opportunities
Technology architecture: ERP, CRM, cloud, AI, etc.
Governance frameworks: Compliance, risk, decision rights
People model: Skills matrix, cultural alignment
5. Validate Through Prototyping
Pilot the model in a low-risk part of the business. Gather feedback, tweak, and scale.
6. Implement with Change Management
Embed the model through:
Communications plans
Training programmes
Performance dashboards
Programme governance
7. Continually Optimise
A good operating model is dynamic. Establish feedback loops and continuous improvement protocols using data and stakeholder input.
Real-World Example
I recently designed a global IT operating model spanning 5 countries at a global electrical group. We eliminated over 90 legacy servers and transitioned to Azure, reducing technical debt by £1.5 million. We standardised processes, embedded governance, and trained local leadership teams. The result? Faster decision-making, stronger cybersecurity, and a unified digital posture across territories.
Common Pitfalls in Operating Model Design
Designing in isolation from business goals
Overcomplicating governance layers
Ignoring cultural dynamics
Failing to embed through change management
Underestimating data and integration complexity
FAQs
What is a target operating model (TOM)?
A target operating model is the envisioned future state of operations—how your organisation should ideally work to support strategic goals.
Who should be involved in designing an operating model?
Executives, department heads, HR, IT, and operational leaders—design must be cross-functional to ensure enterprise alignment.
How long does it take to implement a new operating model?
Depending on complexity, anywhere from 3 to 18 months. Agile, phased implementation is typically more effective.
How does technology influence the operating model?
Technology isn’t just an enabler—it shapes workflows, decision-making, and customer interaction. From cloud platforms to AI, your tech stack must underpin your operating model.
Closing Thoughts
To design an operating model is to architect success. It demands clarity, collaboration, and courage. Whether you're scaling a start-up or transforming a global enterprise, your operating model is the engine that turns strategy into reality.
I've led operating model transformations across multinationals, private equity-backed firms, and start-ups. In every case, success wasn't about frameworks—it was about execution, adaptation, and people. And that's what I help deliver.
Richard Keenlyside is the Global CIO for the LoneStar Group and a former IT Director for J Sainsbury’s PLC.
Call me on +44(0) 1642 040 268 or email richard@rjk.info.
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