Five keys to a modern operating model

by | Feb 7, 2019

Ask a dozen consultants what the term digital transformation means and you’ll likely get a dozen different answers. The term has become so overused and so lacking in definition it has become meaningless. This lack of clarity is problematic for senior executives charged with leading their organizations through increasingly challenging times.

There’s no escape from the fact that the world in which we live and operate today is digital. Transformed or not, all organizations operate in an economy where all meaningful transactions and interactions with customers and stakeholders are intermediated in the digital realm. The key question for executives is not whether they can successfully drive a digital transformation, but whether they can build a modern operating strategy and model that can thrive in a digital world.
Successful organizations that thrive in a digital world exhibit five key attributes: 
  • They have empowered cultures where decision making is pushed outward from the executive team.
  • They use data often in real-time as a foundation for organizational decision making. 
  • Automation is deployed as widely as possible to maximize speed and efficiency.
  • Service and product design is driven by experimental methods which use data from users to iteratively maximize value.
  • Technology decisions are strategic decisions and resulting technology choices form the foundational platform upon which value creating product and services will be built.

Building an empowered culture

Attempting to build an empowered organizational culture without clarity of purpose is a likely road to chaos. A successful modern business requires a clear framework for decision making and governance. This starts with a definition of strategic objectives and clarity over measures of success that can be shared with the entire organization. Staff who do not understand both the strategy and their role in delivering on will never act as empowered contributors
A welldefined strategic operating framework with clear measures and objectives becomes the guard rails that enables executives to push decision making out to the edges of the organization. This approach has obvious implications for organizational structure. Truly empowered decision making at the lowest levels of the organization requires much less middle-management structure. Modern organizations tend to be flatter organizations. Middle-management that must evolve to become a coach and enabler of front-line staff now making decisions.
In a truly empowered culture, risk-taking and experimentation need to be rewarded even when decisions end in failure. Permission to fail must come from the top with reinforcement that the learnings from failures will be re-integrated in the organization’s collective governance framework. Again, a well defined and clear strategic framework and identified objectives are the guard rails that enable the management of risk as decision making is decentralized.
Recommended actions
  1. Implement a structured strategicplanning process embracing all levels of the organization.
  2. Develop and publish a strategic framework with articulated long-term goals, enabled by short-term measurable objectives.
  3. Align staff incentive structures to strategic framework objectives.
  4. Identify, reward and showcase staff actions that exhibit front-line empowerment. 

Using data to augment decision making

Data is the lifeblood of a modern operating model. Connected data that flows seamlessly throughout the organization is critical to the success of the organization. Data does not tell you what the right answer is but the right data, at the right time, combined with the perspectives and experience of skilled staff is what accelerates organizational performance. 
Modern organizations use data to sense the state of the business and to drive real-time adjustments in strategy and operational decision making. Strategic framework measures and objectives require relevant data to be collected and made available to font line staff making day-to-day operational decisions. 
Most organizations are swimming in data but often that data is incomplete or not joined up. The most critical insights often come from the correlation of disparate sets of data. Transactional data for membership subscriptions, publishing revenue transactions and events ticket sales may be useful individually, but combining that data with behavioral data from online services and perhaps 3rd party datasets is likely to provide deeper insights into the trends and developing needs of the community the organization serves.
Modern organizations invest not only in streamlined data capabilities but also in the recruitment, training and development of staff with modern data analysis skills. A truly empowered culture requires an integrated foundation of operational data and front-line staff who know how to extract insight and value to make informed decisions from it.
Recommended actions
  1. Undertake an analysis of existing data assets, technical landscape and staff capabilities to quickly identify gaps in data capabilities required to measure, manage and operationalize the strategic framework.
  2. Identify third-party data relationships that may be required to cover gaps in data landscape.
  3. Execute focused pilot implementation of new data-enabled opportunity in alignment with strategic framework. Prove or disprove pilot hypothesis iterate to next opportunity.
  4. Create and publish a real-time strategic framework progress dashboard to the entire organization.

Streamlining operations with repeatable process automation (RPA)

Staff costs are likely the most significant ongoing operational expense of most organizations. So why do these valuable resources often spend a considerable amount of their energy on low value, repetitive operational tasks: processing invoices, membership inquiries, basic HR functions, website content updates, etc? It’s difficult to build an empowered culture when staff attention is devoted to mundane low value activities.
Modern organizations apply automation broadly across the business to free up staff resources, improve process quality and responsiveness to stakeholders. A new generation of RPA services and tools is enabling organizations to streamline their business operations to ensure staff are freed to apply their talents to higher level value creating activities.
Modern RPA tools can be applied incrementally to the business, automating a single process to start with and then expanding into other areas of the business as the value of the investment becomes proven. Successful RPA implementations requires not just a technical solution but also a change in mindset by senior leadership and staff alike. Staff need to be reassured that automation is not being implemented to eliminate their jobs but to free up their time to create more value for the organization. Incentives need to be created to encourage the organization to identify areas where automation can be profitably applied.
Recommended actions
  1. Identify initial processes which could be streamlined through implementation of RPA.
  2. Identify new products or services that your organization can provide based on the faster turnaround time available with automated processes.
  3. Define target measures of success including reductions in staff effort, improvements in timeliness etc.
  4. Evaluate and select appropriate RPS platform vendor.
  5. Implement RPA pilot and use measured results and expand beyond initial process areas.

Using experimentdriven service design to stay relevant to stakeholders

It is unquestionably the case that organizations looking to build long-term sustainable success will need to evolve an increasingly sophisticated portfolio of online products and services to meet the needs of members and stakeholders. Doing this successfully will likely require the development of new skills and organizational capabilities in modern product management practice.
Modern product management uses iterative experimental methods to ensure ongoing alignment with user needs: Develop a hypothesis, determine the measures required to test the hypothesis, field the experiment in the form of a new version of the service or product, collect data on usage of the product, analyze the data to validate or invalidate the hypothesis, refine and repeat. Very successful web service today, Facebook, Google Maps, Amazon Alexa, etc. use some variant of this approach.
A wide range of proven tools and services is available to any organization to implement this product management approach but the greatest barrier to successful adoption often lies in the attitudes and cultural norms of senior and front-line staff. 
An iterative, experimental approach to service design and implementation implies two often counter cultural attributes: Respect for failure and the lessons that come from it and a deep understanding that perfection is the enemy of progress. Senior staff need to become comfortable with greater lack of clarity at the start of design processes and the need to remain engaged in the process on an ongoing basis.
Recommended actions
  1. Define and adopt a modern agile product management process and invest in appropriate staff training.
  2. Implement specific processes to obtain stakeholder input.
  3. Highlight and reward teams that embrace iterative, experimentally driven and data validated design and decision processes. 

Utilizing a platform-based technology strategy to underpin strategic choices

The four keys to a modern operating model outlined above empowered culture, data augmented decision making, repeatable process automation and experiment driven service implementation require an evolved approach to the organizations technology strategy.
The traditional approach of selecting individual technology solutions to meet discreet needs of each function of the business is no longer sufficient. If a modern organization depends on joined up and free flowing data, those streams of data require an underlying joined up technology foundation. 
In a modern operating model technology becomes the platform upon which other capabilities and services and products are built. Technology selection, architecture design and implementation are integrated processes which need to be aligned to the broad strategic needs of the organization and defined in the strategic operating framework.
Technology leadership and staff in a modern organization ensure that mundane, low value technical tasks are handled by automated tools and infrastructures to able these expensive resources to be focused on enabling the organization to achieve its strategic objectives.
Recommended actions
  1. Undertake a full technology portfolio analysis to identify duplications and gaps in capabilities required to enable strategic framework objectives.
  2. Define new technology platform principles, standards and decision governance model. 
  3. Mandate all new implementations adhere to and implement defined platform standards.
  4. Develop strategic priority driven roadmap for migration, retirement or ongoing maintenance of technology portfolio.
In a world where digital transformation has become a meaningless term, it becomes imperative that executives drive strategic decisions and investments that will enable their organizations to develop these five key attributes and the capabilities required to thrive in a digital world.

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Jonathan Murray


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