Key success factors for operating model transformation

21 September 2020 4 min. read

With nearly nine out of ten business leaders accepting that the rate of change has accelerated over the past two years, operating model transformation has become an “always-on” endeavour that is an essential capability for organisational survival. How can leaders realise their operating model transformations?

Operational changes always face challenges relating to organising for value and continuous improvement. These challenges come from a plethora of sources, including company culture, financial constraints and IT limitations – and without a holistic approach to transformation, firms often fail to fully realise the potential of the innovative new operating model as a result.

In order to help firms successfully complete operating model overhauls, experts from consultancy North Highland have compiled a white paper, outlining what they believe are key success factors for successfully undergoing a transformation. By focusing on the three key success factors components before trying to transform an operating model, North Highland’s researchers believe entities can position themselves to achieve breakthrough user-first value, regardless of the type of transformation they undertake.

Key success factors for operating model transformation

Align on common purpose

Leadership is one key driver to bring about changes in employees’ practices, in light of new goals, standards, and ways of working. For organisations looking to transform, even before addressing the changes needed across their operating model, executive alignment around a common purpose is therefore a critical starting point.

According to North Highland, a well-defined purpose brings clarity around how the business will need to be structured and how supporting operating models should evolve to maximise user-first value. The highest ranks of an organisation typically play a key role in modelling the appropriate mind-set and behaviours of a firm’s approach to change. According to the study, executive leadership team alignment ranks as the top factor in enabling organisational alignment for change, according to 59% of companies polled.

Focus on behaviours and culture

Culture has always been at the heart of delivering successful digital transformation, with North Highland referencing the famous quote from former Ford Motors CEO Peter Drucker, “Culture eats strategy for breakfast.”

A culture of adaptability means organisational agility; the ability to collaborate, accept change, accept risk, and embrace different ways to deliver that potentially have be unchanged for in a long time. Without addressing a firm’s ability to embrace change, then, transformations will often stop short of penetrating a firm beyond surface level alterations.

Business leaders can help set culture through the behaviours they demonstrate, and those they support. To that end, North Highland recommends that firms consider how they “handle” employees who are resistant to change, and how they react to things going wrong. Ultimately, failing fast is something which should be embraced, as once leaders find out what happened, what the team can learn from it, and how they can help the team, a failure can set an organisation well on its way to establishing a culture where people feel empowered to innovate.

Build on quick wins

North Highland recommends bringing both HR and finance experts on-board from the outset of a transformation to ensure buy-in and minimise tension as the transformation progresses. This can also help with budgeting on shorter cycles, enabling flexibility regarding putting resources towards activities driving the highest value. At the same time, the HR function is uniquely positioned to lead the business’s transformation towards more flexible, experiential, and people-centric operations.

This flexibility will help with scaling the transformation. There is often an expectation that you need to reach the end goal of a transformation as quickly as possible, but in reality if leaders do not temper their urge to move fast with the reality of how long it actually takes to effect change, it can prove a major handicap. Regardless of the area a transformation begins, operating model transformations should first seek out low-hanging fruit, where the business case is strongest, using these quick wins to build momentum, and steadily build organisational maturity.