What are the stages of excellence in an operating model?

An operating model develops through five stages. At the bottom, nobody can say who decides what, and a decision waits at every layer it passes through. At the top, a decision made at the right level stands, and the structure cannot grow a layer without losing one.

The stages are assessed across five dimensions. They run from fit to strategy and the role of the centre to money, metrics and ways of working.

The five stages, in operating model terms

• Lagging. Ask three people who approves a price or a hire and you get three answers. Nobody can say what head office does for the people who make the money. Every topic has its own committee.
• Basic. A delegations policy sits in a drawer, and decisions are re-opened at every level. A round of layers was cut once, and nothing stops them growing back.
• Competent. One page says who recommends and who decides for the ten decisions that matter most. The centre's job is written down. Each standing meeting says what it may decide.
• Advanced. Decision rights cover the work that crosses teams, and are redone when the structure changes. Spans and layers are counted every year. A forum that stops deciding is closed.
• Leading. A decision made at the right level is not overturned above it. A new layer can only be created by taking one out. Every new standing meeting has a closing date.

The five dimensions an operating model assessment covers

1. Fit to strategy and the role of the centre: whether the shape was chosen, what head office does, and fit to size.
2. Structure, roles and layers: the top table, reliance on a few people, spans and layers, who owns a margin, duplication and role clarity.
3. Decisions and governance: who decides, standing meetings, how far down a decision can be made, how work is prioritised, and hand-offs between teams.
4. Capabilities, sourcing and cross-functional processes: fixing gaps with capability, moving people, make or buy, and processes that cross functions.
5. Money, metrics and ways of working: scorecards, rewards for sharing work, cost by function, moving people and money, and how the last restructure was run.

How is operating model maturity measured?

Operating model maturity is measured one practice at a time. A Stages of Excellence assessment asks about 26 practices across the five dimensions, and every business answers all of them. For each practice, the respondent picks the one of five sentences that describes the business today. The answers roll up into a stage for each dimension.

The patterns that recur

Score patterns cluster into six types:

• The Founder's Desk: the business runs through one person and will not scale past that person's diary.
• The Halfway House: the last restructure stopped part-way, or the shape was never chosen.
• Grew, Never Redesigned: the business changed size and the model did not.
• Boxes Without Wiring: a tidy chart with nothing changed behind it.
• The Expensive Centre: head office costs more than it saves, and nobody can show what it delivers.
• Over-managed and Orderly: well run, slowly.

Sentences from the check

Each of these is the lowest of five sentences on its question:

• "Ask three people who approves a price, a hire or a capital spend and you get three answers."
• "Every topic has its own committee, and none of the committees has made a decision anyone can point to."
• "The last restructure was announced before it was designed, and people found out what their job was by who stopped emailing them."

See where your business stands: the operating model check takes about ten minutes.