Operating Model Design
Source: Daniel McCullough via Unsplash
summary || Operating Model Design: the Five Levers That Actually Move Value
Most organisations redraw org charts and call it transformation. The smarter ones redesign their operating model, the system that turns strategy into results. If you’ve already read What Is an Operating Model?, you’ll know that structure isn’t the system, it’s the scaffolding. Here we build on that foundation and dig into five design levers leaders can tune to make value flow faster.
Today, the difference matters more than ever. Your org chart tells you who reports to whom. Your operating model tells you how decisions actually get made, how fast you can sense and respond to change, where resources flow when priorities shift, what gets measured and rewarded, and how work actually happens when nobody’s watching.
“Structure follows strategy” is the advice we’ve all heard since business school. But here’s the harder truth: structure doesn’t equal operating model. You can have a brilliant strategy and a logical structure, yet still lose eighteen months to consensus theatre, watch talented people quit because they can’t get anything done, or discover your quarterly business reviews are solving last quarter’s problems.
The operating model is the invisible architecture between strategy and execution. When it works, value flows like a river finding its path. When it doesn’t, friction compounds daily until your best people leave and your competitors move faster.
This article unpacks five levers that actually move value: decision rights, governance cadence, resource allocation, metrics, and ways of working. Each lever connects strategy to execution with speed and clarity. Each is under your control, and when designed intentionally, they create the conditions for organisations to move at the speed their strategy demands.
If you’re unsure which type of operating model your organisation is running: traditional, emerging, or AI-native, start with The Architecture of Execution: Understanding Your Operating Model for context.
-
verb
gerund or present participle: operating
(of a person) control the functioning of (a machine, process, or system).
"the Prime Minister operates a system of divide and rule"
o (of a machine, process, or system) function in a specified manner.
"market forces were allowed to operate freely"
o be in effect.
"there is a powerful law which operates in politics"
o manage (a business).
"many foreign companies operate factories in the United States"
o (of an organization) be managed in a specified way or from a specified place.
"neither company had operated within the terms of its constitution"
o (of an armed force) conduct military activities in a specified area.
"the mountain bases from which the guerrillas were operating"
perform a surgical operation.
"surgeons operated on his jaw yesterday morning"
-
noun
a three-dimensional representation of a person or thing or of a proposed structure, typically on a smaller scale than the original.
"a model of St Paul's Cathedral"
a thing used as an example to follow or imitate.
"the project became a model for other schemes"
verb
fashion or shape (a three-dimensional figure or object) in a malleable material such as clay or wax.
"use the icing to model a house"
use (a system, procedure, etc.) as an example to follow or imitate.
"the research method will be modelled on previous work"
20min read
Lever 1: Decision Rights – Who Owns What
The Problem: Overlapping Ownership, Unclear Accountability
Decision rights sound simple until you try to map them. Who decides whether to build a feature or buy a platform? Who owns pricing for a product that spans three business units? Who can say no to a regional request that conflicts with global standards?
In most organisations, these questions don't have clear answers. Product and platform might both claim ownership. Finance wants a say. Regional leaders expect autonomy. The result is meetings where everyone has input but nobody has authority. Decisions take weeks. Accountability evaporates because when everyone owns something, nobody does.
This is what we call decision gravity, it pulls decisions to the top, right where the people with the least on-the-ground context sit.
Why It Matters
The pace of change currently makes this intolerable. Technology decisions that took six months in 2020 now need resolution in six weeks. Customer expectations shift faster than quarterly planning cycles. Competitors move while you're still scheduling the approval meeting.
Speed isn't about moving recklessly. It's about eliminating the drag of unclear ownership. When decision rights are explicit, escalation paths are clear, and accountability is unambiguous, organisations can move fast without breaking things.
How to Fix It: RACI With Teeth
The fix starts with radical clarity. For every consequential decision, name the explicit owner. Not the consulted party, not the informed stakeholder, the person who can make the call and will be held accountable for the outcome.
Then create escalation paths that prevent consensus traps. If product and platform disagree on a build-versus-buy question, the escalation path is clear, time-bound, and ends with a named decision-maker who isn't interested in splitting the difference.
Real-World Evidence
McKinsey's 2025 research on operating model systems found that organisations using emerging structures (such as enterprise agile and product platforms) rather than traditional hierarchies consistently demonstrate stronger readiness to address key market trends, particularly in areas requiring rapid innovation and technology deployment.[^1]
In a detailed case study, a global financial services company shifted from a traditional matrix structure to an enterprise agile model with clarified decision rights. The transformation delivered a five-to-tenfold increase in decision-making speed, alongside 10-30% improvements in customer satisfaction, operational performance, and employee engagement.[^2]
Diagnostic Question
Can you name the owner for your top ten consequential decisions? Do you have an escalation path if two teams disagree? Where does your best value-creating idea go to die right now?
Lever 2: Governance Cadence – Speed of Sensing and Deciding
The Problem: Quarterly Reviews in Monthly-Change Environments
Governance cadence is the rhythm at which you sense, decide, and adapt. Most organisations inherited cadences designed for slower markets: quarterly business reviews, annual planning cycles, monthly steering committees.
The problem is the world no longer moves in quarters. Customer preferences shift weekly. Technology capabilities evolve monthly. Competitors launch in weeks, not quarters. Yet governance structures built for stability struggle to respond at speed.
Why It Matters
Mismatched cadence creates two failure modes. Move too slowly and you're solving last quarter's problems while this quarter's opportunities disappear. Move too quickly without the right information, and you create chaos, pivoting weekly, exhausting teams, losing strategic coherence.
The right cadence matches the rate of change in your environment. If your market shifts monthly, your portfolio review should happen monthly, not quarterly. If customer feedback changes weekly, your prioritisation cadence should match.
Think of your operating model as a living system, like a river that learns to navigate its course over time, adapting its flow to the terrain it encounters.
How to Fix It: Matched Cadence Across Layers
Fix this by matching cadence to the pace of change. Strategy might still refresh annually. Portfolio priorities might shift monthly. Execution decisions might happen weekly or daily.
The key is coherence across layers. Daily standups inform weekly prioritisation. Weekly prioritisation rolls up to monthly portfolio reviews. Monthly reviews feed quarterly strategy checks. Each layer operates at its natural cadence, but information flows continuously.
Design your cadence around value streams, not departmental silos. You should have a weekly, outcomes-focused check-in for your biggest value stream. Say, 'Customer Onboarding' not just a monthly 'IT Steering Committee'.
Diagnostic Question
Does your decision-making rhythm match how fast customer needs and competitor moves change? Which three meetings cost you the most time for the least decision-making?
Lever 3: Resource Allocation – Where Money and People Actually Go
The Problem: Strategic Intent Versus Budget Reality
Resource allocation is where strategy meets reality. You say customers are the priority, but 60% of engineering capacity goes to technical debt. You claim digital transformation is critical, but legacy systems still consume most of the budget. Strategic intent rarely survives contact with budget season.
The problem isn't that organisations lie about priorities. It's that resource allocation is sticky. Budgets get set annually. Headcount gets locked in. By the time you realise a strategic bet isn't working or a new opportunity emerges, the resources are already committed elsewhere.
This is fixed cost tyranny, once money is allocated to departments, it's virtually impossible to move mid-cycle.
Why It Matters
Strategic bets need to move faster than annual budget cycles. Markets shift. Technology evolves. Customer needs change. Organisations that can't reallocate resources dynamically lose twice: they keep funding yesterday's priorities while missing today's opportunities.
Resource allocation is also a signalling mechanism. Teams watch where resources flow to understand what actually matters. If your strategy says innovation but your budget says optimisation, people will believe the budget.
How to Fix It: Dynamic Reallocation and Portfolio Discipline
The fix requires discipline and flexibility. Start with portfolio-level transparency. What percentage of resources goes to growth versus sustainment? How much is locked in versus available for reallocation? Where are you actually placing your strategic bets?
Then create mechanisms to shift resources dynamically. Quarterly reallocation reviews. Dedicated investment pools for emerging opportunities. Clear criteria for stopping or scaling initiatives based on results, not politics.
This forces a vital conversation at the top: Which strategic outcome is currently delivering the highest return, and how much more capacity does it deserve? This simple shift ensures your best ideas don't get choked by a budget designed six months ago.
Real-World Evidence
EY-Parthenon worked with fashion retailer ASOS to redesign their resource allocation model, implementing data-driven decision-making processes and platform-driven innovation. The transformation enabled faster product launches and lower operational costs through capability pooling and more agile resource deployment.[^3]
BCG's 2022 research on digital transformation found that 70% of digital transformations fail to achieve their objectives, with inadequate resource allocation and slow reallocation mechanisms cited as primary contributing factors.[^4]
Diagnostic Question
How quickly could you move $2 million and ten people to a new priority this quarter? What percentage of your capacity is truly flexible right now?
Lever 4: Metrics – What Gets Measured and Rewarded
The Problem: Measuring Activity, Not Outcomes
Metrics shape behaviour more powerfully than any strategy document. Yet most organisations still measure the wrong things. They track story points delivered instead of customer problems solved. They reward efficiency over effectiveness. They measure inputs and outputs instead of outcomes and impact.
This creates perverse incentives. Teams optimise for the metric, not the mission. Engineering celebrates velocity while customer satisfaction declines. Sales hits revenue targets by discounting unsustainably. Everyone hits their numbers, but the organisation underperforms.
Why It Matters
Speed without direction is just expensive thrashing. Organisations need metrics that connect activity to value. Not just what got shipped, but whether it mattered. Not just how many features launched, but whether customers' problems got solved.
The right metrics create clarity about success, enable teams to self-correct without constant oversight, and align incentives across functions. The wrong metrics create busy work, gaming behaviour, and strategic drift.
How to Fix It: Outcome-Based Metrics and Leading Indicators
The fix starts with ruthless focus on outcomes. What customer behaviour are you trying to change? What business result are you trying to drive? Measure that, not the activity you hope will lead to it.
Then layer in leading indicators. Outcomes take time to materialise, so you need metrics that signal whether you're on track. But make sure leading indicators actually predict outcomes, not just feel like progress.
You could choose one or two North Star outcomes the C-suite truly owns, like Customer Lifetime Value or Time to Market. These are the metrics that matter to customers and the business simultaneously. Then cascade leading indicators that teams can influence now. Keep velocity and throughput as planning data, not success metrics. Make sure leading indicators actually predict outcomes, not just feel like progress.
When you see a leading indicator trending green, you know the future is bright. When it trends red, you have an early warning that something is broken in the machine, allowing you to fix the operating model, not just the symptom.
Real-World Evidence
Between 2009 and 2012, GlaxoSmithKline (GSK) implemented its Accelerating Delivery and Performance (ADP) program, which tied operational decisions to measurable goals. The program trained over 1,250 certified practitioners in performance-driven ways of working, combining principles from Lean Six Sigma, project management, and organisational development. This approach enabled GSK to achieve timely regulatory submissions and improved operational efficiency by aligning metrics with strategic outcomes rather than activity measures.[^5]
Example: A software company replaced engineering velocity metrics with product success metrics. Instead of measuring story points delivered, they tracked activation rates, feature adoption, and customer retention. Teams still measured velocity internally for planning, but success was defined by customer outcomes. This shifted behaviour immediately.
Teams spent more time validating problems before building solutions. They deprecated features that weren't driving outcomes. Within six months, customer satisfaction improved while the pace of shipping actually increased, because teams stopped building things that didn't matter.
Diagnostic Question
Can you show a customer-visible outcome that moved in the last 30 days? Which outcomes would tell you next month that you're winning? If you can't, you have a model problem, not a tooling problem.
Lever 5: Ways of Working – How Work Actually Gets Done
The Problem: Collaboration Theatre and Meeting Fatigue
Ways of working describes how collaboration actually happens when nobody's watching. How do teams make decisions? How do they coordinate across functions? How do they handle conflict, share information, and get work done?
In most organisations, ways of working evolved organically, optimised for nobody in particular. Meetings proliferate. Emails multiply. Decisions happen in side channels. Everyone's exhausted, but nothing moves faster.
The problem isn't that people aren't working hard. It's that the default ways of working create friction. Too many decision-makers in the room. Not enough clarity on who owns what. Collaboration that feels like consensus theatre, everyone talks, nobody decides, nothing happens.
Structure (the org chart) is the least important part of your operating model, yet it's often the only thing people talk about. How you organise the work is far more critical than how you draw the lines.
Why It Matters
Remote and hybrid work make intentional ways of working non-negotiable. You can't rely on organic hallway conversations to resolve ambiguity. Async communication is powerful but only if you design for it. Synchronous time is precious but gets wasted in meetings that should have been documents.
Ways of working also signal culture. Are decisions made transparently or behind closed doors? Is dissent welcome or punished? Do teams experiment and learn, or wait for permission and play it safe? The answers live in how work actually gets done, not in values posters.
How to Fix It: Explicit Norms and End-to-End Teams
The fix requires making the implicit explicit. Document how decisions get made. Define what meetings are for (and what they're not for). Create rituals that drive alignment without requiring constant synchronous time.
This isn't about process for process's sake. It's about reducing friction so teams can move fast without breaking things. When ways of working are explicit, new people onboard faster. Cross-functional collaboration improves. Decision-making accelerates because everyone knows the playbook.
Think in terms of end-to-end teams, teams with all the skills, roles, and decision-making power they need to take a customer problem from start to finish without throwing work over the fence. This is the antidote to silos. It removes handoffs, speeds everything up, and forces people to focus on the customer's journey, not just their job description.
Your job as a leader shifts from traffic controller to system designer, you own the structure and culture so teams can own the work.
Diagnostic Question
Are your team rituals creating momentum or just motion? What can you stop to give back 10% focus time?
Closing: Your Operating Model Audit
Most organisations never explicitly design their operating model. They inherit structures, accumulate processes, and wonder why execution feels harder than it should. They're working exactly as they were designed to, even if they're designed to be slow, political, and siloed.
The five levers - decision rights, governance cadence, resource allocation, metrics, and ways of working, give you a practical framework to diagnose where friction lives and where value could flow faster.
Questions for Your Next Leadership Session
Start with a short audit and fix the choke points you control first. Your first step isn't to hire a big consulting firm. Grab a handful of your most senior people, walk to a whiteboard, and map out answers to these questions.
-
Decision Rights:
Can you name the owner for your top ten consequential decisions?
Do escalation paths exist, and do people use them?
Where does your best value-creating idea go to die?
Governance Cadence:
Does your decision-making rhythm match the pace of change in your market?
Are you solving this quarter's problems or last quarter's?
Which three meetings cost the most time for the least decision-making?
Resource Allocation:
What percentage of your budget is locked versus available for reallocation?
Can you shift resources quarterly based on results, or are you stuck until next year's budget cycle?
If a new market threat appeared tomorrow, how quickly could you move $2 million and ten people to address it?
Metrics:
Do your teams optimise for outcomes or activity?
Can you connect what gets measured to what actually creates value?
Which outcomes would tell you next month that you're winning?
Ways of Working:
Are decision-making norms explicit, or does everyone have their own interpretation?
How much time do teams spend in meetings versus doing actual work?
What can you stop to give back 10% focus time?
If you answered "I'm not sure" to more than half these questions, your operating model likely has more friction than it needs. The good news: these levers are under your control. You don't need board approval to clarify decision rights or redesign governance cadence. You need conviction that how you work matters as much as what you work on.
McKinsey’s 2025 survey of over 2,000 executives found that operating-model redesigns have become increasingly successful over the past decade: 63% now meet most of their objectives and improve performance, up dramatically from just 21% ten years ago. This improvement stems from leaders taking a more holistic, system-wide approach rather than focusing solely on structural changes. [^6]
Organisations that win won’t just have better strategies, they’ll have operating models designed to execute those strategies with speed and clarity.
Stop managing your structure. Design your system so value can move.
Once you’ve tuned the levers, periodically revisit your broader operating-model design. The system will keep evolving as technology, markets, and AI reshape how work gets done.
Researched and written by Rebecca Agent, with credit to the following AI tools for assistance in producing this content:
Editorial and grammar writing assistant | Grammarly (English US)
Research, writing, reader timing and SEO | ChatGPT, and Claude
The Deep Dive Podcast Overview | NotebookLM by Google
Topic research to link peer-reviewed research papers | Storm Genini Stanford; Google Gemini, Perplexity
. . .
REFERENCES
[^1]: McKinsey & Company. (2025). "A new operating model for a new world." Retrieved from https://www.mckinsey.com/capabilities/people-and-organizational-performance/our-insights/a-new-operating-model-for-a-new-world
[^2]: McKinsey & Company. (2025). "A new operating model for a new world." Case study: Global financial services infrastructure company. Retrieved from https://www.mckinsey.com/capabilities/people-and-organizational-performance/our-insights/a-new-operating-model-for-a-new-world
[^3]: EY. (2023). "Operating model transformation." Case study: ASOS. Retrieved from https://www.ey.com/en_us/industries/retail/operating-model-transformation
[^4]: Boston Consulting Group. (2022). "Mind the Tech Gap." Retrieved from https://www.bcg.com/press/1december2022-bcg-x-new-hybrid-of-consulting-and-tech-build-design-capabilities
[^5]: PMI. (2016). "Organizational Change Management at Work in the Global Pharmaceutical Industry: GlaxoSmithKline." Retrieved from https://www.pmi.org/business-solutions/case-studies/organizational-change-management-pharmaceuticals ; Huggins, M. et al. (2016). "A new prescription for improving business performance at GlaxoSmithKline." OpEx Society. Retrieved from https://opexsociety.org/body-of-knowledge/case-study-a-new-prescription-for-improving-business-performance-at-glaxosmithkline/
[^6]: McKinsey & Company. (2025). "The new rules for getting your operating model redesign right." Retrieved from https://www.mckinsey.com/capabilities/people-and-organizational-performance/our-insights/the-new-rules-for-getting-your-operating-model-redesign-right
Core Concepts:
Operating Model Design:
The discipline of shaping how decisions, resources, and information flow. It connects strategy to execution so value moves with speed and coherence.Five Levers of Design:
Decision Rights, Governance Cadence, Resource Allocation, Metrics That Drive Behaviour, and Ways of Working. These are the practical levers leaders tune to make strategy executable.Decision Rights:
Clear ownership of who decides what and how fast. This is the foundation of accountability and agility.Governance Cadence:
The rhythm of sensing, deciding, and adjusting. It aligns decision cycles with the pace of market change.Resource Allocation:
How funding and people flow to priorities. It is the mechanism that signals what truly matters.Metrics That Drive Behaviour:
Outcome-based measures that focus on value creation rather than activity. They enable self-correction and alignment.Ways of Working:
The rituals, norms, and tools that shape collaboration and learning in daily practice.Systemic Design:
Treating the operating model as a living system. It is tuned for flow, learning, and adaptability rather than static structure.Organisational Ambidexterity:
The ability to run multiple models at once, exploring new opportunities while exploiting existing strengths.Transformation Failure Modes:
Common pitfalls in redesigning operating models include misaligned incentives, behavioural unreadiness, under-resourced mobilisation, and lack of adaptive capacity.AI-Native Organisation:
A model where humans and AI collaborate across decision systems. Automation enhances sensing and response, while humans guide ethics and intent.
. . .
See related pieces (on the blog) :
If this content was helpful to you and your work please comment, share, and like !