operating model

An operating model is a visual representation of how an organization delivers value to its internal and external customers. Operating models, which may also be called value-chain maps, are created to help employees visualize and understand the role each part of an organization plays in meeting the needs of other components.

Operating models are useful tools for helping managers understand how changes to one part of the organization might impact the value other parts are tasked with delivering. They are usually organized from the top down and can be very high level or very granular. A large organization may find it necessary to create dozens of operating models to accurately capture the steps each department must go through to successfully meet the needs of other parts of the business and customers.

Operational models are typically documented by internal design teams with visualization expertise in large organizations, but are often simply created with flowcharts in smaller companies. It can take a few days or a few months to document an operational model, depending on the complexity of the organization’s goals and the amount of detail required.

Although operating models often evolve ad hoc, they can also be designed using frameworks such as the Operating Model Canvas (OMC) developed by Andrew Campbell. OMCs capture six elements that play an important role in delivering value: processes, organization, location, information, suppliers and management system (POLISM).