Operating Model

Operating Model

Operating Model Jonathan Poland

An operating model is a framework that outlines how a business operates. It typically covers how a business produces and delivers its products and services. Operating models can be described at various levels of detail, including the basic structures, processes, and methods used to run the business. An operating model helps to define how a business functions and serves as a guide for decision-making and resource allocation.

There are many different types of operating models, and the most appropriate model for a given business will depend on its specific needs and goals. Here are some common types of operating models:

  1. Function-based operating model: This model is based on organizing the business around functional areas, such as marketing, finance, and operations. Each functional area is responsible for a specific set of tasks and reports to a central authority.
  2. Business unit operating model: This model is based on organizing the business around distinct business units, each with its own leadership and decision-making authority. Business units may be organized around products, markets, or customer segments.
  3. Matrix operating model: This model combines functional and business unit structures, with employees reporting to both a functional manager and a business unit manager. This model is often used in organizations that need to balance the needs of multiple stakeholders.
  4. Network operating model: This model involves outsourcing many functions and relying on external partners to deliver products or services. This model is often used by organizations that want to focus on their core competencies and outsource non-core activities.
  5. Lean operating model: This model is based on the principles of lean manufacturing and focuses on minimizing waste and maximizing value. It involves streamlining processes and using tools such as just-in-time production and continuous improvement to increase efficiency.
  6. Agile operating model: This model is based on the principles of agile software development and involves rapid iteration and adaptability. It is often used in fast-paced, highly competitive environments where flexibility and speed are key.
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