Why beautiful operating models fail

Delivering real change in complex, highly dynamic environments needs a non-traditional approach and way of thinking

Are you being sold the tried and tested method?

The consulting market is awash with suppliers offering the classic ‘assess-design-implement-sustain’ method to target operating model (TOM) development. This well-trodden approach will typically result in a beautiful design on paper within 2-3 months. If you’re lucky, the design might be agreed with your stakeholders and backed up with some real data in that time. So far, so good, right?

Beautiful designs fail

Not really. Our view is that a beautiful, extensively designed TOM does not guarantee success. On the contrary in fact: we would go as far as to say that the more polished the design, the more likely it is to fail where it matters most – in its implementation. Instead, companies need to be more comfortable with less beautiful, more practical designs and get on with implementation sooner.

The product development and start-up worlds know the value of rapid iterative design – ‘build – measure – learn’. This approach is entirely relevant to TOM delivery, yet seldom applied. As Reid Hoffman, the founder of LinkedIn said: “If you are not embarrassed by the first version of your product, you’ve launched too late.”

Our experience has repeatedly shown that a comprehensively designed TOM is rarely, if ever, successfully implemented, most commonly because:

• the energy and focus that leaders applied so diligently to the design atrophies as implementation gets underway
• the design takes so long that by the time it is complete the organizational context has fundamentally shifted

The truth about TOMs is that no matter how considered the design, you only uncover its weaknesses when you start to implement. With the ‘classic’ design approach applied by many a management consultancy, too often the pitfalls are only discovered after implementation starts – at the point when it is expensive and/or disruptive to go back and change the design.

Thus, we might re-frame Hoffman’s advice to the world of TOM design as: “if you’ve refined your TOM design to the point that all stakeholders are on board with it before you’ve executed anything – then it’s guaranteed to fail.”

Three key principles to relevant design

It is tricky to strike the right balance between robust design and iterative testing; ensuring that design is thorough but can be completed at pace. We believe that three overarching principles are key to balancing this appropriately.

Data-driven

While dreaming big and thinking creatively is encouraged, the design must be underpinned by a robust dataset that gives confidence that the future operating model is sustainable and affordable.

We develop hypotheses to test and validate organizational data against external benchmarks. This can be started before we formally commence the design phase.

Rapid experimentation

Adopting a product development mindset enables you to rapidly test ideas, expecting to fail quickly and learn from mistakes. Often, the uglier the design, the better the implementation.

We aim to be bold in testing the best elements of your future operating model in weeks, not months. Through this, we can quickly learn what does and does not work in practice.

Context-sensitive

The design must be adaptable to match the nuances of the industry, timing, ambition and current capability of the organization. It is for exactly this reason why ‘off-the-shelf’ methodologies nearly always fail.

We always develop practical implementation plans in parallel with the design, that is tailored to the change capability and maturity of the organization.

Is ugly the new beautiful?

Understanding your operating model and recognizing the need for transformation is just the start of the journey. At Gate One we believe that a ‘beautiful’ operating model is destined to fail, by design. Instead, we quickly learn what needs to change – reaching early hypotheses and rapidly putting them into practice, even if the holistic design is still ‘ugly’ or formative.

We believe this non-traditional approach and way of thinking is the only way to deliver real change in complex, highly dynamic environments. Talk to us about how we can help you design an operating model for your organization that is fit for your future.