Operating Model Redesign: End the Decision-Making Gridlock

Operating model redesign should start with the decisions that determine performance, not the reporting lines that describe authority. Before moving teams or adding management layers, establish where value is being lost, who can act, and what prevents timely execution.

What is the gap between our value agenda and our delivered performance?

The gap is the measurable difference between the outcomes your strategy requires and the results your business consistently delivers. Define it through margin, growth, cash, service, or risk measures, then trace the shortfall to specific decisions and handoffs. Separate operating model weaknesses from unrealistic targets, market changes, and execution failures.

Start with a small set of strategic commitments, each linked to a baseline, target, accountable executive, and delivery date. A construction business seeking stronger project margins might examine bid selection, contract exceptions, procurement commitments, and change-order recovery. A medical technology business pursuing growth might examine launch readiness, channel coverage, and service capacity. The purpose is to translate ambition into observable performance, not build another dashboard.

Follow the work behind each shortfall. Where did an opportunity stall, a cost become unavoidable, or a customer promise become unachievable? Review recent cases rather than relying only on leadership interviews. Look for repeated approvals, conflicting incentives, missing information, and authority that sits too far from the work. Quantify the value at stake where evidence allows, and distinguish proven causes from hypotheses. This becomes the redesign agenda; the existing organization chart is supporting evidence, not the starting point.

Who decides, who gets consulted, and who is only informed?

Give each material decision one accountable decision owner, with explicit consultation requirements and a separate information list. The owner decides within defined boundaries; consulted parties provide necessary expertise before the deadline; informed parties receive the outcome without approval rights. Reserve joint approval for genuine legal, regulatory, or risk requirements.

Build a decision rights matrix around recurring decisions, not broad activities such as “manage sales” or “oversee operations.” Useful entries include approving a nonstandard contract, reallocating production capacity, releasing capital, and changing a product specification. For each, record the decision owner, limits of authority, required inputs, consultation deadline, execution owner, and escalation route. Where a control function has a mandated veto, state its scope and grounds explicitly. Do not allow an undefined advisory role to become an informal veto.

Test the matrix against difficult cases: a commercially attractive deal below the margin floor, a project needing scarce engineering resources, or an urgent supplier substitution. Can the designated owner actually commit budget and resources? Are they accountable for the consequences? Consultation should surface trade-offs without requiring consensus. Informing should communicate the decision, rationale, and required action—not reopen the debate. Align incentives with enterprise outcomes so that authority does not simply give functions more power to protect their own targets.

How long should a decision be allowed to take before it escalates?

Set a decision deadline according to the cost of delay, the decision’s reversibility, and its risk—not a universal approval timetable. Specify when the clock starts, what information is sufficient, and who receives an escalation. Escalate earlier when safety, compliance, contractual exposure, or an agreed financial threshold requires it.

Define service levels by decision type. A routine pricing exception might require a response within one working day, while a major capital commitment needs a longer review with staged milestones. These are design choices, not universal benchmarks. Start the clock when the minimum evidence is available, and assign responsibility for obtaining missing inputs. Otherwise, teams can keep decisions technically “incomplete” while the business absorbs the delay. Track total elapsed time as well as formal approval time.

An escalation must move the issue to a named person with authority to resolve it, accompanied by the options, recommendation, value at risk, and latest responsible decision date. It should not restart the entire process. Silence from a consulted party may allow a decision to proceed only where policy permits; it must never substitute for required safety or regulatory clearance. Review missed deadlines and repeated escalations to identify capacity problems, poor information, or authority thresholds that need adjustment.

Should we refine the current model or move to a new design?

Refine the current model when a few decision bottlenecks explain the performance gap; adopt a new design when the strategy requires fundamentally different capabilities, economics, or coordination. Test targeted changes first where feasible. Judge the choice by expected value, implementation risk, transition cost, and the organization’s capacity to absorb change.

Refinement is appropriate when the existing structure supports the strategy but approval limits, measures, or interfaces prevent it from working. A new target operating model becomes more credible when the business enters different markets, integrates acquisitions, shifts from products to services, or needs shared capabilities that local units cannot sustain. It must specify processes, governance, talent, technology, data, and performance measures—not just reporting relationships. Neither centralization nor decentralization is a strategy by itself.

For executives asking how to redesign operating model arrangements, the practical sequence is to diagnose, clarify decisions, test, and then scale. Pilot the proposed rules in one value stream or business unit. Compare decision time, rework, commercial outcomes, and control exceptions against the baseline. Check whether teams are resolving trade-offs or merely shifting work elsewhere. If broader redesign is justified, sequence the transition around business continuity, with clear ownership during the handover. Redraw reporting lines only where they make the tested model easier to execute.

Bottom line

Operating model redesign succeeds when authority, information, incentives, and accountability support the same value agenda. A new chart is useful only if it helps people make and execute better decisions.

1. Select three material performance gaps and trace recent cases to the decisions, handoffs, and constraints behind them.
2. Publish a decision rights matrix for the highest-value decisions, including authority limits, consultation deadlines, and named escalation owners.
3. Run a time-bound pilot with baseline measures, then use the results to choose targeted refinement or a broader target operating model.

FAQ

What is the gap between our value agenda and our delivered performance?

The gap is the measurable difference between the outcomes your strategy requires and the results your business consistently delivers. Define it through margin, growth, cash, service, or risk measures, then trace the shortfall to specific decisions and handoffs. Separate operating model weaknesses from unrealistic targets, market changes, and execution failures.

Who decides, who gets consulted, and who is only informed?

Give each material decision one accountable decision owner, with explicit consultation requirements and a separate information list. The owner decides within defined boundaries; consulted parties provide necessary expertise before the deadline; informed parties receive the outcome without approval rights. Reserve joint approval for genuine legal, regulatory, or risk requirements.

How long should a decision be allowed to take before it escalates?

Set a decision deadline according to the cost of delay, the decision’s reversibility, and its risk—not a universal approval timetable. Specify when the clock starts, what information is sufficient, and who receives an escalation. Escalate earlier when safety, compliance, contractual exposure, or an agreed financial threshold requires it.

Should we refine the current model or move to a new design?

Refine the current model when a few decision bottlenecks explain the performance gap; adopt a new design when the strategy requires fundamentally different capabilities, economics, or coordination. Test targeted changes first where feasible. Judge the choice by expected value, implementation risk, transition cost, and the organization’s capacity to absorb change.