Operating Model Redesign: Fix Authority Before Structure

Operating model redesign should start with the decisions that determine performance, not the reporting lines that describe the organization. Moving boxes before clarifying authority can preserve the same delays, competing priorities, and accountability gaps under different job titles.

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

The gap is the measurable difference between your strategic commitments and the outcomes your business consistently delivers. Define it through a small set of value measures, then trace each shortfall to the decisions, handoffs, capabilities, and incentives behind it. Separate operating model failures from unrealistic targets or external constraints.

Start with the value agenda in operational terms: profitable growth, cash conversion, project delivery, asset availability, or faster commercialization. Establish the current baseline, the required outcome, and the accountable executive for each priority. Avoid broad statements such as “improve collaboration.” A construction business losing margin through unapproved scope changes needs to examine commercial authority and project controls, not simply ask teams to work together more closely.

Follow several recent cases from the initial request to the final outcome. Where did work wait? Who reopened a settled decision? Which team optimized its own target at another team’s expense? Quantify the impact where records support it, and label estimates clearly. This turns a general performance concern into a specific design problem: unclear authority, missing capability, fragmented data, or an incentive that rewards the wrong behavior.

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

Assign one accountable decision owner wherever possible, and distinguish required consultation from approval authority. A decision rights matrix should name who prepares the recommendation, who decides, whose input is mandatory, and who receives the outcome. Reserve vetoes for explicit legal, safety, regulatory, or financial boundaries rather than organizational seniority.

Build the matrix around recurring decisions that materially affect value: bid pricing, capital deployment, engineering changes, supplier substitution, product release, or customer exceptions. “Operations” is not an adequate owner; name a role with the authority and resources to act. Define the decision’s scope and thresholds. A business-unit leader might approve a commercial exception within an agreed margin floor, while exceptions below that floor require a different authority.

Consultation must have a defined purpose and deadline. Finance can validate economics without becoming a second commercial approver; engineering can assess feasibility without owning every customer commitment. Where formal joint approval is necessary, document each party’s jurisdiction and the route for resolving disagreement. Informed stakeholders should receive the rationale and implementation requirements, not an invitation to restart the debate. Align performance objectives so decision owners are accountable for enterprise outcomes, not just functional efficiency.

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

Set decision deadlines according to the cost of delay, reversibility, and risk, with a named escalation owner for every material decision category. Start the clock when the agreed minimum evidence is available. Escalation should resolve a defined obstacle or authority limit, not automatically transfer every overdue decision to the chief executive.

There is no universal deadline. A reversible customer exception may warrant a same-day response; an irreversible asset investment needs deeper review and scheduled approval gates. For each category, specify the evidence required, the consultation window, the decision deadline, and the escalation route. Track the time spent assembling evidence separately so teams cannot hide delays by declaring requests incomplete. Safety-critical or regulated decisions must retain mandatory checks, even when commercial urgency is high.

Make escalation operational. If consultation expires, state whether the owner can proceed without that input or must seek a designated substitute. If authorities conflict, identify the executive or forum that settles the issue and when it will convene. Record the decision, rationale, conditions, and execution owner. Review elapsed time alongside outcome quality, rework, and exceptions: faster approval is not an improvement if it produces avoidable failures downstream.

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

Refine the current model when the strategy remains sound and performance gaps come from repairable execution problems. Move to a new design when the value agenda requires fundamentally different capabilities, economics, accountability, or coordination. Test that distinction through a bounded pilot before committing the enterprise to structural change.

Refinement may mean removing duplicate approvals, clarifying profit accountability, changing incentives, or establishing common data standards. A new target operating model becomes more credible when the strategy changes how value is created—for example, moving from equipment sales to uptime-based services. That shift can require lifecycle ownership, service capabilities, different capital commitments, and closer integration between engineering and field operations. A revised reporting line alone will not supply those requirements.

For executives asking how to redesign operating model arrangements, the sequence is practical: define value, map critical decisions, assign authority, test workflows, then adjust structure and enabling systems. Pilot a coherent slice of the business, such as one product line or project portfolio. Set success measures and safeguards before launch. Scale only when decision quality, delivery performance, and accountability improve without unacceptable control weaknesses or transition costs.

Bottom line

An operating model earns its place by converting strategy into repeatable decisions and results. Redraw the organization only when the evidence shows that structure must change to support that work.

1. Select three material performance gaps and trace a recent decision behind each, including delays, rework, and financial consequences.
2. Publish a decision rights matrix for the ten highest-impact recurring decisions, with authority thresholds, consultation deadlines, and escalation owners.
3. Pilot the revised rules in one business area, compare outcomes against a documented baseline, and decide whether to refine or redesign.

FAQ

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

The gap is the measurable difference between your strategic commitments and the outcomes your business consistently delivers. Define it through a small set of value measures, then trace each shortfall to the decisions, handoffs, capabilities, and incentives behind it. Separate operating model failures from unrealistic targets or external constraints.

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

Assign one accountable decision owner wherever possible, and distinguish required consultation from approval authority. A decision rights matrix should name who prepares the recommendation, who decides, whose input is mandatory, and who receives the outcome. Reserve vetoes for explicit legal, safety, regulatory, or financial boundaries rather than organizational seniority.

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

Set decision deadlines according to the cost of delay, reversibility, and risk, with a named escalation owner for every material decision category. Start the clock when the agreed minimum evidence is available. Escalation should resolve a defined obstacle or authority limit, not automatically transfer every overdue decision to the chief executive.

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

Refine the current model when the strategy remains sound and performance gaps come from repairable execution problems. Move to a new design when the value agenda requires fundamentally different capabilities, economics, accountability, or coordination. Test that distinction through a bounded pilot before committing the enterprise to structural change.