Operating Model Redesign: Put Decision Rights Before Roles

Operating model redesign should start with the decisions that turn strategy into results, not the boxes that describe reporting relationships. When performance falls short, executives need to establish where value is lost, who has authority to act, and what prevents timely action before changing the organization.

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 specific commitments on margin, growth, cash, service, or risk, then trace the shortfall to the decisions, handoffs, capabilities, and incentives that shape delivery. Do not assume structure is the cause.

Start with a small set of strategic priorities and translate each into an operational requirement. A construction business seeking stronger project margins may need earlier decisions on scope changes. A logistics operator promising reliable delivery may need faster capacity allocation across locations. Establish the expected result, current performance, accountable executive, and financial or customer consequence. Distinguish a weak operating model from an unrealistic target or a temporary market shock.

Then follow actual work. Review a delayed bid, a missed delivery, or an investment that stalled between committees. Identify where information arrived late, authority became contested, or local targets overrode enterprise priorities. Separate decision waiting time from execution time. The useful output is a short list of recurring breakdowns linked to business value, not a catalogue of every process complaint.

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

Assign one accountable decision owner wherever possible, distinguish required consultation from approval, and keep information rights separate from veto rights. A decision rights matrix should state the decision, authority limits, required inputs, consultation deadlines, and notification requirements. Where law or governance requires collective approval, make that exception explicit rather than allowing informal consensus to govern everything.

Build the matrix around consequential decisions, not job descriptions. Examples include accepting a low-margin contract, reallocating engineering capacity, qualifying a supplier, or releasing capital for an expansion. For each, specify who prepares the recommendation, who decides within which limits, and who executes. Finance may validate the economics without owning the commercial decision; operations may assess feasibility without gaining an unrestricted veto. Mandatory safety, legal, and regulatory approvals remain protected.

Test the assignments against difficult cases. Can a regional leader commit scarce resources that another region needs? Who resolves disagreement between product and sales? Does the decision owner control the budget and information needed to act? If authority and accountability remain separated, a new title will not help. Align incentives, management forums, and system permissions with the matrix so that the documented rules match daily practice.

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

Set decision deadlines according to the cost of delay, reversibility, and risk—not a single enterprise-wide rule. Every material decision category needs a defined clock, minimum information requirements, and a named escalation destination. Escalation should resolve a specific obstacle or authority conflict, not automatically transfer every overdue decision to the chief executive.

Create distinct service levels for routine, cross-functional, and high-consequence decisions. A standard pricing exception might have a proposed one-business-day window; a major capital commitment needs staged review tied to investment gates. These are design choices to validate, not universal benchmarks. Define when the clock starts, how missing evidence is flagged, and whether a pause is permitted. Otherwise, teams can meet the deadline on paper while the business still waits.

Specify what happens at expiry. The owner should either decide within delegated authority or escalate with the options, recommendation, unresolved issue, and consequence of further delay. Required approvals must not become presumed consent. Track elapsed time, overdue cases, repeated escalations, and decisions reopened after approval. Review the pattern: frequent escalation may indicate insufficient delegation, poor information, or a capacity constraint rather than individual indecision.

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

Refine the current model when the strategy remains sound and performance failures are concentrated in a few decisions or interfaces. Move to a new design when the value agenda requires fundamentally different capabilities, economics, or coordination. Base the choice on evidence from critical workflows, not leadership preferences for centralization, decentralization, or a fashionable structure.

Refinement may mean removing duplicate approvals, shifting a budget threshold, or establishing a shared planning cadence. A broader redesign becomes more credible when entering a new market, integrating acquisitions, or moving from equipment sales to lifecycle services changes how value is created and captured. The test is whether the existing model can support the new requirements without constant exceptions. Repeated workarounds are evidence to investigate, not automatic proof that wholesale change is necessary.

For executives asking how to redesign operating model arrangements, sequence matters: value agenda, decisions, capabilities, workflows, governance, then structure. Describe the target operating model through concrete choices about ownership, resources, data, technology, and performance measures. Pilot critical decision rules in a bounded area before scaling. Assess business outcomes alongside transition costs and control risks; automation should support a sound decision process, not accelerate an ambiguous one.

Bottom line

An org chart can clarify reporting, but it cannot compensate for unresolved authority, weak information, or conflicting incentives. Redesign the decisions that determine performance, then change structure where the evidence requires it.

1. Select three strategic commitments and trace one recent performance shortfall against each to its underlying decisions and handoffs.
2. Build and test a decision rights matrix for the highest-value decisions, including authority thresholds, consultation requirements, deadlines, and escalation owners.
3. Run a bounded pilot, compare outcomes and decision times with the baseline, and use the findings to choose targeted refinement or broader redesign.

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 specific commitments on margin, growth, cash, service, or risk, then trace the shortfall to the decisions, handoffs, capabilities, and incentives that shape delivery. Do not assume structure is the cause.

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

Assign one accountable decision owner wherever possible, distinguish required consultation from approval, and keep information rights separate from veto rights. A decision rights matrix should state the decision, authority limits, required inputs, consultation deadlines, and notification requirements. Where law or governance requires collective approval, make that exception explicit rather than allowing informal consensus to govern everything.

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

Set decision deadlines according to the cost of delay, reversibility, and risk—not a single enterprise-wide rule. Every material decision category needs a defined clock, minimum information requirements, and a named escalation destination. Escalation should resolve a specific obstacle or authority conflict, 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 failures are concentrated in a few decisions or interfaces. Move to a new design when the value agenda requires fundamentally different capabilities, economics, or coordination. Base the choice on evidence from critical workflows, not leadership preferences for centralization, decentralization, or a fashionable structure.