Operating Model Redesign: Set Authority Before Structure

Operating model redesign should start with the decisions that determine performance, not the boxes that describe reporting relationships. Before moving teams, establish where value is being lost, who has authority to act, and when unresolved decisions must move upward.

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

The gap is the measurable difference between strategic commitments and actual outcomes, traced to the work and decisions that produce them. Compare intended growth, margin, cash, service, and risk outcomes with delivered performance. Then distinguish operating model failures from weak assumptions, market changes, capability shortages, and execution problems within an otherwise sound design.

Start with a small set of commitments that matter to enterprise value. A construction business might examine project margin and cash conversion; a medical technology company might focus on commercialization milestones and launch readiness. For each commitment, establish the baseline, expected outcome, accountable executive, and delivery date. Avoid treating broad ambitions such as “greater agility” as diagnostic evidence. The gap must be specific enough to investigate and material enough to justify intervention.

Trace underperformance backward through actual work. Where did a bid stall, a specification change arrive late, or a resource request lose priority? Examine elapsed time, rework, handoffs, and unresolved trade-offs. Separate symptoms from causes: missed milestones may reflect unclear approval authority, but they may also reflect unrealistic planning. The output should be a short list of value-critical decisions, each linked to a performance measure and an evidenced constraint.

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 recipients outside the approval path. A decision rights matrix should specify the decision, authority limits, required inputs, consultation obligations, execution owner, and notification recipients. Any mandatory concurrence or veto must have an explicit basis and a defined scope.

Build the matrix around decisions, not job descriptions. “Commercial leadership owns pricing” is too broad to guide action. “The regional commercial director approves discounts within agreed margin and contract-risk limits” establishes usable authority. Finance can provide margin analysis, operations can assess delivery feasibility, and legal can review defined contractual exposures. Their participation does not automatically create three additional approvals. Where regulation, safety, or fiduciary duties require independent approval, preserve it explicitly rather than disguising it as consultation.

Test each row against a recent difficult case. Could the named owner obtain the necessary information and commit the relevant resources? Would another executive still be able to reopen the decision informally? Authority without resource access is nominal; accountability without authority is unfair. Align budget delegation, performance measures, and management forums with the matrix. Inform affected teams promptly, but do not turn notification into a waiting period for objections from everyone copied on an email.

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

Set decision deadlines according to economic exposure, reversibility, and mandatory review requirements, then name the escalation owner before delays occur. Define when the clock starts, what constitutes a complete submission, and what happens when the deadline expires. Escalation should resolve a specific obstacle, not restart the discussion with a larger audience.

Use different service levels for different decision classes. A routine, reversible commercial exception may warrant a short turnaround; an irreversible capital commitment needs a more deliberate process. Illustrative deadlines might be two working days for an in-policy exception and a scheduled investment review for a major commitment. These are design choices, not universal benchmarks. Calibrate them to customer commitments, downside exposure, available capacity, and the evidence required for a responsible decision.

Record submission time, information gaps, consultation deadlines, and the final decision date. Track total elapsed time as well as time after the submission is complete, so repeated requests for information cannot hide delay. At expiry, route the unresolved issue to a named authority with the recommendation, options, and consequences of waiting. Missing consultation may trigger escalation, but silence must never substitute for mandatory safety, legal, or regulatory approval. Repeated escalations indicate a design or capability problem that management should address directly.

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

Refine the current model when the strategy remains valid and performance constraints are concentrated; pursue a new design when the model cannot support the value agenda. The test is whether clearer authority, better interfaces, and targeted capability changes can close the gap without repeatedly overriding the underlying structure, economics, or governance.

Executives asking how to redesign operating model arrangements should compare two explicit options: repair the current system or establish a different one. Refinement may address duplicated approvals, inconsistent delegation, or weak cross-functional planning. A broader redesign may be warranted when market entry, acquisitions, service-based revenues, or technology deployment change how value is created. Do not mistake frustration with a few individuals for evidence that the enterprise needs a new architecture.

Define the target operating model through capabilities, workflows, decision rights, data, technology, governance, and performance measures before settling reporting lines. Compare options on expected value, implementation cost, management capacity, transition risk, and time to benefit. Pilot the most consequential interfaces in a bounded business area and specify success criteria in advance. If the pilot succeeds only through constant executive intervention, the design is not yet workable. Change the org chart where structural authority genuinely needs to move, not to signal activity.

Bottom line

An operating model earns its place by converting strategic priorities into accountable decisions and delivered outcomes. Redraw reporting lines only when the evidence shows that structure prevents the required authority, coordination, or capability from working.

1. Select three material performance gaps and trace each to the decisions, handoffs, and constraints behind it.
2. Create a decision rights matrix for those decisions, naming owners, authority limits, required approvals, consultation deadlines, and escalation routes.
3. Pilot the revised rules in one business area, review outcomes and elapsed decision time, and use the findings to choose refinement or redesign.

FAQ

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

The gap is the measurable difference between strategic commitments and actual outcomes, traced to the work and decisions that produce them. Compare intended growth, margin, cash, service, and risk outcomes with delivered performance. Then distinguish operating model failures from weak assumptions, market changes, capability shortages, and execution problems within an otherwise sound design.

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 recipients outside the approval path. A decision rights matrix should specify the decision, authority limits, required inputs, consultation obligations, execution owner, and notification recipients. Any mandatory concurrence or veto must have an explicit basis and a defined scope.

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

Set decision deadlines according to economic exposure, reversibility, and mandatory review requirements, then name the escalation owner before delays occur. Define when the clock starts, what constitutes a complete submission, and what happens when the deadline expires. Escalation should resolve a specific obstacle, not restart the discussion with a larger audience.

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

Refine the current model when the strategy remains valid and performance constraints are concentrated; pursue a new design when the model cannot support the value agenda. The test is whether clearer authority, better interfaces, and targeted capability changes can close the gap without repeatedly overriding the underlying structure, economics, or governance.