Operating Model Redesign: Set Authority Before Structure

Operating model redesign should begin 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 what happens when a decision stalls.

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 organization delivers. Define it in margin, growth, cash, service, or risk terms, then trace the shortfall to specific decisions and handoffs. Separate operating model failures from unrealistic targets, market changes, and execution problems.

Start with a small set of value commitments rather than a catalogue of organizational frustrations. A construction business might need stronger project margins; a logistics operator might need better service without increasing working capital. For each commitment, identify the baseline, intended outcome, accountable executive, and relevant planning period. Then examine actual cases where performance fell short. The question is not whether people were busy. It is whether the organization made and executed the choices needed to deliver the commitment.

Trace those cases through the work: pricing exceptions, resource allocation, procurement commitments, engineering changes, or customer acceptance. Record where information arrived late, approvals repeated, or local incentives conflicted with enterprise outcomes. Distinguish decision waiting time from execution time. If an approved investment cannot proceed because specialist capacity is unavailable, changing approval authority will not solve the constraint. This diagnosis gives the redesign a value case and prevents an expensive structural response to a narrower problem.

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

Assign one accountable decision owner wherever possible, consult those whose expertise materially changes the choice, and inform those who need the outcome to act. A decision rights matrix should specify authority limits, required inputs, mandatory approvals, and execution ownership. Consultation is not a veto unless an explicit control requires it.

Build the matrix around recurring decisions, not job descriptions. For a bid exception, specify who recommends the commercial position, who decides within agreed margin and exposure limits, and when finance or legal approval is mandatory. Name who implements the outcome as well. A decision owner without access to budget, people, or execution capacity holds nominal authority only. Where formal board or committee approval is required, define the accountable sponsor, approval route, and conditions for a valid decision.

Keep consultation narrow enough to work, but broad enough to protect decision quality. Required advisers should provide a recommendation, evidence, and material objections by a defined deadline. Informed stakeholders receive the decision and rationale; they do not reopen it simply because they disagree. Test the proposed rights against recent contested cases. If commercial, operational, and functional leaders still name different decision owners, the ambiguity remains. Resolve it before changing reporting lines or configuring approval workflows in enterprise systems.

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 clock. Each decision category needs a response window, a trigger for escalation, and a named escalation owner. Escalation should resolve a defined obstacle without silently transferring accountability or bypassing required safety, legal, or regulatory controls.

Specify when the clock starts: normally when a decision-ready submission contains the agreed minimum evidence. Also track elapsed time from the original request so repeated information demands cannot hide delay. An illustrative policy might allow two business days for a routine commercial exception and a scheduled review window for a major capital commitment. These are design choices, not universal benchmarks. Urgent safety issues require immediate action under established protocols, rather than waiting for an ordinary management escalation deadline.

Define what happens at expiry. Missing advice may trigger a proceed-with-documented-assumptions rule for low-risk, reversible choices; missing mandatory approval must not. A dispute over authority should move to the designated executive with the options, recommendation, unresolved issue, and consequence of further delay. Review overdue decisions and repeated escalations together. If the same decision category keeps rising to the executive team, the underlying problem may be unclear thresholds, insufficient capability, or authority that sits too far from the relevant information.

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 in identifiable interfaces, authorities, or capabilities. Move to a new design when the value agenda requires fundamentally different coordination, economics, or accountability. Choose based on evidence of structural mismatch, not leadership preference for centralization, decentralization, or a cleaner chart.

The practical answer to how to redesign operating model arrangements is to test the smallest change capable of closing the identified gap. Clarify authority, adjust thresholds, align incentives, or strengthen a capability before assuming a full reorganization is necessary. Pilot changes in a bounded business area and compare decision speed, outcome quality, rework, and risk exceptions against the baseline. Faster approvals alone are not success if margin deteriorates or control failures increase.

A new target operating model becomes appropriate when localized fixes cannot support the strategy. Examples include moving from equipment sales to lifecycle services or coordinating previously independent businesses around shared customers and capacity. Define how work, decisions, capabilities, data, technology, and performance accountability must interact. Only then determine structural implications. Sequence the transition around business continuity, name owners for interim decisions, and retire obsolete governance forums. Otherwise, the new model can inherit the old approval burden while adding another layer of oversight.

Bottom line

Decision rights make strategy executable; an org chart only shows part of the arrangement. Redesign structure when the evidence demands it, and judge the result by delivered value rather than organizational neatness.

1. Select three material performance gaps and trace recent cases to the decisions, handoffs, and capacity constraints behind them.
2. Publish a decision rights matrix for the highest-impact choices, including authority thresholds, consultation deadlines, and escalation routes.
3. Pilot the revised rules in one business area, review outcomes against a baseline, and use the findings to choose targeted refinement or structural 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 organization delivers. Define it in margin, growth, cash, service, or risk terms, then trace the shortfall to specific decisions and handoffs. Separate operating model failures from unrealistic targets, market changes, and execution problems.

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

Assign one accountable decision owner wherever possible, consult those whose expertise materially changes the choice, and inform those who need the outcome to act. A decision rights matrix should specify authority limits, required inputs, mandatory approvals, and execution ownership. Consultation is not a veto unless an explicit control requires it.

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 clock. Each decision category needs a response window, a trigger for escalation, and a named escalation owner. Escalation should resolve a defined obstacle without silently transferring accountability or bypassing required safety, legal, or regulatory controls.

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 in identifiable interfaces, authorities, or capabilities. Move to a new design when the value agenda requires fundamentally different coordination, economics, or accountability. Choose based on evidence of structural mismatch, not leadership preference for centralization, decentralization, or a cleaner chart.