Operating Model Redesign: Make Decisions Move, Not Boxes

Operating model redesign should start with the decisions that turn strategy into results, not the boxes that describe reporting relationships. When executives redraw the organization before clarifying authority, they risk moving the same delays, conflicts, and accountability gaps into a new structure.

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 current operating model produces. Define it through margin, growth, cash, service, or risk measures, then trace the shortfall to specific decisions, handoffs, capabilities, and incentives rather than assuming the organization chart is responsible.

Start with a small set of strategic commitments and establish a credible baseline for each. A construction business pursuing profitable growth might examine bid margin against realized project margin. A logistics operator promising differentiated service might compare customer commitments with delivery reliability and cost to serve. Separate external pressures from internal execution failures; a weaker market and a stalled pricing decision require different responses.

Then follow the work behind each gap. Where did a decision wait, get reversed, or proceed without the right information? Review actual bids, investment requests, product releases, and customer exceptions rather than relying only on interviews. Attribute financial consequences carefully to avoid double counting. The output should be a short set of testable explanations: which operating constraints prevent value delivery, who controls them, and what evidence would demonstrate improvement.

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

Assign one accountable decision owner, identify the people whose input is required, and distinguish everyone who only needs notification. A decision rights matrix should specify authority by decision type and threshold, including any legally required approvals. Consultation must improve the decision without quietly becoming a universal right of veto.

Build the matrix around recurring choices with material consequences: pricing exceptions, capital commitments, supplier selection, engineering changes, and resource allocation. For each, record the decision owner, required consultees, informed parties, authority limits, and execution owner. The person approving a choice is not always the person implementing it. Where a board or formal committee must decide, name that body explicitly and assign an individual to prepare and advance the decision.

Make boundaries concrete. A regional leader could approve a commercial exception within an agreed margin floor, while an exception below that floor goes to a designated executive. Finance supplies the economics; legal or safety functions retain explicit approval rights where required. Other stakeholders receive the outcome, not an invitation to reopen it. Test the matrix against disputed recent decisions before publishing it, and resolve contradictions with existing policies and delegated authorities.

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

Set a decision deadline according to urgency, reversibility, and exposure, with a named escalation owner when that deadline is missed. There is no universal time limit. The clock should start when agreed information requirements are met, while missing inputs should trigger their own deadline rather than allowing indefinite delay.

Use a few decision classes instead of negotiating timing case by case. A routine, reversible customer exception may justify a short turnaround; an irreversible capital commitment needs more diligence. Specify whether the deadline covers consultation, approval, or both, and measure elapsed time rather than meeting frequency. For safety or regulatory matters, escalation should secure timely expert attention, never bypass mandatory review or treat silence as permission.

Define what happens at expiry. The decision owner records the unresolved issue, options, recommendation, and cost of delay, then routes it to the named authority. Avoid escalating every disagreement to the chief executive. Track time spent waiting for information separately from time spent awaiting approval, alongside reversals and execution failures. If faster approvals produce more rework, the remedy may be better inputs or clearer limits rather than tighter deadlines.

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

Refine the current model when performance gaps come mainly from unclear authority, weak handoffs, or inconsistent execution; choose a new design when the strategy requires fundamentally different capabilities or coordination. The test is whether targeted changes can deliver the value agenda sustainably, not whether leaders prefer a different organizational shape.

Run a bounded trial before committing to structural change. Apply revised decision rights, information requirements, and escalation rules to one business process or market. Compare decision speed, outcome quality, management effort, and realized value against the baseline. Include frontline users and control functions in the review. A successful trial supports refinement; persistent constraints tied to fragmented ownership, incompatible incentives, or missing capabilities may support a broader redesign.

For executives asking how to redesign operating model arrangements, the sequence matters: establish the value gap, test decision changes, then specify the target operating model. That design should connect processes, roles, governance, capabilities, data, technology, and performance measures. Assess transition costs, service continuity, and leadership capacity before selecting it. Redraw reporting lines where they enable the required authority and collaboration, not as a substitute for defining how work will happen.

Bottom line

Operating model redesign earns its cost when it changes how consequential decisions are made and executed. Structure should reinforce those changes, with performance evidence determining whether refinement is enough or a new model is necessary.

1. Select three material performance gaps and trace recent decisions behind each, recording delays, reversals, and financial consequences.
2. Build a decision rights matrix for those decisions, naming owners, consultees, informed parties, authority thresholds, and escalation deadlines.
3. Pilot the revised rules in one operating area, review speed and outcome quality, and use the findings to approve targeted refinements or a broader design.

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 current operating model produces. Define it through margin, growth, cash, service, or risk measures, then trace the shortfall to specific decisions, handoffs, capabilities, and incentives rather than assuming the organization chart is responsible.

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

Assign one accountable decision owner, identify the people whose input is required, and distinguish everyone who only needs notification. A decision rights matrix should specify authority by decision type and threshold, including any legally required approvals. Consultation must improve the decision without quietly becoming a universal right of veto.

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

Set a decision deadline according to urgency, reversibility, and exposure, with a named escalation owner when that deadline is missed. There is no universal time limit. The clock should start when agreed information requirements are met, while missing inputs should trigger their own deadline rather than allowing indefinite delay.

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

Refine the current model when performance gaps come mainly from unclear authority, weak handoffs, or inconsistent execution; choose a new design when the strategy requires fundamentally different capabilities or coordination. The test is whether targeted changes can deliver the value agenda sustainably, not whether leaders prefer a different organizational shape.