Operating Model Redesign: Fix Authority Before Structure

Operating model redesign should start with the decisions that determine performance, not the reporting lines that describe hierarchy. A new structure will not resolve unclear authority, conflicting incentives, or approvals that arrive too late to protect value.

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

The gap is the measurable difference between your strategic commitments and the results your organization consistently delivers. Define it through outcomes such as margin, cash conversion, delivery reliability, or market entry milestones. Then trace the shortfall to specific decisions, handoffs, capabilities, and constraints rather than assuming the organization chart is responsible.

Start with a small set of enterprise priorities and establish a baseline for each. Separate external effects, such as commodity prices or customer delays, from internal execution problems. In construction, for example, margin erosion may reflect delayed change-order decisions rather than weak project delivery. In medical technology, a launch delay may arise from unresolved trade-offs between commercial commitments and regulatory readiness. These are different problems requiring different interventions.

Build a value-to-decision map: intended outcome, performance gap, decision affecting that gap, current owner, and evidence of failure. Examine actual cases, including elapsed time, rework, exceptions, and reversals. Interview the people preparing and implementing decisions, not only those approving them. The objective is to identify where authority, information, or capacity breaks down. This prevents a broad transformation program from becoming a substitute for solving a few consequential operating problems.

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

Give each material decision one accountable decision owner, with explicit boundaries for consultation and communication. A decision rights matrix should distinguish who prepares the recommendation, who decides, whose input is mandatory, and who receives the outcome. Reserve veto rights for defined legal, safety, regulatory, or other formally authorized control requirements.

Build the matrix around recurring decisions, not broad activities such as “manage customers” or “lead operations.” Useful entries include approving a bid below the margin threshold, reallocating engineering capacity, selecting a technology platform, or releasing capital for a development stage. For each, specify the authority limit, required evidence, consultation window, execution owner, and record of approval. A role described as accountable without the authority to commit resources is not a functioning decision owner.

Consultation must not become an informal consent requirement. A regional leader may need input from finance and operations before accepting a logistics contract, but that does not mean every contributor has an equal vote. Where a board or statutory committee must decide, name that body as the decision owner and define its quorum and approval rules. Align incentives and delegated authorities with the matrix; otherwise, managers will continue seeking protection through extra approvals.

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

A decision should escalate when its agreed deadline or risk threshold is breached, not when someone becomes frustrated. Set time limits by decision type, reversibility, financial exposure, and operational urgency. Specify when the clock starts, what information is required, who receives the escalation, and what happens while the issue remains unresolved.

There is no universal approval deadline. A reversible scheduling choice may need resolution within a shift; a major capital commitment may require staged review over several weeks. Treat these as design choices, not benchmarks. Define separate allowances for preparing the evidence and making the decision so that missing information does not conceal delay. Establish an expedited route for urgent exceptions, while preserving mandatory safety, technical, and regulatory controls.

Escalation should transfer a defined issue to someone with sufficient authority, not add another audience. Record the options, recommendation, unresolved trade-off, and consequence of waiting. State whether work pauses, continues within existing limits, or proceeds through a preauthorized fallback; silence should never imply approval for a controlled decision. Track median decision time, overdue cases, and repeated escalations. Persistent escalation often signals misplaced authority, inadequate information, or a capacity problem that the operating model must address.

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

Refine the current model when targeted changes can close the performance gap; choose a new design when the strategy requires fundamentally different capabilities or coordination. Test whether clearer authority, better information, and fewer handoffs are sufficient. A target operating model is justified when the existing architecture cannot support the value agenda.

Refinement is often appropriate when the business logic remains sound but execution is inconsistent. Pilot revised decision rights in one business unit, project portfolio, or customer segment. Compare decision speed, outcome quality, and control compliance against the baseline. If performance improves without repeatedly overruling the existing structure, retain what works. Do not confuse employee frustration with evidence that every reporting line needs to change.

A new design becomes more credible when the enterprise enters a different market, integrates an acquisition, shifts from equipment sales to lifecycle services, or needs shared capabilities across fragmented businesses. Executives asking how to redesign operating model arrangements should start with required outcomes, then design authority, workflows, capabilities, data, technology, and measures together. Reporting lines follow those choices. Set transition ownership and continuity safeguards, and test critical decisions before rollout. The design must work during the transition, not just at its endpoint.

Bottom line

Operating model redesign succeeds when authority, information, and accountability support the value agenda. Redraw the organization chart only after establishing which decisions must change and why.

1. Within two weeks, baseline three priority performance gaps and trace each to recurring decisions using recent cases.
2. Assign decision owners, consultation rules, authority limits, and escalation deadlines for those decisions; confirm alignment with formal delegations.
3. Pilot the revised rules for one operating cycle, review outcomes and control exceptions, and use the evidence to choose refinement or structural 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 results your organization consistently delivers. Define it through outcomes such as margin, cash conversion, delivery reliability, or market entry milestones. Then trace the shortfall to specific decisions, handoffs, capabilities, and constraints rather than assuming the organization chart is responsible.

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

Give each material decision one accountable decision owner, with explicit boundaries for consultation and communication. A decision rights matrix should distinguish who prepares the recommendation, who decides, whose input is mandatory, and who receives the outcome. Reserve veto rights for defined legal, safety, regulatory, or other formally authorized control requirements.

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

A decision should escalate when its agreed deadline or risk threshold is breached, not when someone becomes frustrated. Set time limits by decision type, reversibility, financial exposure, and operational urgency. Specify when the clock starts, what information is required, who receives the escalation, and what happens while the issue remains unresolved.

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

Refine the current model when targeted changes can close the performance gap; choose a new design when the strategy requires fundamentally different capabilities or coordination. Test whether clearer authority, better information, and fewer handoffs are sufficient. A target operating model is justified when the existing architecture cannot support the value agenda.