The Search for Clarity
Welcome to The Search for Clarity, a podcast focused on empowering clarity in leadership and execution. Hosted by Richard de Kock, a seasoned Cloud Strategy & Operations Executive Advisor and an Executive & Leadership Coach at www.coachingwithrichard.co.uk. This podcast is a treasure trove of insights for professionals navigating the complex world of business transformation and leadership. Each episode, we sit down with leading industry thought leaders, individuals who have made significant contributions in their fields, to dissect and understand the intricacies of successful transformation. Our conversations aim to cut through the noise, offering clear, actionable insights for senior transformation leaders, consultants, managers, and any professional eager to make a tangible impact in their domain. Whether you're looking to refine your strategy, enhance your leadership skills, or simply gain a deeper understanding of transformation dynamics, "The Search for Clarity" (www.searchforclarity.com) is your go-to resource for guidance and inspiration from the best minds in the industry.
The Search for Clarity
Strategic Clarity for Leaders: Exploring Operating Models with Andrew Campbell (Part 1)
Can strategic intent really be transformed into operational success? Explore this question with Andrew Campbell, the seasoned author of "Operating Model Canvas," as he unpacks the intricacies of aligning business operations with strategic goals. With a rich background from McKinsey and various academic roles, Andrew sheds light on the importance of a comprehensive operating model. He discusses the crucial elements that make up an effective operating model, such as people, structure, IT systems, and management processes, and explains why a detailed, multi-page model is indispensable for any organization aiming to achieve its objectives.
Discover how the Operating Model Canvas can be a transformative tool across all levels of an organization. From individual tasks to entire departments, Andrew guides us through practical applications of the canvas, illustrating its adaptability and effectiveness in ensuring that every layer of an organization is in sync with its strategic goals. By examining contexts like IT, HR, and regional operations, he clarifies how different operating models can coexist within an organization, each tailored to specific strategic intents and goals. The conversation emphasizes the importance of creating appropriate operating models to simplify and streamline strategy execution, even in complex, multi-layered organizations.
Before diving into new operational frameworks, what foundational steps should organizations take? Andrew emphasizes the necessity of clearly defining an organization's value proposition and customer base before implementing any operating model, such as a cloud operating model. He warns against disjointed operations that can arise from poor planning and stresses the use of tools like the Business Model Canvas and Operating Model Canvas for comprehensive alignment. We conclude the episode by announcing the upcoming release of episode two and encouraging listeners to stay connected and engage with us on social media for more insights. Join us to continue this enlightening journey with Andrew Campbell into the world of operating models in business.
Engage with Richard further: https://linktr.ee/richardekock
Welcome everyone to the Search for Clarity. We are here with Andrew Campbell, the author of the Operating Model Canvas, which we're really excited about sharing with you today. So here's a copy of the book. If you haven't seen it before, it is a must read for any leaders who are trying to convert their strategy into something meaningful and executable. And so you know, without further ado, I'd like to introduce you to Andrew himself. So he's ex-McKinsey consultant. He was a lecturer at London Business School, he was the director of Astridge and now he's at Hult International Business School, got his MBA through Harvard Business School and, of course, is an author of the Operating Model Canvas and designs lots of courses. He wrote the Operating Model Canvas with Mikel Gutierrez and Mark Lancelot and now trains and teaches many leaders in how to go and get this right in the real world. So pleasure to have you on the Search for Clarity, Andrew. Thank you very much. Thank you, Richard. So pleasure to have you on the search for clarity.
Speaker 2:Andrew, thank you very much Thank you, richard.
Speaker 1:So, just so everyone's aware, remembering that this is a two-part episode we're going to have with Andrew, and just to remind you all that the views and opinions expressed in this podcast are solely those of the individual contributors, and the podcast is my own independent effort. It is not associated with any of my employers or clients. So to kick us off, andrew, I've been fascinated with the whole topic of business models, operating models, and have spent a fair bit of time nowhere near as much as you trying to make sense of a very abstract concept and how to get it applied at a very tractable level on the ground, and in my journeys I've seen this word thrown around an awful lot. So to kick us off, operating models how would you, I mean, with all the hype, how would you define this? What is an actual operating model? What would a leader expect an operating model to look like?
Speaker 2:Not an easy question to answer and you will find many different definitions. If you go on Google, you will get easily, quickly and easily confused. Let me back up a bit. So I was a well, I'm a strategist. So I was.
Speaker 2:When I worked at McKinsey I did strategy studies. I then went to an academic and did work and wrote books on on strategy, particularly corporate level or group level strategy, and, um, I was always accused of and suffered a bit from leaving an organization with a strategy and then a couple of years later, years later, them saying well, that was all very good, but we don't think we did half of what you were suggesting that we should do. And it seemed harder when we were trying to make it happen. And so I became interested in how to make it happen. And that took me first into organization design.
Speaker 2:So how do you set up an organization in terms of the lines and boxes, literally the organization chart, the lines and boxes so that it is supportive of the strategy? Or at least, how do you, if you come up with a new strategy, how do you figure out if the organization you have is appropriate or not? And I did some work with Michael Golden, wrote a book on organizational design at a time when organizational structure was a bit passe and I think at Harvard Business School at the time they'd sort of stopped teaching structure on the basis that if you had good people and good processes, everything works. But Michael and I realized that no, your boss is terribly important.
Speaker 2:So who is your boss and what relationships you have with other people in the organization are rather critical to the thing working well. And that can't all be about process. It's more than just the process. Processes are terribly important. But with that realization that we hadn't fully solved the problem with structure, I then started thinking about well, what else beyond organization structure do you need to put in place when you've come up with a strategy? Or do you need to check whether it's in line with the strategy? And that got me a bit into process, but it also got me into location decisions. It got me into a colleague of mine was doing work on suppliers and made me realize how important relationships with suppliers are.
Speaker 2:And then, of course, there's a whole dimension of people. You know, how do you get the right people in the right culture? Uh, around your organization, um, and. And then I got what I was teaching. This is rather long answer, but I was then teaching with um, uh, um, pa, consultant, uh, in a course that they originally called um, business architecture, I think, and I hadn't a clue really what business architecture was. But I was teaching organization design and that exposed me the whole business architecture, thought it exposed me to an it centric view of organizations, which I think of business architecture as being an it-centric organization as opposed to people architecture, your resource-centric view, and really my attempt to pull together the topic of operating models was an attempt to pull all this together.
Speaker 2:Now, what you really want, though, is a definition of what is an operating model that people can use, and I think it is a model, so it's an attempt to kind of put on paper your operations, and your operations clearly should be designed to fit the strategy. Your operations clearly should be designed to fit the strategy, and so an operating model is the paper version of your operating design, and it can be tables and charts and all sorts of things. You can sort of get it on one page with the operating model canvas, but typically it's going to be 10 or 100 pages of information about how your organization works so that it can achieve the strategic capabilities, sources of advantage whatever you want to call them and outcomes that you have set it up to do. So it's really a setup of the organization it's the people, it's the structure, it's the IT systems, it's the technology, it's locations, it's the supplier relationships, it's the management processes, all of that stuff and I'm in the process of doing some work on a house at the moment and the same sort of thing.
Speaker 2:What's your house model? Well, that's the thing an architect puts on a piece of paper, but it has a lot of stuff in it. It needs multiple pages.
Speaker 1:So, yes, what I liked about the publication, again, I thought it was really practical because you alluded to the fact that the operating model canvas is your highest level of abstraction, your highest level of simplicity, and it's about being able to move away from the complexity of the details. That helps a strategist move, you know, move things around in a much easier way and then dig down into the details again. And you you illustrated quite nicely how, from an operating model canvas highest level of abstraction perspective, you would then go down into further details and documentation from the decisions, from the, the construct that you come up with, uh, through the canvas itself. So I thought the publication really great in its ability to illustrate that journey from right, you know, let's figure out what the strategy is, let's look at the business model and then let's break this down and start to flesh it out, layer by layer by layer of abstraction, until we get to the, you know, really detailed documentation.
Speaker 2:Which is a very central part of good design is being able to think at a high level and then work it down into the details. I was much influenced by the Vogue business model generation, which I'm sure your listeners will have come across.
Speaker 1:Got to try to.
Speaker 2:I've come across and, of course, copy the style and the sort of accessible format, but probably in my mind was. And the operating model canvas fits together with the business model canvas as a sort of combined tool, correct. So there's even a page, I think, in the operating model canvas where it shows where these things fit together.
Speaker 1:But on how they the key yeah, it'd be the key partners, key activities and key resources, if I wasn't mistaken.
Speaker 2:It replaces that part. It's an attempt really to take in the business model canvas. They took the value proposition part of the canvas and did a whole book on that, which, by the way, is also good and very helpful.
Speaker 2:I've seen that yeah, very good, and really what I've done is taken the back end, the key resources and key partners and so on, bit and do a whole book on that, which which they really, in their two books, never really did a proper job. So in my view it's in that genre, um, and there are, just so that your listeners understand. There are other um ways that the phrase operating model is used. Fairly prominent on the internet is the Bain and Company consultancy way of using it, which is really more about organization and that comes from a heritage where the word operating model was really used by some people to describe the relationship between headquarters, the setup between headquarters and business units. Do you have a decentralized operating model or a centralized operating model kind of thing? But I use it in a very holistic way, almost like the word process. And actually your point about the cascade in process analysis you can do a process at the very highest level which is sort of buy, make, sell, and then you can break it down to level two processes and level three processes, level four processes and so on, but you're still using the same process mapping tool at all of those different levels. Operating model canvas is exactly like that. You can use it at all the different levels so you can have an operating model.
Speaker 2:I mean, you can have an operating model for what you're doing right now interviewing me and so on. So you can have an operating model for one person. You can have an operating model for a team of three people. You can have an operating model for one person. You can have an operating model for a team of three people. You can have an operating model for 10 people. You can have an operating model for the compensation and benefits team within HR and so on. It's about what are they trying to do, what value are they trying to deliver, for whom, and how are they going to get the work done that delivers that value? And so you know you're trying to deliver some value to your listeners. You've got some work to do to get that value to your listeners. What's the operational setup that makes it possible for you to do this work? You need some technology. You need some suppliers I guess I'm one of your suppliers you need editors and so on to get this done.
Speaker 1:And that's a great point. Thank you, andrew, because I suppose it tees me up to the next question I had. I mean that's, I think, where lots of confusion is stemming from, as you mentioned. I mean I've seen various forms that an operating model would be used, even in terms of people structuring. You know, even in an IT perspective, how we structure our servers and stuff. All you know I've seen it referred to as operating models. So I think my question is given the fact that different contexts, you know it can be used in different contexts. I've seen it used.
Speaker 1:You know you hear IT operating model very frequently business operating model, target operating model, cloud operating model. It kind of starts to get a bit confusing for a leader to understand. Right, well, what operating model is what In your mind? How do, based on what you've just said, organizations can have several operating models? How does it all come together at the end to form the overall? This is how we deliver value and this is how we'll execute, deliver value as an entire. You know, looking at the strategy, how does it all come together to deliver against the strategy at the end of the day?
Speaker 2:Well, again, it's a slightly odd question that, although I do understand the question, but there are strategies at all sorts of levels in organizations. You'll have a strategy at the headquarters level in a multi-business company like Mars or something, and then you'll have the strategy for the launch of a particular product in the South African division of the pet food arm of Mars, and you'll have strategy for the HR team's recruitment strategy and so on. So there are lots of strategies and each of those strategies needs work to get done in order to deliver the strategy, and an operating model is about how do we set things up so that work gets done well, and so it's really anywhere where you have work being done, you need an operating model if you want it done well and in line with your strategic intent. Now, of course, some strategies is like the recruitment strategy is a pretty low-level thing that doesn't really impact much else, although even that might be impacted by some very high-level strategic thought about we're trying to move into Asia and therefore, when we're recruiting in Europe, we should be looking for some people who might be interested in transferring to Asia. So it's complicated, it's multi-layered and you need to be very clear.
Speaker 2:What layer am I working at? Am I working at the recruitment strategy in Europe or is it the global recruitment strategy? What is it? And therefore, what operating model am I trying to design? Am I designing the operating model for Europe and for senior managers, or is it the operating model for Europe and for senior managers, or is it the operating model for Europe recruitment for all staff? And then you say, well and again, what are we trying to achieve at that level? And now, how do we put together an organization and the technology and the buildings and the equipment and the systems and so on to make that possible? I think of it as extraordinarily simple, if people do get quite wrapped up in the terminology, possibly with federal rather like the word strategy.
Speaker 2:It's got a thousand meanings. Absolutely, yeah, good point, good point, natural, rather like the word strategy has got a thousand meanings.
Speaker 1:Oh, absolutely, yeah, good point, good point.
Speaker 1:So this is really helpful, andrew, because I think you're helping me understand this a bit better as well.
Speaker 1:When reading the publication, I'm almost in my mind thinking there is one operating model and unless you've got completely radically different resources, you're going to get another operating model. Know, unless you've got completely radically different resources, you're going to get another operating model. Um, but what you're sort of saying is that its simplicity is more in the fact that, depending on the context, wherever there is a strategy to be done, you know, at whatever level in the organization, there needs to be an operating model to drive that strategy. And it's a great tool to codify that strategy into an executable format at a department level, at a team level, at a division level. And it becomes probably more complex when we start to look at it as an all-encompassing almost. If it's a big organization, almost an impossible task as an all-encompassing model. But the simplicity is perhaps in the fact that this is something that is done in smaller containers, for lack of a better word than this big behemoth yes, well, a leader is trying to get some things done.
Speaker 2:It may be trying to get three or four very different things done and therefore needs three or four operating models reporting into that leader, or it may be possible to put it all together in one operating model. You might argue that the collection of three or four operating models that that leader designs to get the things done that he or she is trying to do is his or her overall operating model. So it's not because I know that quite a bit of your audience will be IT. Let me give an IT example which is actually in the book.
Speaker 2:There is an IT example in the book, the one I'm going to mention is not the one that is laid out in detail, but one that's really got only one page on it, because there's a conference in Los Angeles that happens every year, called DEF CON 2, which is the hackers conference. It's all about people how do we identify what is hackable and how do we help organizations stop it being hacked? And I have a friend who was a quartermaster of defcon 2, so his job was to make sure that when defcon 2 was on in los angeles, all the equipment and and stuff was with there and and available. And that involves creating, having warehouses to store the equipment from one year to the next, and so on, making making sure the equipment's all running properly. And um, and, and he, um, uh.
Speaker 2:I was talking to him and I was thinking oh quite, you have a, an operation model for your department or whatever it is, 10 people or something, um, and so we know we I spent some time talking to him and getting clear about what's, what's his strategy, what's what's, what value is he trying to deliver to the conference and to the greater audience of the conference, and what's his job in delivering that value and how does he set up his organization to get it done. And we even got into topics like the culture in his team, which is much influenced by one of the team being a copy barista and providing fantastic copies.
Speaker 2:Which was all people he has to deal with because he has to deal with lots of people to come to him because they liked his copies, and so that was an extremely important part of the operation. So that's one department in one organization which only really acts once a year, but it still took a good part of a year to plan the whole thing and make it work that's a really another really interesting point, because what I've seen happen very often is I'd love to your view on this.
Speaker 1:I've seen very often in from an it perspective and I think from a business perspective as well, this notion of a cloud operating model mentioned very frequently and in my mind, just to be clear on what that translates to me is you know, it's the people, the process, the technology and the partners behind. Actually, you know and all the capabilities and the flow of those. You know how services are enabled and created, etc. And how that gets delivered for cloud services. And then you've got your IT operating model. You've got your IT operating model and there is definitely a difference between the two in that you run a little differently for the cloud than what you would traditionally for your old IT operating model.
Speaker 1:What I'm finding is a lot of leaders tripping over the old versus the new, and so what I've been saying is I'd view them almost as the same thing instead of trying to see them as two polar opposites, because you're still using the same people in many instances.
Speaker 1:The analogy I was giving is you can't play checkers in a chess game. Follow the rules of checkers on a chess game. So if you've got a resource that's supposed to be delivering in this view of this operating model and then you've got this new cloud operating model, you've got some consultants to come in and flesh up for you, Resources are very often pulled between the two ways of delivery and from an organizational change perspective, from an adoption perspective, they run into lots of challenges and trying to make sense of that sort of world, and so I was wondering what your thoughts on that might be. In the essence of yes, it's great. From a departmental perspective, it makes complete sense to go and create operating models. It seems to me almost like there's a convergence of strategy that's the problem here versus the operating model itself.
Speaker 2:Well, okay, I'm not sure if we, because my work work in operating rooms I always start with what value is this organization trying to deliver to who? You have to start with what organization you're talking about. I suspect what we're talking about here the IT organization, and then, of course, there are lots of parts Is it the service department or is it the app department or is it the app? But it's what's the organization and what value is it trying to deliver to who? So, if you have real clarity which is why the business model canvas is so helpful, real clarity who is the customer, what is the value proposition, you can then start to think. Now, the phrase cloud operating model doesn't specify a customer and it doesn't specify a value proposition, and you described it as a means of delivery or something. So it's used, I think, as a phrase to contrast paper operating model or digital operating model. Ie, we are trying to provide IT services to our organization and we do it all through digital apps. Now, if we then choose to put some of those digital apps in the cloud, it's not really changing the value proposition that we're providing to our customers, although it may enable us to provide more value, although in my experience as a customer, usually less value, because there's always a delay in your screen because your app is not in your laptop, it's somewhere in the cloud and it takes some time to get onto your screen. So it's actually reducing the value that I receive as a customer, but it is a much lower cost operating model. So it's not a cloud operating is not. It's just, it's a phrase saying we could store the data and the apps on our own equipment or we can store it in the cloud. And we've chosen to store it in cloud because we think it's lower cost. And my point is well, have we then thought through all of the elements that we need to think through to make that work? And you were mentioning well, we often use the same people. Well, probably you shouldn't, because, as you say, one can test and the other can check, because they're rather different playing skills, and that's again I see happening a great deal of the time.
Speaker 2:Organizations change something its strategy or its decision about operation, and they then work their way around. Okay, what impact does this have on the management systems? What impact does this have on supplier relationships? What impact does this have on the organization structure and so on? When I was at McKinsey. I was there when the tool, the 7S organization tool, was invented and it was a big eye opener to me and lots of people at McKinsey about how many things you need to think through when you're making check.
Speaker 2:And the operating model canvas is another form. It's a slightly broader canvas than the seven S's, but the same sort of thing. It's a checklist it's nothing really more than a checklist Things to think about when you're making operating design decisions. And also, please make these operating design decisions, because if you don't make them, if you don't design them, they will evolve and emerge and then it'll be a mess, which a lot of organizations are, because they've had different bits built on by different people with different objectives and the thing doesn't really work together well. So it's worth sitting down. And then, of course, it's such a big task that people never get around to it. Hence you need a tool like the Operating Model Canvas to get started at a very high level in whatever part of the organization you're designing, which is non-threatening to senior executives, and then in an afternoon they can have a really good discussion which will help them set an agenda for doing a hell of a lot of things.
Speaker 1:So if I summarize what I'm hearing back now it's a small really.
Speaker 2:I'm back. No, no, no. Keep asking questions, but I'm hearing back. I'm back. No, no, no, keep asking questions.
Speaker 1:No, no, this is wonderful. So if I summarize that, what I'm hearing and how I'm sort of interpreting it is, it's depending on so again, using the word strategy who the audience is, what value you're trying to deliver to that audience, and the example we just talked about it's more around. What are you actually trying to deliver? If you're just trying to change some of the delivery mechanisms in the back end to cloud for argument's sakes, then is it really a new operating model at the end of the day?
Speaker 2:You may describe it. You may say and we're using cloud operating model, you know, for our data, sure, sure, you know. You can say we're using a outsourcing operating model for our people. You know they're all contractors. We don't get hung up about using the term. It's like you know we're using a cloud strategy. We're using a strategy of using contractors.
Speaker 2:It's you don't let the language get in the way of the thought which is it's, it's um sure, it's, uh, it's it. You don't let the language get in the way of the thought, which is some work needs to get done.
Speaker 1:I just yeah, it's like um, I'm not a football fan.
Speaker 2:I don't know if you watch soccer, um, but um uh, each team has its own you. Each team has its own, you could say. It has its own operating mode. It has its own way of setting up the team and getting them to play, which will be a bit different, and some have a high press and some have a low press, and some use the wingers a lot and some don't, and sometimes they set up differently for different games. It's the setup.
Speaker 1:Right. So this has been a really, really helpful session. Thank you, andrew. I've learned quite a lot from this. So it's not about so much the looking at an operating model, as this big complex beast that you know has got all these different interconnected components you know, cloud operating model versus IT versus business. All it is is it's a simple tool to say, right, if we have work to get done, this is a model we can use to help us structure that work to ensure that we're able to get that strategy, wherever it might be, whatever context it's delivering against the audience and the value we're trying to deliver. It's about how do we structure ourselves in order to go and achieve that strategy. So this has all been tremendously helpful. Thank you very much.
Speaker 1:So, everyone, hang on, because we're going to have episode two coming on in the next two weeks, and so do wait for that. We'll be publishing that on social media and then, of course, if there are any questions, you can get hold of us on our social media channels. I'll be publishing Andrew's as well, so that you can get hold of him as well, directly. But thank you so much for being a guest for the Search for Clarity, and we look forward to catching you all and yourself, andrew, as well in the next episode. So thanks everyone, goodbye, thank you.
