Structure eats strategy for lunch: Insight into operating model design

Structure eats strategy for lunch: Insight into operating model design

Posted by Tiffany McDowell on February 16, 2016.

Very few in the business world have escaped the old adage “culture eats strategy for breakfast.” Anyone who has tried to transform an organization and drive different behaviors from the status quo has probably heard Peter Drucker’s classic statement. Despite passion for doing the right thing, and despite having a great group of well-intended, hardworking individuals, leaders often cannot get the collaborative behaviors needed to move their organization to new ground. But when you really want to understand why individuals and groups behave certain ways—often in ways that seem counter-intuitive to the organization’s best interest, or at odds with their own mission—you need only look at their existing operating model and the very purpose and vision it’s built to drive.

Case in point: Looking beyond the walls
Take Alcatraz as an example, one of the most storied prisons in American history. Did you know Alcatraz is maintained by the National Park Service (NPS)? It’s true, Alcatraz is not owned and operated by the prison system, but by the NPS. It is the NPS’s operating model that dictates the experience of the people that sign up for a tour. While the tour guides do walk tourists through the dark, somewhat spooky prison, the tour itself is structured around the following four constructs directly linked to the current operating model of operations at Alcatraz.

  • Operating organization’s mission is a driver of how the employees view their mission: The mission and vision of the National Park Service directly influences the approach used in operating Alcatraz, with a particular emphasis on the conservation of natural and cultural resources throughout the tour.
  • Operating model has a direct impact on the way in which employees communicate. Content provided to the public focuses not only on the infamous prison and its infamous inmates, but also on ecological initiatives. Think how much more welcoming and accessible this tourist destination is for diverse populations now that it’s associated with wildlife appreciation, preservation, and sustainability.
  • Operating model design has created a set of universal behaviors within a system. Alcatraz’s operations under the National Park Service greatly impact the behavior of individuals who work within the organization. Programs and educational activities led by park rangers and volunteers reveal an employee perspective and correlating actions that (coinciding with the NPS’s mission statement) primarily focus on nature and wildlife. Actually, a big chunk of the tour focuses on orange and fig trees, gardening, and landscaping and explaining how they provided prisoners meaningful physical activities and mental peace.
  • Operating model design influences employees to deliver and view their jobs/roles in a certain way.
    Tours of Alcatraz focus on elements exterior to the prison; tour guides have specific expertise in birding and other outdoor competencies. This is a game changer because the operating model design is deliberately attracting, recruiting, and deploying certain skill sets on the island that radically change the way in which the public experience is delivered to hundreds of tourists (the ones who line up every day to take a tour of the lovely little island overlooking the stunning San Francisco Bay).

Operating models drive experiences
Alcatraz isn’t the only example, there are actually numerous examples just like Alcatraz. Each one forces us to confront a million-dollar question about operating model design: Do we believe that if we transformed the operating model and assigned the operations at Alcatraz to the National Guard, City of San Francisco, or the Department for Housing and Urban Development, the island prison would be run the same, or provide a similar customer experience to what it does today?

Most likely not. The Alcatraz example demonstrates that the very design of the operating model directly impacts the way in which people behave, communicate, think about, and deliver their roles and responsibilities within a system.

The psychology of organizational behaviors is deeply woven into the fabric of operating model design. The operating model is the foundation’s cornerstone that lays down the vision for the future. Mobilization of an operating model attracts a certain type of talent that is unconsciously programmed to proactively act, behave, and deliver services in a way that is correspondingly linked with the operating model.

Think beyond “reorganizing”
Traditionally, companies viewed operating model design as a black-and-white reorganization of business processes linked to the business strategy. This thinking has led to too many failed transformations—those that successfully reorganized the tasks and processes but did not empower people to act, communicate, and deliver their jobs in new ways—by crippling strategic execution. As companies transform their operating models to tackle new challenges in the environment, they should think beyond the traditional ways of operating model design and think about what drives people and how group behavior can be influenced by changing the operating model.

Tiffany McDowell is a principal in the Organization Transformation & Talent Human Capital Practice of Deloitte Consulting LLP, where she focuses on helping companies improve performance by building organization structures to execute new capabilities through their workforce.

Contributors: Uzair Qadeer and Julia Rudansky

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