Organizations that follow a set of “golden rules” for operating model redesign can boost performance, propel value creation, and improve the odds of long-term success.
An ever-changing, increasingly complex business environment requires a dynamic and flexible operating model that is tailored to its organization. During a McKinsey Live event, senior partners Alexis Krivkovich and Brooke Weddle discussed how the operating model is one of the most underleveraged aspects of business performance. Recent McKinsey research indicates that even high-performing companies have a 30 percent gap between their strategy’s full potential and the value of what’s actually delivered, a gap attributable to shortcomings in their operating models.
To close the gap, the classic framework McKinsey developed in the 1970s have been updated to apply to today’s accelerating societal, business, and tech changes, including the scaling of AI and automation. The new “Organize to Value” system consists of multiple design choices leaders must make for each of 12 interrelated operating model elements: value agenda, structure, ecosystem, governance, processes, technology, leadership, talent, footprint, purpose, behaviors, and rewards.
Moreover, nine revised and updated “golden rules” represent best practices for maximizing the success of operating model transformation, positioning the organization to evaluate risks, seize opportunities, and thrive amid uncertainty and disruption.
According to the research, an organization that follows all nine of these rules has a 97 percent chance of meeting their objectives and improving overall performance:
Think outside the box—and the lines.
- Don’t just fix the pain points; enable the strategy.
- Go beyond “boxes and lines” to rewire the business inside and out.
- Use a rigorous process for talent selection.
Bring leaders along from the start.
- Align the senior team with a shared vision and clear design principles.
- Stack the redesign team with top talent and expertise.
- Equip people leaders with the skills to propel change.
Treat execution as a series of sprints.
- Identify and embrace new behaviors and mindsets.
- Manage transition risks proactively.
- Link leadership incentives to the success of the redesign.
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For more on this topic, see the article “The new rules for getting your operating model redesign right” and the McKinsey Quarterly article “A new operating model for a new world,” both on McKinsey.com.
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