We live in the age of disruption with new players aggressively entering old industries, such as Uber threatening the taxi industry and AirBNB taking on the hotel industry. These businesses have disrupted the ways and operating rhythms of the past by creating new operating models that erode the successes of historically dominant (and seemingly untouchable) players. To successfully adapt we need to take greater control of the impacts of these changes by proactively defining our own Operating Models, and associated Operating Rhythms. This will ensure, not only survival, but success in this aggressive new world.
In my experience I have found that many executives and key decision makers don’t fully understand these terms or their importance. Below is an outline of what these terms mean, why they are so important and how to establish your own.
Change is now occurring more and more rapidly than it ever has across all sorts of industries. Those involved in the old ways are struggling to keep up and adapt to these new worlds.
When disruptive change occurs, the old Operating Models established for years, are no longer relevant resulting in a period of uncertainty, turmoil and anger. To be clear, I define an Operating Model as being the interconnected pieces that made up a business’s microcosm. It is all of the daily activities, tasks and processes, the hierarchical structure and roles and responsibilities of the people involved in the organisation and the systems and technology used to deliver the service or product to the consumer. Simply put, it is how the business runs.
The ‘Old World Operating Model’ may have once proved successful, however, in this exciting new world; it requires either incremental or transformational changes to have any chance of ongoing survival. If you follow the news you will see examples of traditionally dominant players, such as Taxis and Hotels, desperately fighting to keep the ways of the past alive. Of course, in most cases, this is a fruitless battle as the new services are being driven by changes in customer preference and behaviour. Attempting to dictate to customers what they can and can’t do often just adds to the momentum of this revolution.
In change management terms this resistance is merely a precursor, albeit painful for the incumbents, to the evolution of an industry. Everyone has experienced this at a personal level, whether having to deal with changes in the workplace or in our home lives. The degree of change will determine the size of the impact to our lives and the way we go about our daily routines. For example getting Pay TV means you will probably spend more time at home rather than going out, which is not a major change. However, a divorce will result in a complete upheaval of your life and routine as you deal with being single, new abode and breaking apart your previous life.
Your personal Operating Model will change in both of the above examples, however, the degree of change is being determined by the significance of the disruption and emotional attachment. You can create your new operating model either consciously or unconsciously. If you do nothing and just let life play out then you will end up with an operating model that evolves. Chances are that if you don’t have much conscious input, you will not be satisfied with your personal Operating Model. You will either remain unhappy or have to make changes to it again in the future.
I have seen projects that have implemented changes without planning for a future operating model, and the survivors are left floundering as they look for a semblance of order in the resulting chaos. Quite often the project was considered a success as the new system or technology was delivered on time and on budget. The true cost is that the people who must use it are left not understanding their roles and responsibilities in the new world. As people are all ultimately creatures of habits they try to find a routine or rhythm in the new activities and processes.
As a Program Director at Westpac Retail and Business Bank (RBB) in Australia I was tasked with a once in a life time project – manage the creation of a new banking service for famous sportspeople and entertainers, branded Alpha. I worked with Grant Hackett, Olympian, and Tim Horan, former rugby union Wallaby great, to establish this successful business that now manages over $1.5 Billion. When creating this new segment we needed to establish a new operating model. Our relationship managers could not be star struck when dealing with their famous clients, and our products and services had to be targeted to the needs of the clients. It was at this time that Rob Coombe, then CEO of RBB, introduced me to another layer that sits above the operating model – the Operating Rhythm.
As Rob outlines “The Operating Rhythm ensures that the management team are addressing the needs of all the stakeholders. Without a structured approach it is very easy to miss a period where you may have let something slip (for example, succession planning or performance around customer metrics), because you were too busy with the day to day activities. The bigger and more complicated a business is, the more important it is to have an Operating Rhythm.”
Drawing on his extensive experience as a hands-on CEO with a passionate interest in Alpha’s success, Rob understood the need not only to define what success actually looked like for the project, but also to have in place the management and reporting tools to establish a robust and sustainable Operating Rhythm. This would enable us to deliver on our sales targets, as well as also meet our obligations for decision making governance, formal reporting and people management.
To develop your own operating rhythm, employ the 5W model – Who, why, what, when and where.
- Who? – Identify who key stakeholders are and their level of influence over your ongoing success
- Why? – Understand why they are interested in your business and then tailor your information and reporting accordingly
- What? – What information, strategies, obligations, reporting or decisions that are required to satisfy your stakeholders? What established processes and procedures are already in existence that must be met?
- When? – When do these need to be completed? Deadlines, commitments, expectations etc. Creating a calendar of all of the events that you must undertake and comply with is an excellent way to ensure you haven’t missed anything
- Where? – By understanding where these obligations must be met will assist in understanding any dependencies or limitations that you must consider.
Now you have created your new Operating Rhythm based on the new Operating Model the key to success is:
- Awareness – make sure everyone understands and owns the new Operating Rhythm and Model and their roles and responsibilities in delivering it. Putting the calendars up on the walls is a great way to ensure people don’t forget
- Embedding it within the business and make sure you refer to it as a key management tool
- Monitor the evolution of your operating model and adapt your Operating Rhythm as required – this is a living document as changes will continue to be implemented
- Be disciplined – maintain focus on this as a key management tool. Hold yourself and others accountable to it and report on the Operating Rhythm as one of your key performance indicators.
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