After a shift in strategy, a push toward greater or lower centralization, or a series of acquisitions that have not been fully integrated, many mid to large organizations need to rethink their operating model.
Execution no longer aligns with business priorities. The existing structure no longer fits the challenges ahead. The work the organization needs to do has changed, but the organization itself is not ready for it.
This often happens in mid to large organizations, including multinationals, after a shift in strategy, a series of acquisitions, or a push toward greater or lower centralization.
At that point, the question is not whether something needs to change, but how to rethink the way the organization actually works.
This article lays out a practical approach to operating model redesign. It focuses on when change becomes necessary, the challenges companies typically face, and how to move from design to execution without getting stuck in theory.
What this article covers
When Operating Models Stop Working
The Nature of the Work Has Changed
Operating models stop working when the nature of the work changes.
This can mean new types of activities, new customer segments with different needs, or new ways of delivering value. In many cases, it is not only about doing new things, but about doing similar things under different conditions, at a different scale, or with different expectations.
In practice, these shifts rarely happen in isolation. Companies often face several of these dynamics at the same time.
These shifts are often driven by changes in strategy. A company may decide to serve new segments, introduce new products or services, or change how it goes to market. Each of these decisions introduces new requirements and capabilities that the current organization may not be designed to support.
When this gap is not addressed, execution tends to stall, even when the strategy is clear, as explored in Why Strategy Execution Gets Stuck.
Complexity Has Outgrown the Current Model
Other situations can lead to the same outcome. After a series of acquisitions, for instance, companies often find themselves with multiple ways of operating that are difficult to align. In other cases, growing complexity makes coordination harder and slows down execution, leading to a need for simplification or greater standardization.
In all these situations, the underlying issue is the same. The way the organization is set up no longer matches what the business is trying to achieve.
At that point, incremental adjustments are rarely enough. The organization needs to rethink how work is structured, how decisions are made, and how different parts of the business come together to deliver results.
Whether this is called an operating model redesign or an organizational redesign is often a matter of terminology. In practice, both refer to the same broader challenge of realigning structure, processes, and decision making with the needs of the business.
What Makes Operating Model Redesign Difficult
Balancing Urgency and Readiness
One of the main challenges is the tension between urgency and readiness. Organizations are often under pressure to deliver results aligned with a new strategy, while the current model is not yet equipped to support it.
Moving too fast can lead to poorly thought out solutions. Moving too slowly risks losing momentum and credibility.
Rethinking the Model While Being Part of It
Redesign requires stepping back and rethinking how work is done, while being deeply rooted in the current model.
The people involved bring essential knowledge of how the organization operates today. At the same time, they need to challenge existing assumptions and imagine a different way of working. Balancing these perspectives is not easy and requires deliberate effort.
Lack of Clarity on What Needs to Change
Teams sometimes move too quickly into designing solutions without fully aligning on what the organization actually needs to achieve.
Without a shared understanding of priorities and requirements, redesign efforts can become fragmented or unfocused.
Leadership Alignment and Hidden Tensions
In many cases, leadership alignment becomes a constraint. Different parts of the organization may have competing priorities or perspectives on what the new model should deliver.
These differences are not always explicit, but they can slow down decisions and create friction throughout the process, often reinforcing siloed ways of working, as explored in Breaking Down Silos: Why They Persist and How to Fix Them.
Managing Scope and Deployment
For larger or more complex organizations, scope and deployment add another layer of difficulty.
Deciding whether to pilot changes, roll them out in phases, or implement them broadly from the start depends on the context and requires careful judgment. In multinational environments, balancing global consistency with local realities makes this even more challenging.
Making Change Stick from Day One
Change management is not something that can be addressed at the end. It needs to be part of the process from the beginning.
Building understanding, involving the right people, and creating early buy-in are critical to ensure that the new model is not only designed but actually adopted.
A Practical Approach to Operating Model Redesign
While the specifics vary depending on the situation, the core logic of operating model redesign remains the same. It is about making deliberate choices that connect strategy to execution in a way that is both clear and adaptable.
Redesigning an operating model can feel complex because it touches many aspects of the organization. The approach below provides a practical way to structure the work and move from diagnosis to design and into implementation.
Step 1. Understand the Current Model and Define Requirements
Every redesign starts with understanding how the organization actually works today, not just the formal structure, but how decisions are made, how work flows, and where friction exists.
One of the reasons this step is more difficult than it seems is that operating models are not always easy to see.
Unlike an org chart, which is visual and familiar, the operating model is more abstract. It is reflected in how work flows, how decisions are made, and how different parts of the organization interact. Because of this, different teams often have different interpretations of how the organization actually works.
Tools such as process maps or decision frameworks can help, but clarity matters more than format.
The goal is to build a shared understanding of how value flows through the organization and where misalignment or friction exists. A structured diagnostic can be helpful at this stage, as outlined in How to Assess the Effectiveness of Your Organization in 4 Steps.
At this stage, the goal is not to design solutions yet. It is to define what the new model needs to achieve, even if you are not yet sure how.
In practice, this is where many teams move too quickly. They jump into solutions before aligning on what needs to change, which often leads to rework later.
For example, a manufacturer shifting toward servitization may not yet know how to restructure to offer value added services, but it can already define the capabilities it needs to build, such as understanding customer needs or delivering more tailored solutions.
Outcome of this step: a clear and shared view of the current model, along with a defined set of requirements that the future operating model must support.
Step 2. Define the Organizational Structure
Before defining how the model will operate in practice, you need a clear view of the structure required to support it.
Start by mapping the key activities the organization needs to perform. These activities should flow directly from strategy and the critical capabilities required to deliver it. A more detailed approach to this can be found in Organizational Structure Design: How to Build the Right Structure.
In practice, a common mistake at this stage is to start from existing structures or external benchmarks instead of building from the work itself.
Begin by identifying the few critical capabilities your strategy depends on. Break these down into the specific activities that bring them to life. Then use those activities as the building blocks of your structure, grouping them based on required skills, desired outcomes, and areas where specialization adds value, such as by region, product, or customer segment.
This approach ensures that the structure is grounded in how work actually gets done, not in generic models or borrowed org charts.
Outcome of this step: a high-level organizational structure aligned with the activities and capabilities required by the strategy.
Step 3. Define Operating Logic and Decision Flows
With a structure in place, the next step is to define the operating logic of the model and how work will flow across the organization.
This is where the structure starts becoming operationally concrete. The organization begins to clarify how teams perform key activities, who makes decisions, and how different roles and interfaces interact under the new model.
This typically requires more detail than the previous step, including clear ownership, interfaces, handoffs, and decision-making dynamics.
In practice, this is often an iterative process. As workflows and decision dynamics become more explicit, organizations frequently identify structural gaps, unclear responsibilities, unrealistic interfaces, or coordination challenges that require further refinement of the model itself.
Formats such as workflows, decision rights frameworks, or interaction models are especially useful at this stage because they help make the operating logic tangible and easier to align around.
For example, an organization redesigning its commercial model may use workflows and decision frameworks to clarify how sales, marketing, customer success, and product teams interact across different customer segments or geographies. This helps clarify how coordination, ownership, and decision making work in practice.
The goal is not to produce extensive documentation, but to create a small set of clear and practical materials that help teams understand how the model is expected to operate and enable alignment among key stakeholders.
Outcome of this step: a clear definition of how work flows across the organization, including ownership, interfaces, and decision making.
Step 4. Prepare the Model for Activation
Once the core design choices are defined, the next step is to prepare the organization to operate under the new model in practice.
This means identifying the critical enablers required to support the model and assessing the gaps between the current state and the target operating model.
Depending on the context, this may include areas such as:
- Governance and routines
- Metrics and incentives
- Tools and systems
- Talent and skills
- Culture
At this stage, the goal is not to fully redesign every enabling element around the model. It is to identify what is most critical to support activation and allow the organization to begin operating differently in practice.
Some enablers may require immediate adjustments before activation, while others can continue to evolve as the organization starts operating under the new model.
At the same time, organizations also need to prepare the activation itself. This may involve further leadership alignment, stakeholder engagement, communication planning, and rollout sequencing.
At this stage, the challenge is not only defining the future model, but understanding what must happen for the new model to gain traction in practice.
This often requires assessing organizational readiness, prioritizing what is most critical for activation, and sequencing the work across different areas.
Successfully activating a new operating model requires more than a plan. It depends on leadership alignment and ownership. When leaders are not aligned around the strategy or do not actively support it, execution tends to slow down or fragment, a pattern highlighted in Harvard Business Publishing’s research on strategic alignment.
Outcome of this step: a clear activation roadmap, including readiness priorities, critical enablers, and the conditions required to begin operating the new model.
Step 5. Activate, Learn, and Refine
Once activation begins, the organization starts operating under the new model in practice. Teams begin working through new structures, interfaces, decision-making processes, routines, and responsibilities.
At this stage, the focus shifts from preparing the model to helping the organization operate effectively under the new way of working.
As the model starts operating in practice, new friction points often emerge. Some assumptions will hold. Others may require adjustment. Certain coordination challenges or decision-making tensions may only become visible once teams begin working under the new model day to day.
Because of this, activation requires disciplined follow-up and active governance. Organizations need mechanisms to monitor how the model is operating, support teams through the transition, unblock critical issues, and reinforce the new ways of working in practice.
The goal is not to react to every complaint or temporary tension, but to distinguish between normal transition noise and signals that point to a meaningful issue in the model itself.
The aim is to keep learning without losing direction. A good operating model becomes stronger through use, feedback, disciplined follow-up, and careful refinement over time.
Outcome of this step: the organization is operating under the new model, supported by active governance, continuous learning, and ongoing refinement.
Designing for Reality, Not for Perfection
The Limits of “Future-Proof” Design
Operating model redesign often starts with an implicit goal: to design a model that will last.
The intention is understandable. When organizations invest significant time and effort into redesigning how they work, there is a natural desire to get it right and make it future-proof.
In practice, that rarely works.
Business contexts evolve. Strategies shift. Organizations learn as they go. Models that try to anticipate every possible scenario often become too complex, too rigid, or too disconnected from day to day execution.
The Overdesign Trap
In many cases, the problem is not a lack of effort, but where that effort is placed.
Teams tend to overinvest in design and underinvest in making the model work in practice. The result is a model that looks coherent on paper but struggles to gain traction once deployed.
Models fail less because they are wrong in design, and more because they are not built to work under real conditions.
Designing for Execution
A more effective approach is to design for reality.
This means focusing first on what needs to work from day one. It means prioritizing clarity in roles, decision making, and key processes so that teams can start operating in the new way without unnecessary friction.
It also means accepting that some elements will evolve. Not every detail needs to be defined upfront. Trying to resolve everything during the design phase often slows progress and creates a false sense of completeness.
Build for Learning and Adaptation
In practice, the most effective operating models share a few characteristics:
- They are clear enough to guide action from the start
- They focus on the few elements that matter most for execution
- They allow for adjustment as the organization learns
Designing this way requires a shift in mindset. The goal is not to create a perfect model, but to create a model that works and improves over time.
A good operating model is not defined once and left unchanged. It becomes stronger through use, feedback, and refinement.
Rethinking Your Operating Model
If you are facing a shift in strategy, increasing complexity, or the need to operate in a different way, it may be a sign that your current operating model no longer fits what the business requires.
In these situations, the challenge is rarely isolated. It involves multiple dimensions at once, from structure and roles to processes, decision making, and ways of working. Taking a structured approach helps make sense of this complexity and focus on what matters most.
If you would like to reflect on your situation or discuss how to approach these questions, feel free to reach out. Even when the problem is not fully defined, a short conversation can help clarify where to focus and how to move forward.
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