The CEO's Guide to Operating Model Design

As a CEO, your primary responsibilities are setting the strategic vision, ensuring the company is capitalised, and building the executive team. However, the most brilliant strategy will fail if the organisation is not structurally capable of executing it. This is why operating model design must be a CEO-level priority.

Many CEOs make the mistake of delegating operating model design entirely to HR or the COO. While these leaders are critical to the process, the operating model is the fundamental architecture of how the business creates value. It requires the CEO's vision and authority to mandate cross-functional changes that individual department heads cannot force upon one another.

Three Questions Every CEO Must Answer

• Does our current structure allow us to execute our 3-year strategic plan? If the answer is no — or if you are not sure — the operating model is the constraint, not the strategy.
• Are decision rights placed at the correct level? Decisions should be made at the lowest level of the organisation that has the competence and information to make them well. If everything escalates to the CEO, the model is broken.
• Do our performance management systems incentivise the right behaviours? If your KPIs reward siloed performance, you will get siloed behaviour — regardless of what your values statement says.

The operating model is the bridge between the CEO's strategy and the organisation's daily behaviour. If the bridge is broken, the strategy never arrives.

The CEO's Role in the Redesign

At Loop Consulting Group, we advise CEOs to view the operating model as the bridge between their strategy and their people. The CEO's role in the redesign is not to design the model — it is to mandate the process, protect it from political resistance, and model the new behaviours from the top.

The most common reason operating model redesigns fail is not a flawed design — it is a CEO who delegates the process and then allows department heads to water it down through political resistance. The CEO must be the champion, not just the sponsor.