BusinessModelsandOperatingModels

(Thisreadingisassembledfromblogsatashridgeonoperatingmodels.com)

Whatisthedifferencebetweenabusinessmodelandanoperatingmodelandwho
cares?First,Idontthinkthatitmattershowyoudefinetermslikebusinessmodelor
operatingmodelorbusinessarchitecture.Butitdoeshelptobeconsistent.Inthisblog
Iwilloffersomedefinitions,notbecauseIthinktheyaremorerightthanother
definitionsbutbecause,inordertodevelopdefinitions,youneedtothinkthroughall
themovingparts.
Formeabusinessmodelisthelargerconcept.Anoperatingmodelisapartofa
businessmodel.Anoperatingmodelistheengineattheheartofthebusinessmodel
thathelpsmakethebusinessmodelwork.
Abusinessmodeldefinesthefollowing
thestakeholderswithwhomtheorganisationwillinteract
theofferorpromisethattheorganisationismakingtoeachstakeholdersegment
(customers,employees,investors,suppliers,etcbothinternalandexternal)
thecontributionthateachstakeholdersegmentisexpectedtomake(workfrom
employees,moneyfromcustomers,etc)
theresultingfinancialmodels(incomestatementandbalancesheet)takingaccount
ofsizeandgrowthambitions
theoperatingmodelthatmakesitpossiblefortheorganisationtointeract
effectivelywithitsstakeholders
Anoperatingmodeldefines
thecoreworkprocessesthatareneededtocreateanddelivervaluetoeach
stakeholdergroup
theequipmentandtechnologyneededtoexecutethesecoreprocesses
theinformationsystemsneededtosupportthesecoreprocesses
otherprocessesneededtosupportthecoreprocesses,suchasfinancialprocessesor
HRprocessesorgovernanceprocesses
thesuppliersandsupplieragreementsneededtosupporttheprocesses
thepeopleneededtodothework
theorganisationstructure,decisionrights,incentivesandaccountabilitiesandculture
neededtogovern,motivateandsupportthepeople
thelocations,buildingsandambiancewherethecoreandsupportprocesseswillbe
executed
SomepeopleusetheshorthandofPeople,ProcessandTechnologytodescribean
operatingmodel.MyownshorthandisPILOSProcessandequipment,Information
andinformationsystems,Locationandproperty,Organisation,peopleand
governance,Suppliersandbusinesspartners.

MoreonBusinessModelsandOperatingModels
IrecentlycameacrossDeloittesframeworkforbusinessmodelsandoperating
models(seeexhibitbelow).Iwasquitetakenbytheframeworkandbegantothink
aboutwhatitismissingandwhyorwhethermyPILOSframeworkisbetter.Itis
alwaysgoodtokeepchallenginganyframeworkyouusebecauseitcanbecomea
toxicinfluenceonyourworkifitoverlookssomethingorbiasesyourthinking.
ThefirstobservationisthatDeloitteusesthetermbusinessmodeltocoveronlythe
frontendthetargetcustomers,thechannelsandtheproductandservicevalue
propositionswhereasIusethetermbusinessmodeltocoverthewholesubject.For
me,thetermbusinessmodelisthebigtermlikestrategyeverythingelseisa
subsetofbusinessmodel.

However,DeloittesapproachissimilartotheapproachinEnterpriseArchitecture.
ThetermBusinessArchitecturereferstothefrontendofEnterpriseArchitecture.
OthercomponentsofEnterpriseArchitectureareTechnologyArchitecture,
InformationArchitectureandApplicationsArchitecture.IthinkBusiness
Architecturealsoincludesprocessarchitecturesoitisnotexactlythesamedefinition
asDeloitte.
AnotherdifferenceisthatDeloittedoesnotincludepeopleorpeoplepolicieswithin
itsdefinitionofoperatingmodel.Deloittehasaseparateconcept:PeopleModel.At
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onelevelIlikethisideabecauseIthinkthereareoftensomereallyinteresting
opportunitiesthatcomefromrethinkingthepeoplemodel.Forexample,oneIT
servicescompanysetupitsoperatingmodeltoattractemployeeswhowerewomen
workingfromhome.Thecompanyspottedthatthereisalotofunderutilisedtalent
inthispeoplepoolanddesignedabusinesstotapintoit.InthesamewayEden
McCallumdevelopedadifferentkindofconsultingcompanyoutoftheobservation
thattherearelotsofcapablepeoplewithportfoliocareers.MarkWarnerhasbuilta
businessmodelaroundgapyearstudents.
Atanotherlevel,thisseparationofpeoplemodelfromorganisationdesignfeelsodd
tome.Idonotbelievethatorganisationdesignshouldbedonewithouttaking
accountoftheavailablepeople.Inotherwordsthedesignwillchangedependingon
thepeopleyouhave,particularlyatseniorlevels.Sopeopleandorganisationare
hardtothinkaboutseparately.Hence,Iincludebothaspartofmyconceptof
operatingmodelalthoughIliketoencouragesomeseparatefocusedthinkingabout
thepeopledimension.
Deloittesframeworkisalsomissingsomethingsthatsurpriseme.Itdoesnot
includesuppliersandbusinesspartnersformeavitalingredienttotheoperating
model.Itdoesnotincludeintangibles,likebrandandIP;whichformearealso
important(butIdonothaveaspecialplacefortheminthePILOSmodeleither).It
doesnotincludelocation,anothersignificantpartofthedesignchallengeinmy
opinion.Although,inDeloittesframework,locationmaybeasubsetofphysical
assets.PossiblyDeloittealsoincludesbrandandIPunderphysicalassets.
Finally,Deloittesframeworkdoesnotincludethefinancialmodel(nordoesthe
PILOSframework!).ThismaybebecauseDeloittes,beinganaccountingfirm,see
thefinancialaspectoftheoperatingmodelasanintegratedpartofalltheother
choicesandhenceallpervasive.However,inmyexperienceitishelpfultodosome
designworkonthefinancialmodelasaseparatestep.Whataretheratiosgoingto
looklike?And,howdotheratiosworksothatthereisagoodprofitmarginanda
goodreturnoninvestedcapital?

The Open Groups Business Reference Model

IhavejustcomeacrosstheOpenGroupsnewwhitepaperWorldClassEA:
BusinessReferenceModel.EAstandsforEnterpriseArchitecture.
Ihavenotbeenabletoextractthevisualintheirpapertosharewithyou,soIwilltry
toexplainwhatthisisaboutandgivesomecomments.Thefollowingistheirtext
TheBRM(BusinessReferenceModel)isintendedtofacilitatedescriptionofa
businessmodelthroughfiveperspectives:

TheEnvironmentperspectiveaddressesthecontextwithinwhichanorganization
mustoperate.Itdescribestheexternalfactors,suchasthecompetitors,regulation,and
customersforanorganization,inadditiontotheoverallstrategypossessedbythe
organizationformarketpositioning.Thisperspectiveisintendedtodescribewhyan
organizationismotivatedtoundertakeparticularcoursesofaction.
TheValuePropositionperspectivedescribestheofferingproducedbythe
organizationintermsofproducts,services,brand,andshareholdervalue.This
perspectiveisintendedtodescribewhatimpactanorganizationwishestogenerate
andhowthatwillgeneratevalueforstakeholders.
TheOperatingModelperspectivedescribestheresourcesatthedisposalofthe
organizationthatwillbedeployedtogeneratethevalueproposition.Thisperspective
isintendedtodescribehowanorganizationwillbeabletodeliveronitsvalue
proposition.Capabilitiescanbethoughtofascombinationsofpeople,process,
information,andtechnologythatcanbeinternallyorexternallysourced.
TheRiskperspectiveidentifiestheuncertaintiesthatmaysurroundanorganization
initsdeliveryofthevalueproposition.Thisperspectiveisintendedtodescribethe
threatsthatfaceanorganizationfromwithinandwithout.
TheComplianceperspectiverepresentsthesetofcriteriathattheorganizationmust
adheretoinordertoassurethatthevaluepropositionisdeliveredusinganacceptable
standardofbusinesspractice.Thisperspectiveisintendedtodescribetheconstraints
thatpreventanorganizationfromactinginnegative,destructive,orinappropriate
waysandthecorrespondingopportunitiesthatcanbeexploitedfromadifferentiated
complianceposition.
Thevisualisfiveboxeswitharrowsbetweenthem.Theoperatingmodelboxisinthe
middle.Eachofthefiveboxescontainmoreboxes.Theoperatingmodelbox,for
example,hassixboxesinitvaluechain,capabilities,governance,partners&
ecosystem,financeandassets.ComparethistomyPILOSmodel(processes,
informationsystems,locationsandbuildings,organisationandpeople,suppliersand
businesspartners)andyougetsomedifferences.TheOpenGroupsmodelgetsat
processesthroughvaluechain,informationandorganisationandmoredetailed
processesarecontainedincapabilities.Locationsandbuildingsmaycomeunder
assets.Ecosystemisaninterestingdescriptor,buthassomeoverlapwith
suppliersandbusinesspartners.Financeformeistheresultoftheoperatingmodel
andthevaluepropositions,soisbetterconsideredoutsidetheoperatingmodel
concept.GovernanceisaseparateboxintheEAframework,butformeispartof
organisationandpeople.
SotheBusinessReferenceModelisanotherattempttodefinewhatismeantbythe
termsbusinessmodelandoperatingmodel.
Thereareacoupleofotherelementsherethatareworthyofcommenttherisk
perspectiveandthecomplianceperspective.Theriskperspectiveincludesfourboxes
financial,operational,strategicandcontrols.Itisnotcleartomehowthisoverlaps
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withorisseparatefromgovernancewithintheoperatingmodelbox.Riskis
important.Operatingmodelsdealwithriskbycontrollingsomedecisionsand
imposingpoliciesandconstraints.FrommyperspectiveRiskisasubsetof
governance.
Compliancecontainsfiveboxescommercial,legal&regulatory,quality,safetyand
socialresponsibility.Interestinglyethicalrisk/compliance(gettingpeopleto
behavewithintegrityandavoidingthereputationdamagethatcanbecausedby
sexualharassmentorinappropriatesourcing)doesnotappearineitherlist.SinceI
havejustbeeninvolvedinsomeresearchonTonefromtheTop,Iamrather
sensitivetothiscomplianceandriskissue.Italsodemonstratesthatthereisagood
dealofoverlapbetweencomplianceandrisk.Therealsoseemstobesomeoverlap
betweenenvironmentandthesetwo,sincethelawispartoftheenvironment.
Havingnibbledawayatthefiveperspectivesview,Ido,however,thinkthattheOpen
Groupmaybesurfacingsomeperspectivesthatgettoolittleattentioninnormal
operatingmodelwork.Somythoughtisthiscomplianceissuesshouldsurface
whenyoutakeafullstakeholderviewofthebusiness.Complianceisaboutlivingby
rulessetbystakeholders.Infactatypicalvaluepropositionbetweenacompanyand
societyisthatthecompanywillbecompliantwiththemeaningofthelaw,notjustthe
letter,andwithnormalgoodpractice:thisispartofgettingalicensetooperate.
Riskisaboutuncertainties.Maybeanoperatingmodelneedstoberisktested:
definesometypicaluncertainties,considerwhattherangeofpossibilitiesisoneach,
andseeiftheoperatingmodelstillworksattheextremesoftheseuncertainties.

Operating Model Diagrammes

Notmanypeoplewritesimplyaboutasubjectlikeoperatingmodels.SoIam
reproducinghereablogbyJonathanHammondofKnadel.Jonathandoesagreatjob
ofdemystifyingthetaskofgeneratingagooddiagramofyouroperatingmodelor
TOM.ThankyouJonathan,apologiesforafewsmalledits.Unfortunatelyhedoes
notprovideanyexamplesmaybeinhisnextblog.
Theobjectiveofdocumentingtheoperatingmodelistocommunicatehowthe
businessworks,orwillwork,bothoperationallyandtechnically.Agoodoperating
modeldiagramwillalsoservetoidentifyoperationalbottlenecks;uncover
responsibilitygapsorrisks;orhighlightfragmentationofdatamanagement,systems
orfunctions.
ManyofKnadelsprojectsinvolvedocumentingabusinesssoperatingmodel;
typicallythetargetoperatingmodel(TOM),normallythecurrentmodeland
frequentlyboth,withanumberofstagesinbetween.Invariablywetendtouseour
ownstandardsfordocumentingmodelsandovertheyearsourpresentationhas
evolvedandmatured.

However,wedothiswithoneeyeonpotentialmodellingstandardsandIveoften
trawledtheinternettofindadefinitionofanoperatingmodeldiagram,andhave
regularlybeendisappointed(MetooJonathan!).Ifindmyselfinspectingexample
diagramsthatfallintooneoftwocamps;
1. extremelyhighleveldiagramswheretheinformationcontainedwithinthe
diagram(usuallyafunctionaldecomposition)couldequallyapplytoany
businessinthatmarketsegment,or
2. highlyspecialisedenterprisearchitecturediagrammingtechniquessuchas
TOGAF,ARISorZachman;orBPMNforbusinessprocessmodelling.
Whilstthesestandardsworkwellfortheirintendedframeofreferencee.g.atechnical
architectureorabusinessprocesshierarchy,Ibelievetherestillremainsagapin
articulatingtheinterrelationshipbetweenbusinessfunctions,organisationaldesign,
technicalarchitectureanddatamanagement.Itisthisinterrelationshipthatstandard
diagramsseemtomiss.Inacompany,functionaldecompositions,organisational
chartsandsystemsarchitecturesoftenaboundbutrarelysharethesameunderlying
modelorterminologyorsupportforeachother.(ThisthoughtisthereasonthatI
launchedtheDesigningOperatingModelsworkshop!)
Unfortunatelynosinglediagramcancommunicatethefullcomplexityofanoperating
model.Ourapproachistoprovideasuiteofrelateddiagramsusuallyaugmentingpre
existingorganisationalchartsandsystemsarchitecturediagrams.Thesediagrams
answeranumberofquestionsusingthesamelanguageandunderlyingmodel.

Whoisresponsibleforwhat[function]?ThisistypicallyaFunctional
Responsibilitydiagram.AFunctionalResponsibilitydiagramapportionsa
businesssfunctionsandactivitieseithertointernalparties(e.g.departments)
ortoexternalproviders.Itsimportanttorealisethatinsuchadiagram
functionsmaybesplit/duplicatedandthusscopeofresponsibilitymustalsobe
represented.Outliningfunctionalresponsibilityisparticularlyusefulwhen
measuredagainstaCapabilityMapi.e.whoiscapableofundertaking
functionsandwhatstheircapacitytodoso.Insophisticatedcasesfunctional
responsibilitydiagramshaveatemporalaspecti.e.whoisresponsiblefor
whatandwhen.(Jonathan,Ithinkyouaretalkinghearaboutsomethingthatis
amixbetweenanorganisationstructureandavaluechainmap?)

Whatfunctionsaresupportedbywhichsystems(andbyinferencewhich
functionsarenotsupported)?Intheabsenceofabettertermthisis
anOperatingDiagram.AnOperatingDiagramisusuallyfocusedona
distinctbusinesscycleoveranextendedperiod(e.g.atradingcycle,a
reportingcycleetc)andcoversallthefunctionsinvolved,thesystemsthat
supporteachfunction,andthedataused.Thisisclearlyacomplicateddiagram
andmustbetargetedtomaintainlegibility.

Whereisdatamastered,managedanddistributed?Mentiondatadiagrams
andthisusuallyconjuresupimagesoftechnicaldatabasediagrams.These
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modellinglanguagesshowhowdataisstructuredwithinasystemandaretoo
lowlevelforoperatingmodels.Weendeavourtoshowhowdataissourced,
managedanddistributedacrosssystems.WetypicallyrefertothisastheData
Managementdiagram.Stylisticallyitiscloselyrelatedtoasystems
architecturediagrambutextendstofunctionsnotsupportedbyautomation.
WealsoshowdataflowsonOperatingdiagrams.
ThesearebutafewofthediagramsthatweuseandIfearImaybeleavingyouwitha
whettedappetite,unsatisfiedthatIhavealludedtodiagrammingmethodswithout
sharingthem(YesJonathanwhichiswhyIhaveaskedyoutocomeandspeakon
thecourse!)Forthetimebeingthemessageisifyoureinterestedthengetintouch.
Otherwiseitswatchthisspaceformoreinformationaswellsharemoreinthe
future.
WhileIdontthinkthatJonathansthreetypesofdiagramscoverthefullwaterfront
whataboutgeographicmaps,whataboutstakeholdermaps,whataboutprocess
hierarchies,etcIlikethehumbleyetpracticaltone.

BusinessModelsandBusinessArchitecture
InarecentLinkedIndiscussionwithintheLinkedIngroupOperatingModelsthere
hasbeenagoodthreadaboutwaystodrawoperatingmodels,methodsusedtodraw
operatingmodelsandthedefinitionofwhatisanoperatingmodel.Irecommendthe
thread.
InthisblogIwanttoshareoneresponsetoaproposalImadethatweinterpretthe
termBusinessArchitectureasmeaningthesameasthetermBusinessModel.Inmy
understanding,bothtermsincludeasoneoftheirelements,theoperatingmodel.
ThisresponsefromSteveKerzmanprovidesalucidalternativeview.Thankyou
Steve:asalwaysapologiesfortheedits.
IdontagreewithyouAndrew.IwouldarguethatBusinessModelandBusiness
Architecturearetwodifferentthings,althoughIhaveseensomepeopleincludethe
formerunderthelatter.
MyexperienceofthetermBusinessModelisthatitismostoftenusedtodescribethe
strategyforhowabusinesswillmakeitsmoney;e.g.wellsellrazorbladehandles
cheaplyatlittleprofitandthenmakeourmoneyonthesupplyofthebladestoour
captivemarketofcustomersowningourhandlesthatareincompatiblewithother
bladesuppliers.AssuchIseeitincludingastrategicdefinitionofthingslikemarkets,
customers,channels,products/services,pricing,etc.
Inmyversionofmodelhierarchies,abusinessarchitecturetakestheseandother
statementsofstrategicintentasinputsandinterpretsthemintermsofwhat
operationalbusinesscapabilitiesandvaluechain(s)willthereforeberequiredto
successfullyachievethevision/strategy.Businessarchitecturedealswithanumberof
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dimensionssuchasprocesses,metrics,organisationstructure,technology,etc.As
suchItendtoseebusinessarchitectureandtargetoperatingmodelaslargely
synonymousconcepts.althoughImsureothersmayseeitsomewhatdifferently.
[SoSteveissuggestingthatthetermbusinessarchitectureissimilartothetermtarget
operatingmodelandthatitsstartingpointisabusinessmodel/strategy.WhereasIsee
businessarchitecturecoveringbusinessmodelaswell...infactIconsideran
operatingmodeltobeoneofthepartsofabusinessmodel]
Continuingdownthehierarchy,Iseedetailedbusinessprocesses,waysofworking
andthelike,whichmayhavebeendefinedusingvaluestreammapping,BPRand
otheranalyticalassessmentandredesigntechniques,underpinnedbywhatever
managementphilosophyandtoolsetismostappropriateorpreferred(e.g.LeanSix
SigmaandDMAIC).Thesemostoftenareaccomplishedinaprogrammeofrelated
projects,eachofwhichwillimplementtheirportionoftherelevantprocedures,
systemsandotherartefacts,allofwhicharemadecoherentbytheoverarching
businessarchitectureortargetoperatingmodel.[Ithinkweagreeherethebroad
businessprocessesaredefinedusingtoolslikevaluestreammappingandthenthe
detailisworkedoutinprojectsthatshouldbepartofabiggerprogramme.Thebigger
programmeiskeptalignedbytheoverallmodel]
Thebusinessarchitectureinturnalsoprovidestheupwardsassurancethatthedelivery
ofprojectoutputswillcollectivelycorrespondandadduptotheoutcomesdefinedby
theoriginalstatement(s)ofstrategicintent.Theseareoftenexpressedaselementsina
businesscase.Theseelementsarepartofthetermsofreferenceofeachprojectas
administeredbytheprogramme.
Ialsoagreethatthetermarchitectureisgenerallypoorlyreceivedandunderstoodby
mostmanagementteammemberswhotendinstinctivelytoplaceanyoneusingitina
sortoftechienerdpigeonhole.Theirnextreactionthenoftenbeingtoshuntsaid
personofftotalktotheITguys..andthatlabellingunfortunatelyfrequentlyalso
hastherelatedeffectofreducingthatpersonsbusinesscredibilitywiththeboard
andotherseniormanagement.[Weagreehere,althoughthingsmaybeimproving]
WhatIlikeaboutthiscontributionisthatitillustrateswellthelanguageanddefinition
confusionthatwearein.Ithinkeveryoneistalkingaboutthesamestuff:
youhaveastrategythatfocusesyouoncertainproductsandmarketsandchannels
andpricingandvalueproposition;
todeliverthisstrategyyouneedcapabilities;
thecapabilitiesinvolveprocesses,people,technology,locations,buildings,
machinery,workingcapital,brands,suppliers,etc;
finallythepeoplerequireorganisingintostructures,governing,motivating,
performancemanagingandennoblingwithvalues.

Allofthisthinkingneedstobedoneatahighlevelandatincreasinglevelsofdetail
untilyougetdowntothelowestlevelofdetailsuchassentencesinjobdescriptionsor
codeinsoftwareapplicationsortermsincontractswithsuppliers.
Whatweallfinddifficultistodevelopasetofwordsfordescribingthisstuffthatis
notobscuredbyjargonorsoconstrainingthatitgetsinthewayofinnovationand
uniqueness.

MoreonBusinessModelsandBusinessArchitecture
IthoughtitwouldbehelpfultoaddsomeofthefurthercommentfromtheLinkedIn
threadondiagramsforoperatingmodels.Thisisforthoseinterestedintheissueof
language.
IntheLinkedIndiscussionIupgradedmysummaryofwhatwearetalkingaboutin
responsetosomechallengefromaparticipantcalledJD.Thesummarywasmy
attempttobejargonfree!
Ithinkeveryoneistalkingaboutthesamestuff:
*youhaveastrategythatfocusesyouoncertainproductsandmarketsandchannels
andpricingandvalueproposition(s);
*todeliverthisstrategyyouneedcapabilities(bitofajargonword);
*thecapabilitiesinvolveprocesses,people,technology,information,locations,
buildings,machinery,workingcapital,brands,suppliers,etc;
*manyoftheaboveelementsneedorganisingfurther.Soprocessesneedtobe
organisedintoahierarchyormodel,peopleneedtobeorganisedintostructures,
informatonneedstobeorganisedintodatamodels,etc.
Allofthisthinkingneedstobedoneatahighlevelandatincreasinglevelsofdetail
untilyougetdowntothelowestlevelofdetailsuchassentencesinjobdescriptionsor
codeinsoftwareapplicationsortermsincontractswithsuppliers.
FirstacommentbySteveKerzman(withaneditortwo),
HavingreadyourblogpostIwouldagreethatmostofusareprobablytalkingabout
(mostly)thesamestuffbutthatthedefinitions,namingconventionsandresultant
hierarchiesarefluidandcansoundquitedifferent.AsIguessmightbeexpectedina
fairlynascentdiscipline.
Butofcoursethatdoesusallnofavourswithclientswhojusthearcomplications
andconfusionsbetweenvariouspractitioners.Asnoncognoscenticlientsgenerally

dontseeitasallthesamestuffreally(whywouldthey)andcanbeforgivenfor
thinkingwearealljustspoutingmanagementtechnobabble.
FormypartIamreasonablyambivalentaboutwhetherbusinessmodelispartof
businessarchitecture(oroperatingmodel),orencompassesit,orissomething
else..theconceptsinvolvedjusthavetolivesomewhereinsomeformof
appropriateandcoherentframework.InmyearlierpostIwassimplyexpressingthe
splitIhavemostoftencomeacrossandhencehavecometousemyself(basedalsoon
myexperiencesofwhathasworkedbest)intheabsenceofanyfirmagreementon
termsanddefinitions.Aseverthemileageofothersmayvary:)
HereisacommentfromFionaLamb(Ihavecutoutbitsthatarenotfocusedonthe
mainthreadinthisblog)thanksFiona.
AgreewithSteveKthatImreasonablyambivalentaboutwhetherabusinessmodel
ispartofbusinessarchitecture(oroperatingmodel).Whatisappropriate&coherent
toaparticularorganisationiswhatisimportant.Itsnotnecessarilyvaluabletoagree
hierarchiesetctoalowlevelofdetailinadevelopingscience(&art!).However,Ido
notagreethatabusinessmodel=strategy.Thetimeframeoftheseviewsisusually
different,strategicpicturesbeinganevolvingthingwhereasabusinessmodelcanbe
veryexactindeed.Also,verymuchagreewithSteveKthateachconstructformspart
ofatranslationalbridgefortheorganisation(usuallydescribedasatransformation
programme).
Whatwearedoing,anyofusworkinginthissphere,ishelpingtostructurethe
thinkingoforganisationsatagivenpointintimebygivingtangibilitytothingswe
cantsee.TothatendIdontthinkweshouldgettoohunguponterminology&
maybeithelpstofocusonthegenericsofthescienceinthisfield&notforgetsome
artistryisneededtoo,tocreateascaffoldforeachorganisationtohelpthemtoclarify
theirthinkingatanyparticularpointintime.[Ilikethescaffoldterm!]
ThesecommentscontrastwithonebyJDBeckinghamwhoismuchmorecommitted
toaparticularsetofdefinitions(commentsinsquarebracketsareaddedbyme)
TherealityisthatBusinessModelsandOperatingModelsareintendedtoaddress
differentthingsandservedifferentpurposes.(Wecanavoidanywhosereality
questionsbyacceptingthatthereisaveryextensiveliteratureonbothbusinessand
operatingmodels.)[Yesbutitisveryextensivelyconfusing!]
Inmyopinion,thereisnopracticalwaythatanoperatingmodelcouldbeconsidereda
subsetofabusinessmodel.Thebestonecouldsayisthatanoperatingmodelisa
supersetofabusinessmodel.
BusinessmodelsdonotincludeactionableBusinessStrategyinanydetailedsense.
Andyet,itisthebusinessstrategywhichtheoperatingmodeloperationalizes.
Theoperatingmodelis,literally,amodelofhowweoperateandcontainsallthe
informationnecessarytodescribehowweoperate.Includedinthisinformation

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mightbe(inmyopinionshouldbe)linksbacktothebusinessstrategyindicating
whichaspectsofthestrategyareimplemented/supportedbythevariousoperating
modelcomponents.
ThenacalmingthoughtfromSteveKerzman
Itseemstomethatweallbroadlyunderstandwhatwearetryingtohelpourclients
doenablethemtoachievetheirdesiredoutcomesbyhelpingthemstructuretheir
thinkingandactionseffectively.Weprobablyalsohaveafairlycommon
understandingofalltheatomsinthemixproducts,channels,customers,
processes,metrics,systems,data,security,etcandtheplaceanduseofapproaches
likeleansixsigma,projectmanagement,etc.Wewouldprobablyalsoagreeonthe
broadsequenceofactivitiesinatransformationprogramme.
Wherethewheelsseemtocomeoffthewagon.andIadmitIamsimplifyingfor
clarityhere..ishowwealldefine,cluster,orderandarrangemetaconceptslike
operatingmodel,businessmodel,businesscapabilities,thevariousarchitecturesand
soforth.OramIbeingtoosimplistic?InasenseIguessIambroadlyagreeingwith
Andrew.Weallhaveasenseofwhatwearedoingasperhisbulletpoints..wejust
dontseemtoagreeonthetableseatingplan

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