An operating model integrates human and machine-driven processes and business strategies to create, manufacture, and sell products. It looks at the big picture and integrates all business units, processes, and operations into the enterprise architecture. Changes in the operating model can occur due to market changes or to achieve greater profitability. Managers should consider all aspects of current operations and may use a conceptual business model to predict an optimal operating model.
An operating model is an integration of all human and machine-driven processes and business strategies used to create, manufacture and sell products. Implement productive activities within a corporate structure created to make a profit. This is also referred to as enterprise architecture.
The operating model looks at the big picture, not the details. It is seen as a logical and intentional plan that takes into account all factors involved in production and operations. Operating models typically integrate all business units, processes, and operations into the enterprise architecture. Managers can then refer to that data in order to pinpoint areas that aren’t interacting as they should.
The business architecture encompasses all the activities that the firm does to make money. The means of production, the methods and technology used to produce goods and the way the production activity is organized compose these activities. In contrast, a business model details how business structures and processes interact with production activities. The operating model is not about business processes. Instead, examine the overall strategy used to implement the production scheme.
The details contained in the enterprise architecture model answer the questions essential to the productive operations of the company. In terms of organizational structure, the business model drives the process. A change in enterprise architecture can happen in two ways.
One occurs as a result of changes in the market. Management may come under pressure to restructure in order to maintain profitability. Changes in operating models are often implemented following a macro shift in the economic or competitive environment.
For example, a technological breakthrough in computer-aided design can put the company at a competitive disadvantage if it doesn’t adopt the new technology when its competitors do. This is also referred to as event-driven restructuring. The potential pitfall in implementing event-driven restructuring lies in the time pressure factor. This may allow insufficient time to strategically plan the renovation.
It is also important to take into account all processes and strategies in order to ensure proper integration. Sometimes a company chooses to change its operating model, with the goal of achieving greater profitability. Any changes to an operating model will usually be viewed holistically.
Managers will likely take into account all aspects of current operations. It is sometimes considered a conceptual business model. This model predicts what an optimal operating model would look like, if plans for it were implemented. A forecast helps managers understand the human infrastructure that currently drives the business model and what changes should be made.
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