Do you know what your operating model is costing you?

21 hours ago
3 min read

By Chris Carlisle

Most leadership teams can easily tell you what they spend on people, technology, and suppliers. What is much harder to calculate is how much of that investment is lost in the gap between strategic ambition and daily execution.

Individually, routine hand-offs, duplicated tasks, and management layers don't look like a crisis. But across an enterprise, they add up to a substantial drain on capacity and margin, leaving you paying for a team setup that isn't built to deliver your future strategy.

This is why operating model conversations need to be as much about strategic alignment and commercial value as structure.

Cost isn't always where you think it is

When organisations come under pressure to improve margin or accelerate growth, the conversation can move quickly towards headcount. It's understandable because people costs are visible, measurable, and, in many businesses, one of the largest areas of expenditure.

The danger is assuming that reducing headcount automatically addresses the reason the cost exists.

Removing people without changing how the work gets done simply leaves fewer people dealing with the same complexity. You might improve the P&L in the short term, but you haven't built a business capable of executing where you want to go next.

A better starting point is to understand what you're actually paying for.

How much capacity is being consumed by activities that don't support your strategic goals? Are expensive specialists spending enough of their time on work that requires their expertise? How much management capacity exists primarily to coordinate across organisational boundaries? Do you have the right capabilities in place to execute the strategy tomorrow?

These aren't simply organisation design questions. They're commercial and strategic ones.

A Target Operating Model isn't an org chart reshuffle

Moving boxes on a chart changes hierarchy, not execution performance. Real alignment between strategy and operations requires four connected elements:

· Functional architecture: Defining the core capabilities and outcomes your strategy demands.

· Aspirational design principles: Setting guardrails for how decisions get made and how teams execute.

· Target structure: Structuring teams explicitly around those capabilities and principles.

· Processes and behaviours: Embedding the day-to-day mechanisms, accountabilities, and mindsets that make new ways of working stick.

Put a number against the opportunity

One of the things we've learned from this work is how valuable it can be to quantify the opportunity before deciding what to change.

That doesn't mean pretending every inefficiency can be reduced to a perfectly accurate financial figure. Organisations are more complicated than that. It means creating enough evidence to understand the scale of the opportunity, where it sits, and how it impacts your team's ability to deliver.

For example, we worked with an enterprise where a 45-person back-office operation had evolved into nine sub-functions with 15 managers. Looking at the functional work rather than simply the headcount exposed how fragmented accountability had become from the strategic goals of the business. By redesigning the operation around three end-to-end teams, we helped deliver the required £500k EBITDA improvement while protecting service quality and restoring execution speed.

Cost reduction and value creation aren't opposites

A well-designed operating model isn't simply a leaner one.

Sometimes the opportunity is to remove unnecessary cost. Sometimes it's to release capacity so that people can focus on higher-value, strategic work. It might be improving the speed of decision-making, making better use of technology, or giving leaders more time to lead rather than coordinate.

The question isn't necessarily, “How much can we take out?”

A far more valuable question is: “Are we getting the right strategic value from the organisation and team we're already paying for?”

That changes the nature of the conversation. Instead of starting with a blanket savings target and working backwards, you can look at how the organisation creates value, where resources are being consumed, and whether your current team setup is built for where the business is going.

Make the invisible visible

Over time, every growing business accumulates operational drag. The real opportunity comes from making that hidden friction visible and using objective data to fix it.

When you ground your decisions in how work actually flows, an operating model stops being treated as a static organisational diagram and becomes what it should be: a direct driver of strategy execution and commercial performance.