The Digital Operating Model Design Checklist
By Konstantinos Varsos, Brian Prentice, and Neil McConachie
 // . //  Insights // The Digital Operating Model Design Checklist

For years, organizations have been investing substantial time and funds into simplifying, digitizing, and modernizing their legacy processes. Although many have developed in-house continuous improvements and process re-engineering capabilities, a lot of efforts have not brought the desired outcomes. Some have even served as stark learning experiences, resulting in the adoption of ill-fitting software-mandated workflows.

While the benefits of digitization can be multitude, the key question is how can businesses avoid a prolonged and costly journey toward achieving their transformation goals? Many of these failures can be traced back to the setup of the design process. For example, leaders may have their vision and objectives, but without a capable, trained, and well-equipped design team, the process will falter. Likewise, the right design objectives may have been defined, but can only be achieved if they have the buy-in from the team.

In our experience, successful digitization begins with investing time up front into planning and correctly setting up design processes. Below is our checklist of eight points to help organizations get this right. 

Exhibit 1: Checklist set up for the digital operating model design
  1. Establish a clear mandate and broad buy-in: Digitization will broadly impact the daily lives of employees, so to succeed it’s important to get backing from all stakeholders, starting at the top. Unequivocal advocacy from leadership goes hand-in-hand with a strong consent from end users, as they will be asked to contribute to and implement the changes at the tail end of this program. While the business plays an active role, any changes will need to have the IT organization’s support, partnership, and continuous involvement as it will increase adoption rates and lead to business-focused results
  2. Clarify the operating model design objectives: Start the process by clarifying the end-state vision and stating the overall organizational strategic intent and goals. The outcome of this process needs to definitively support the case for change with associated design principles, key performance indicators (KPIs), and technology constraints, for the end-state business process, articulated in a way that the design teams can understand and reference. This will provide the design teams with the appropriate mandate but also establish the guardrails to keep the design focused towards the desired outcome.
  3. Invest time in selecting your team: Selecting the right design team is the step that is most often undervalued. In addition to business leaders, end users, and representation from IT, diversify the design team with a balance of soft and hard skills. Ensure the team leader is a change-minded sponsor and executive team member, who understands the mandate and design objectives. Likewise, engaging both internal and external expertise will bring valuable know-how and benchmarking from the broader industry. For example, if you involved system vendors or suppliers in the design process, this could have benefits both from an expertise and sourcing perspectives. To demonstrate that people matter, and the organization is committed to change, make sure that every team member’s time is properly allocated to the design process and is not piled on top of their existing responsibilities.
  4. Assess the team’s readiness for change: Most of your employees will want to protect parts of their daily routines that are trouble-free and familiar, so don’t let this familiarity and comfort become an obstacle that stifles and compromises the design process. Instead, be prepared to start with a clean slate, challenging and disrupting engrained policies and procedures along the way if necessary. Furthermore, acknowledging upfront that the design might not make everyone happy. Fundamentally, there will always be competing priorities, methods, and approaches. Instead focus the team on reaching a positive organizational outcome.
  5. Build your competency as you go: Competency building is one of the most important aspect of projects and should be done continuously, as opposed to at the end of the design process. Include future process and technology owners and knowledge champions within the design team and continuously monitor their engagement and understanding. Ideally, they will be the ones creating the material and delivering the training to front-line employees. They will also likely evolve to become your change agents and provide the necessary fine-tuning to the processes once those have been tested and deployed.

    One organization invested heavily upfront to ensure their design teams were diverse both in terms of thinking and functional representation, and had received thorough training in advance. External subject matter experts were brought on as challengers, and the future-state business and technology owners were actively encouraged to shape the design, resulting in an increased sense of purpose and closer collaboration.
  6. Use documentation and business process mapping tools: Document and communicate all key design decisions as you go, including feedback, to create a repository for future reference. Post-implementation, most organizations tend to revisit some of the design decisions, and it is necessary to have the correct context and decisioning framework to understand the intent of the original design. This information becomes part of the organization’s intellectual capital and can be a useful starting point for future process re-engineering endeavors, or that can be repurposed to aid testing and create training materials. Likewise, leverage business process mapping tools to ensure standardization, support parallel development, enable automated workflows, and create training material.

    During a major transformation, one organization utilized a business process mapping tool to collaborate on capturing its current- and design its future-state processes. The tool allowed the teams to quickly extract the business gaps between the “as-is” and “to-be” processes and acted as a real-time repository and reference database for the enterprise. This broader access allowed employees, who were not part of the design teams, to provide valuable feedback and led to well-throughout and broadly-accepted designs.
  7. Break down the scope: When the scope of the end-to-end change is extensive and includes a variety of upstream and downstream functions and roles, it is best to break down these into manageable and self-contained sub-processes. At a high-level, the sub-processes connect into the backbone of the end-to-end operating model which provides a clear view on how things fit together. At the sub-process level, they provide the teams with a clear focus and mandate on what needs to be re-designed.
  8. Select your “digital” design philosophy: It is also important to choose how you will embed technology in your design philosophy. Will this be a technology constrained design where you start with the workflows supported by the current IT systems? Or will this be a process-led design, where technology will be employed to support a “desired” best-in-class process? In either case, be mindful of the constraints imposed by the supporting technology to avoid sub-optimizing but also any extensive technology customization.

    A cargo provider wanted to improve their overall asset availability and quickly realized that the task of optimizing the end-to-end operating model was too broad of a scope to tackle at once. They broke-down the operating model to a set of key-processes, excluded all functions with limited impact to the overall objectives, and designed a phased approach to methodically review and re-design each sub-component. Furthermore, with an objective of creating a best-in-class design, they opted to a process-led approach, creating a technology-unconstrained design with a focus on oriented the organization towards maximizing the asset availability.

A well-designed future

Coming out of Covid-19, firms now have a great opportunity to rewrite the rules in terms of shifting to a digital operating model, allowing them to optimize their workflows, harmonize operations across business units and geographies, or create the right process foundation on which to deploy modern IT systems. Transformation will always give us valuable, even harsh, lessons in how the organization really works, but taking the time to get the design right at the beginning could set you on a more resilient path.