The phrase has been damaged by overuse. Almost any change a company is willing to pay a consultant to support gets called a transformation. We try to use the word more carefully than that, because the projects that genuinely change how a business operates are different in shape from the ones that get the same label.
What we see
Two things get sold as operating model transformation that are not.
The first is the reorg. A new CEO arrives, looks at the chart, decides there are too many direct reports, and redraws the boxes. Reporting lines change, a few executives leave, the same processes continue, and twelve months later the operating economics of the business are essentially unchanged. The chart has moved. The model has not.
The second is the ERP programme. The company has lived with a tangle of spreadsheets and legacy systems for a decade, decides to put in a new platform, and frames the implementation as a transformation. There is a steering committee, a workstream structure, change management, the usual artefacts. At the end of it, the systems are better — sometimes — but the way decisions are taken, the way work flows between functions, and the way the business actually makes money are all the same as they were before.
Both of these are useful things to do. Neither is what a transformation actually is.
What works
A real operating model transformation changes at least three of four things at once: how the business is structured, how decisions are taken, how work flows, and how performance is measured. Change one and you have an initiative. Change three or four and the way the business operates is genuinely different on the other side.
The transformations we see succeed tend to start somewhere unfashionable. Not with a target operating model deck, not with a benchmark exercise, but with a clear-eyed view of one or two operating economics that have to change for the business to be viable in five years. Margin compression in a core line. A working capital cycle that no longer fits the customer base. A cost-to-serve structure that has not adjusted to a shift in product mix.
From there the design works backwards. What would have to be true about how the business is organised, how it decides, how work moves, and what gets measured, for those operating economics to actually change. The structure follows the answer rather than leading it.
This is slower, less photogenic, and harder to sell internally. It is also the only version we have seen produce the result the word is supposed to describe.
