The document discusses the importance of evolving operating models for achieving operational excellence amidst increasing complexity in business environments. It highlights the need for alignment between strategy, capabilities, and processes to overcome challenges and improve performance. Companies are urged to adapt their operating models to counteract inefficiencies and meet customer demands effectively.

1. Strategy • Execution • Performance
Creating Value in a Complex World
The Operating Model Imperative
for Operations Excellence
Process Excellence Week 2016
1

2. Wilson Perumal & Company, Inc.
Right
Offering
& Markets
Optimized
Operating
Model
Effective
Processes &
Procedures
Culture of
Operational
Discipline
Leading Performance
Sound
Strategy
Operational
Excellence
Achieving Success Means…

3. Wilson Perumal & Company, Inc.
“We may get from 1500 to 1400 through continuous
improvement, but we will need to think differently to
get to 1300”
-COO Energy Services

4. 4
Companies As Complex Systems
1. Non-linear reactions
3. Unknown interactions
2. Many feedback loops
4. Emerging properties

5. Many companies are passing a
complexity threshold
5
VALUE
COST & RISK
$
More and more
companies are
now here New Channels
& Formats
Expanded
Geographies
New
Acquisitions
Bigger
Portfolios
More
Customers
More
Regulation
Increasing
Competition
More
Suppliers &
Partners
Complexity is introduced in many ways
Complexity is the opposite of scale

6. Wilson Perumal & Company, Inc.
Assets
Suppliers/Partners
Governance Model
Technology Architecture
Processes Architecture
Operating Model
Execution
Strategy Foundation
Framework
Organization Structure
The foundation for your strategy,
the framework in which you operate

7. Wilson Perumal & Company, Inc.
“We have tried improving in a variety of ways, but
we are still struggling to deliver what our customer
(C-suite) wants”
-SVP FP&A Global Banking

8. Wilson Perumal & Company, Inc.
Operating models must evolve
Industry Characterization Strategic Orientation
RegulatedUnregulated
ExpandingShrinking
High BarriersLow Barriers
Innovation-drivenStable Technology
Capital IntensiveLabor Intensive
Many Customers &
Channels
Few Customers &
Channels
Product HeterogeneityProduct Homogeny
Regulation
Overall Market
Entry
Innovation
Assets
Markets
Variety
Environmental Context
Changes
Value Propositions
Change
Low-cost Provider
Providing customers products at the
lowest cost—focus on high-volume,
efficiency & repeatable processes
Technology Leader
Providing customers cutting edge,
advanced products—focus on research &
customer-driven product updates
Customer Service Focus
Providing customers personalized service
—focus on meeting the individual needs of
your customers
InternalExternal

9. Wilson Perumal & Company, Inc. 9
Financial Targets
Strategic Initiatives
Required Capabilities
Core End-to-End Processes
5% Annual Revenue Growth
New products
Effective product development
Concept-to-Launch
Operational metrics Time to Market / % Rev. new products
ExampleConvert strategy to capabilities
Expected targets Six months / 20%
 Design Parameters
 Ongoing measures of success
Operating models need to be aligned to
strategy and fit-for-purpose

10. Wilson Perumal & Company, Inc. 10
Trigger: Realizing Diseconomies of Scale
Economies of
scale
DIS-economies
of scale
S&P 500 companies with economies (or dis-economies) of scale
9 years financial data as of January 2015
n = 423
Almost half of S&P 500
companies are actually
becoming less efficient as
they grow
The bottom 20% of companies
(with the greatest DIS-economies
of scale) actually have the highest
revenue growth

11. Wilson Perumal & Company, Inc.
Trigger: Poor End-to-End Performance
Overlap
Latency
Ambiguity

12. Wilson Perumal & Company, Inc.
12
Trigger: Lack of Visibility &
Accountability
All
Customers
Sales &
Service
($$$)
Field
($$$)
Inside
($$)
Before After
Partner
($)
↓ Organization Complexity
↑ Process Complexity
↓ Transparency & Accountability
↙ Scalable growth
Commodity
& Quoted
Customers
High Value,
High Touch
Customers
Transactional
customers
& new
markets
↗ Organization Complexity
↓ Process Complexity
↑ Transparency & Accountability
↑ Scalable growth

13. Wilson Perumal & Company, Inc. 13
Operating Model Imperatives for
Achieving Operations Excellence
1. Understand current operating model and strategic direction
– Failure: Doing what you shouldn’t be doing
2. Address operating model issues during your journey
– Failure: An ineffective program at the end
3. Develop operating model competencies in your organization
– Failure: Watching transformation from the sidelines

14. Wilson Perumal & Company, Inc. 14
Thank You!
Questions?