If you can't "out-structure" poor execution, can you "out-execute" bad structure? By structure, we mean operating model; the foundation for achieving strategic objectives and the framework in which you execute.

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?