An operating model defines how an organization functions to deliver on its strategy and business model. It’s not the same as structure or process—it’s the full architecture of how decisions are made, how work flows, how people and systems interact, and how value actually gets delivered at the ground level. It connects purpose to execution. If the business model is about what value is being created and for whom, the operating model is how that value gets made real.
A well-formed operating model covers more than reporting lines or tool stacks. It spans roles, governance, culture, information flow, supplier relationships, delivery methods, shared services, risk controls, and measurement systems. In short, it’s how the whole thing runs.
Organizations can define operating models at multiple levels. The enterprise usually has one that reflects its global capabilities, shared services, and standards. But business units and portfolios may need their own variations—especially when they serve distinct markets, operate under different constraints, or deliver through different channels. A retail portfolio might run with store ops, regional supply chain, and customer service structures that differ completely from a digital-only portfolio in the same company. When strategy, product mix, or regulatory environments diverge, so do operating models.
2026 update: ITIL Strategy v5 includes an operating model consisting of: Organizations & People, Information & Technology, Partners & Suppliers, Value Streams & Processes, the Management System, and the Value Chain.
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Another useful tool is the Operating Model Canvas, created by Andrew Campbell, Mikel Gutierrez, and Mark Lancelott. Their approach invites you to define key choices across processes, organization, locations, information, suppliers, and management systems. The book of the same name lays out a clear visual method to describe, compare, and design operating models at the BU, portfolio, or enterprise level. Unlike abstract frameworks, the canvas forces clear articulation of how things actually work—making it easier to spot misalignment or inefficiency.
Operating models don’t always need replacement. Sometimes the move is improvement—fine-tuning flow, clarity, or integration. Other times, there’s a need for material change—introducing new roles, shifting accountability, updating governance, or adapting how teams interact with systems and suppliers. And in some cases, the operating model no longer fits at all. This often happens after strategy changes, acquisitions, rapid scaling, or changes in external conditions that expose deep friction between what the organization is trying to do and how it’s set up to operate. In those moments, the answer isn’t to push harder—it’s to redesign how the work actually runs.
Whether at the top of the organization or inside a single business unit, a well-understood operating model brings order, clarity, and adaptability. It gives structure to delivery, coherence to decision-making, and a shared basis for improvement. And when things shift—as they always do—it gives you a way to respond that strengthens the whole system, not just patches symptoms.