Operating Model versus Business Model

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Business Models > Forum > Operating Model versus Business Model

Operating Model versus Business Model
Walters, ICT Consultant, United Kingdom, Member
How exactly does an operating model differ from a business model? What are the commonalities and differences? What are their key elements?

Differences Between an Operating Model and a Business Model
KATHRYN STEINER, MBA, Entrepreneur, United States, Member
This is a great question that is challenging to answer. Would like to know the answer as to the commonalities and differences and key elements..

Operating Model versus Business Model
Walters, ICT Consultant, United Kingdom, Member
@Kathryn Pawley Steiner: I understand the business model defines the value creation process (a good template for this seems to be Osterwalder's work). I think the operating model describes the way the BM is implemented, but I can't find a template for this.
Weill and Ross suggest the Operating Model is based on process/data standardisation and integration, but is there more to consider?
What about distribution of the functions and organisation structure for example, is that included too?

Business versus Operating Model
KATHRYN STEINER, MBA, Entrepreneur, United States, Member
@Walters: I would like to take the time to research as a potential business owner with a business plan which I believe is modelled after standard business plans presented in business schools. We didn't create an operating model per se, however, we did outline how we would structure our business, which is different than how it would operate in detail.
Focusing on how the business model is successfully implemented would be interesting to research in depth.

Differences Between an Execution Model and a Business Model
drs. ing. Peter Cleton, Management Consultant, Netherlands, Member
Maybe this is helpful. I distinguise between Business Model and Execution Model. (So no Operating model):
- The Business Model is the LOGIC a company earns money.
- The Execution Model is the execution of that logic.
I use the Extended Business and IT (BITA) Alignment model from Henderson and Venkatramen (more), defined as follows: 3x3 matrix:
- Columns named C1: Business, C2: IM, C3: IT.
- Rows named R1: Strategy, R2: Tactics, R3: Operations.
The Business Model can then be 'projected'/translated into execution, on all of these nine blocks. So lefttop will be the business strategy, midtop will be the Information Management strategy and righttop will be the IT strategy, and so on.
This way a single business logic acts as a shared view for all those people in the execution of the logic, being all those in each of the 3x3 matrix.
I hope this practical approach was helpful.

Using the 6 Pillars Test
Derek Lark, CEO, Australia, SIG Leader
I like the model @ing. Peter Cleton has suggested. Another one that I use is the 6 Pillars approach.
Organisation success can be roughly defined by these six pillars: Products, Markets, Technology, Culture, Processes, Resources.
Once you have settled on the changes/innovation to your business model to meet/set your strategic direction you can then determine the changes/innovation needed in each of these six pillars. This can then be used to set operational actions.

Felix Oppong-Menson, Accountant, Ghana, Member
I think the two basically describe the BUSINESS IDEA and WHAT WILL DRIVE THE IDEA for maximization of the vision.
Both 3x3 matrix and 6 pillars are absolutely clear on this.

Business Model versus Operational Model
Derek Lark, CEO, Australia, SIG Leader
Hi @Felix Oppong-Menson, the business model is a high level view of how you create, deliver and capture value.
Importantly it is high level to allow an understanding of how the 9 parts fit together and what impacts "what ifs" have on the model.
So yes, maximising the vision I agree with your proposition.
Regards, Derek .

Special Interest Group Leader
Derek Lark

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