Operating model basics: What you need to know [+ examples]

Having a business strategy isn’t enough. Understanding how a business operates is crucial to its success. 

An operating model is essentially the blueprint that outlines how a company delivers value to its customers and sustains its operations. Whether you’re a startup looking to establish a solid foundation or an established company aiming to optimise efficiency, a well-defined operating model can make all the difference.

In this post, we'll dive into what an operating model is, share some examples, and highlight the key differences between an operating model and a business strategy.

What is an operating model?

An operating model is a framework that defines how an organisation works in practice to deliver value to its customers, stakeholders, and shareholders. It goes beyond strategy to describe the underlying structure, processes, systems, and capabilities that keep the business running.

Think of it as the bridge between vision and execution. While your strategy outlines what you want to achieve, your operating model explains how you’ll get there—day in, day out.

A strong operating model answers fundamental questions:

• Who does what? This covers your organisational structure—how teams are set up, what roles exist, and how responsibilities are divided. It ensures people are clear on their purpose and how they contribute to broader outcomes.
• How is work done? These are your core processes, workflows, and operating rhythms. It includes how products are built, services are delivered, and internal functions (like HR or finance) operate. The goal is to drive consistency, efficiency, and clarity in how work gets done.
• What tools and resources support delivery? This includes the technology stack, infrastructure, and physical or digital resources that power operations. It ensures teams have the right platforms and support systems in place to work effectively.
• How is performance measured and managed? This covers metrics, KPIs, review cycles, and accountability structures. It ensures the business can track progress, make data-informed decisions, and continuously improve.

Whether you’re scaling a startup, re-aligning a team, or evolving with market shifts, your operating model ensures that every part of the business works together to support your goals and OKRs. It’s the blueprint that turns intent into impact.

Key components of an operating model

There’s no one-size-fits-all operating model—but the world’s leading consultancies and business schools agree on the core elements that make them effective. Whether you’re supporting rapid growth, navigating transformation, or driving day-to-day efficiency, a successful operating model aligns people, processes, and systems with strategy.

Some typical components that may be included in an operating model are:

• Processes: The series of actions or steps that enable the business to deliver its products or services. This includes core operational processes (e.g., manufacturing, logistics), support processes (e.g., HR, finance, IT), and management processes (e.g., planning, performance tracking).
• Organisation (people and structure): How the business is structured, including team design, reporting lines, roles, and responsibilities. It defines how people are grouped, how decisions are made, and how accountability flows across the organisation.
• Technology and infrastructure: The digital and physical systems that support day-to-day operations. This includes IT platforms, software tools, data architecture, facilities, equipment, and the broader infrastructure needed to run the business efficiently.
• Governance and decision-making: The mechanisms that ensure oversight, control, and alignment with strategic priorities. This includes decision rights, risk management, compliance frameworks, and the structures that guide how decisions are made across the business.
• Performance management: The tools and processes used to measure success, drive accountability, and enable continuous improvement. This includes KPIs, OKRs, reporting rhythms, and review cycles used to track progress and adjust course as needed.
• Culture and ways of working: The shared values, behaviours, and mindsets that influence how people collaborate, make decisions, and engage with work. Leadership style, communication norms, and organisational habits all contribute to shaping the culture.

The basic key components of an operating model represent the essential elements that define how an organisation delivers value and operates on a day-to-day basis. While different frameworks may expand on these, you can use these basic components to get you thinking about the right ideas.

Operating model frameworks from experts

Going deeper, you might want to look at trusted frameworks that real consultants and companies use in the real world. A quick Google search will tell you that hundreds of experts have their own tried and true methods on how an operating model should be designed. We’ll cover some of the most famous frameworks from McKinsey, Bain, PwC, KPMG, and others to break down the key components of an effective operating model in the following:

POLISM: A practical enterprise framework rooted in systems thinking

The POLISM model is a widely used enterprise architecture tool for operating model design. It helps organisations consider all the key enablers that support the delivery of value to customers—ensuring nothing critical is overlooked.

POLISM stands for:

• P – Processes: The end-to-end workflows that create and deliver value to customers
• O – Organisation: Structures, roles, people, and decision-making responsibilities
• L – Locations: Physical or virtual places where operations happen—offices, plants, service centres, remote teams
• I – Information: The systems, data flows, and reporting mechanisms that support decision-making and coordination
• S – Suppliers: External partners, vendors, and third-party providers that support delivery
• M – Management system: Governance, performance management, planning cycles, and the rhythm of how the business is run

This framework is particularly helpful when designing or evolving an operating model because it forces a holistic view—balancing strategy, structure, systems, and people.

Bain: Six building blocks for organisational alignment and agility

Bain & Company approaches operating model design by focusing on how organisations actually function and evolve. Their framework addresses both tangible structures and softer cultural elements that influence behaviour and performance.

The six key components are:

1. Leadership & culture – The values, norms, and behaviours that shape how people work
2. Management systems – Planning, budgeting, and performance tracking mechanisms
3. Structure, teams & accountabilities – Organisational hierarchy, team design, and role clarity
4. Talent engine – How people are hired, developed, and retained
5. Business processes – Core and enabling processes that deliver value to customers
6. Technology & data – The systems and infrastructure that enable execution and insight

Bain’s model is particularly useful for companies undergoing change or scaling operations, where clarity and agility are equally important.

McKinsey: The “fingerprint” of high-performing operating models

McKinsey’s operating model research is rooted in performance benchmarking. Their studies show that companies with mature operating models outperform peers in productivity, innovation, and execution.

Rather than a checklist, McKinsey’s “operating model fingerprint” includes a flexible set of 12 interlocking elements. While the full list varies by context, several stand out across top performers:

• Governance – Clear decision rights and accountability structures
• Culture – Organisational values that reinforce strategy and desired behaviours
• Workforce planning – Ensuring the right skills and capabilities are in place
• Metrics and incentives – Performance systems that drive the right outcomes

This model highlights that structure alone isn’t enough—an effective operating model also influences mindset, behaviour, and decision-making.

PwC Strategy&: Capabilities-led operating model design

Strategy&, the consulting arm of PwC, emphasises that not all business capabilities are created equal. Their approach begins with identifying what your company does better than anyone else—and then building the operating model to amplify those strengths.

Their framework focuses on:

• Defining differentiating capabilities – What your company must be great at to win
• Organising around those capabilities – Aligning teams, workflows, and systems accordingly
• Embedding governance and measurement – Ensuring decisions and incentives support strategic goals

This model is ideal for companies seeking to scale their competitive edge, rather than dilute it through generic structures or copy-paste models.

KPMG: A layered model for scalable transformation

KPMG’s “six-layer target operating model” is designed to help companies modernise and transform at scale. It expands the traditional people–process–technology triangle into a more complete structure suited to digital and service-led organisations.

The six layers include:

1. Process – The core activities that produce business outcomes
2. People – Skills, roles, and organisational structures
3. Service delivery – Where and how work is delivered (e.g. centralised vs decentralised)
4. Technology – Tools, platforms, and data infrastructure
5. Performance insights – Analytics, KPIs, and business intelligence
6. Governance – Oversight, risk management, and compliance frameworks

KPMG’s approach is especially helpful for organisations undergoing digital transformation or rolling out shared services, where coordination and measurement are critical.

Key takeaway

Across these frameworks, the message is clear: a strong operating model is more than just charts and job titles. It’s a cohesive system that connects strategy to execution, empowers people to perform, and gives leaders the visibility they need to adapt and grow. Whether you adopt POLIST, Bain’s six-block structure, or a layered model like KPMG’s, the most important thing is to ensure alignment—between what your business aims to achieve and how it’s set up to operate.

How to design your operating model

Understanding the components is one thing—putting them into action is another. Designing an operating model means translating your strategy into a practical, scalable system that drives performance across every part of the business.

Your operating model should reflect your organisation’s unique context—its goals, culture, customers, and capabilities—rather than copying a template. Here’s a step-by-step approach to help you build one that actually works.

1. Start with your strategy

Clarify your corporate level goals, value proposition, and the outcomes you want to achieve. Are you optimising for scale, innovation, customer intimacy, or efficiency? The answers will shape your design priorities.

2. Identify your differentiating capabilities

What must your business do exceptionally well to win in your market? These differentiating capabilities—like supply chain agility, customer support, or data-driven product development—should sit at the centre of your model.

3. Map the core components

Using the frameworks above (e.g. POLIST, Bain, KPMG), define how your business needs to operate across the key operating model components

• Key processes and workflows
• Organisation (People and structure)
• Technology and infrastructure
• Governance and decision rights
• Performance measurement and incentives
• Culture and ways of working

This becomes your operating model blueprint.

4. Tailor for your context

Factor in your size, maturity, industry, and customer complexity. A fast-growing startup needs speed and flexibility, while a global enterprise may need more structure and control. The best models strike a balance between clarity and adaptability.

5. Visualise and communicate

Operating models are easier to implement when teams can see how the pieces fit together. Use blueprints, organisation maps, scorecards, and workflows to bring the model to life and create alignment across departments.

6. Plan your transition

Rarely does a new operating model go live all at once. Build a roadmap for rolling it out, including change management, capability building, and governance updates. Secure buy-in early—especially from leadership—and set clear milestones to track adoption.

Difference between an operating model and business strategy

While the terms business strategy and operating model are often used together, they play very different roles in how a company functions. Strategy defines where you want to go; your operating model defines how your operations will get you there.

Understanding the distinction is critical. Strategy sets the direction and big-picture goals, while your operating model ensures the day-to-day operations are structured to deliver on that vision. Without a strong connection between strategy and operations, even the best ideas can struggle to turn into results.

Here’s how the two differ:

Operating model

An operating model is a detailed framework that describes how a business is structured and managed to deliver on its strategy. It includes the organisation’s structure, processes, systems, and capabilities that enable the execution of the business strategy. The main focus is on the operational aspects of the business, ensuring that the day-to-day activities align with the strategic objectives.

Business strategy

A business strategy outlines the long-term goals and the plan of action a company intends to follow to achieve these goals. It defines the direction the business will take to create value for customers and gain a competitive advantage in the market. It includes the vision and mission statements, target market identification, value proposition, competitive analysis, and key strategic initiatives. The primary focus is on setting objectives, determining the necessary resources, and planning how to achieve the desired market position.

How your operating model and business strategy come together

Your business strategy sets the direction—your operating model makes it real. The two must work hand in hand to ensure that high-level ambitions translate into meaningful outcomes across the organisation.

Here’s how they connect:

Alignment

The operating model must align with the business strategy to ensure the effective achievement of business objectives. It translates high-level vision into practical, actionable steps and processes.

Execution

While the business strategy defines "what" the business aims to achieve, the operating model defines "how" those aims will be achieved. The operating model provides the structure and mechanisms to execute the strategy.

Adaptation

A well-designed operating model can adapt to changes in strategy, ensuring that the business remains agile and responsive to market changes and new opportunities.

Operating model example: Unilever

Let’s take a look at a real-life company as an example. Unilever is a British-Dutch multinational company that produces a wide range of consumer goods, including food, beverages, cleaning agents, and personal care products. It’s one of the world’s largest fast-moving consumer goods (FMCG) companies.

Unilever is known for its commitment to sustainability and social responsibility. Its vision is to make sustainable living commonplace, and it has aligned much of its business strategy with environmental and social impact goals—ranging from reducing plastic waste to improving health and well-being for consumers around the world.

Example business strategy

Vision: To make sustainable living commonplace.

Goals: To grow the business while reducing environmental impact and increasing positive social impact.

Strategic initiatives:

• Develop and market sustainable products.
• Reduce waste and carbon emissions across the supply chain.
• Enhance social impact through community programmes and partnerships.

Example operating model

Organisational structure: A matrix structure that supports global operations while allowing for local market responsiveness.

Core processes:

• R&D: Focus on developing sustainable products and packaging.
• Manufacturing: Implementing eco-efficient production processes.
• Sales and distribution: Leveraging both traditional retail and digital channels to reach consumers.

Support processes: Strong emphasis on supply chain management, human resources for talent development, and financial management.

Governance: Decision-making processes that prioritise sustainability and ethical practices.

Technology and infrastructure: Investments in advanced manufacturing technologies and digital tools for supply chain optimisation.

Culture: A culture of sustainability, innovation, and social responsibility.

Performance management: KPIs focused on sustainability targets, market share growth, customer satisfaction, and social impact metrics.

How it all comes together for them

• Alignment: Unilever’s operating model is designed to support its strategic goals of sustainable growth and social impact. The focus on sustainable R&D and eco-efficient manufacturing aligns with the strategy of promoting sustainable living.
• Execution: The operating model enables Unilever to execute its strategy by ensuring that the organisational structure, processes, and systems are all geared towards sustainability and efficiency.
• Adaptation: As Unilever’s strategy evolves (e.g., introducing new sustainability initiatives), the operating model can adapt to support new strategic priorities, ensuring ongoing alignment and effectiveness.

Other operating model examples

Product-centric operating model

Example: Apple

Description: Focuses on designing, manufacturing, and selling innovative products. The company's core capabilities include product design, technology integration, and marketing.

Service-centric operating model

Example: Accenture

Description: Provides specialised services to clients, focusing on consulting, technology services, and outsourcing. Key capabilities include deep industry expertise and customer relationship management.

Platform business operating model

Example: Uber

Description: Connects service providers with customers through a digital platform. Core capabilities include technology development, user experience design, and network management.

Subscription-based operating model

Example: Netflix

Description: Offers access to a wide range of content (e.g., movies, TV shows) for a recurring subscription fee. Key capabilities include content acquisition, customer retention strategies, and data analytics.

Franchise operating model

Example: McDonald's

Description: Expands the business by allowing independent operators (franchisees) to run individual locations under the company's brand. Core capabilities include brand management, quality control, and franchisee support.

Direct-to-consumer (DTC) operating model

Example: Dollar Shave Club

Description: Sells grooming products directly to consumers, bypassing traditional retail channels. Key capabilities include e-commerce management, customer service, and supply chain efficiency.

Dropshipping operating model

Example: Wayfair (historically used supplier-fulfilled inventory for part of its assortment) or many Shopify-based retailers

Description: Sells products online without keeping stock on hand. Orders are passed to a third-party supplier, who fulfils them directly to the customer. A common variation is print-on-demand dropshipping, where sellers offer customised products such as print on demand airpod cases without buying inventory upfront. Key capabilities include supplier coordination, storefront optimisation, customer acquisition, and return handling.

Freemium operating model

Example: Spotify

Description: Offers a basic product or service for free while charging for premium features. Core capabilities include product development, user engagement, and conversion optimisation.

Marketplace operating model

Example: Amazon

Description: Operates a digital marketplace where third-party sellers can list and sell products. Key capabilities include logistics, customer service, and platform scalability.

Lean manufacturing operating model

Example: Toyota

Description: Focuses on minimising waste and maximising efficiency in the manufacturing process. Core capabilities include process improvement, quality control, and supply chain management.

Freight brokerage operating model

Example: DB Schenker

Description: A leading global logistics provider, offering comprehensive supply chain management and logistics services. Key capabilities include freight management and contract logistics.

The wrap

An operating model is essential for businesses to provide value to customers and achieve their strategic goals. By carefully considering all the different parts and aligning them with the overall business strategy, companies can establish a strong foundation for steady growth and success. A well-designed operating model ensures that every aspect of the business, from day-to-day operations to long-term planning, works together seamlessly.

Investing time and effort into developing a robust operating model can lead to improved performance, higher customer satisfaction, and increased profitability. It also enables businesses to be proactive rather than reactive, allowing them to anticipate challenges and seize opportunities as they arise.

Ultimately, a well-executed operating model is not just about maintaining the status quo; it's about driving continuous improvement and fostering a culture of excellence that supports long-term success.