The Operating Model: Bridging the Gap Between Strategic Ambition and Measurable Results

Written by Thomas Flarup (CEO, HEIMDALL)

Every executive has experienced the frustration: a brilliant strategy that never quite delivers. The vision is clear, the market opportunity is real, but somewhere between the boardroom presentation and daily operations, momentum stalls. The missing link is almost always the operating model.
In this guide, you’ll learn how to design an operating model that turns strategic intent into measurable results. We’ll cover the essential components, walk through practical design steps, and explore how leading organizations are building adaptable models for the volatility that defines 2024-2026 and beyond.

The operating model is where <a href=”https://heimdallpartner.com/insights/commercial-excellence/”>commercial excellence</a> stops being a slide and starts being how the company runs.

What is an operating model?

An operating model is how an organization actually runs day to day to deliver on its strategy. It defines who does what, how decisions get made, which technology enables the work, and how processes connect from idea to customer outcome.

Think of it this way: your business strategy declares where you want to compete and why you’ll win. Your operating model determines how you’ll actually make it happen—every single day, across every team, in every location.

In the years since 2020, this distinction has become more critical than ever. COVID-19 disruptions, supply chain shocks, and rapid AI adoption have exposed a hard truth: organizations with explicit, well-designed operating models adapted in weeks, while those with implicit or outdated models struggled for months.

The stakes are significant. Consulting benchmarks consistently show that without an effective operating model, most organizations realize only 60-70% of their strategic potential. That gap represents billions in unrealized value for large enterprises and existential risk for smaller companies trying to scale.

Strategy → Operating Model → Execution → Results

This simple chain captures the relationship. Strategy sets direction. The operating model configures the organization to move in that direction. Execution happens through daily operations. Results follow—or don’t—based on how well these elements align.

The operating model is where strategy becomes real. It’s the bridge between ambition and action.

This article focuses on practical implications for leaders designing or refreshing operating models between 2024 and 2026. Whether you’re responding to a new CEO’s mandate, integrating an acquisition, or pivoting to a new business model, the principles here will help you build something that actually works.

Operating model vs. business model

The terms “business model” and “operating model” often get confused, but they describe fundamentally different things. Your business model explains how you create and capture value in the market. Your organization’s operating model explains how you organize internally to deliver that value.

Consider a SaaS company selling project management software on a subscription basis. The business model is straightforward: recurring revenue from monthly or annual subscriptions, with customer segments ranging from small teams to enterprise accounts.

But delivering on that business model requires an operating model that can support 24/7 cloud reliability, responsive customer support across North American and European time zones, continuous product development, and a sales motion that lands and expands accounts over time. The business model fits on a napkin. The operating model requires hundreds of decisions about people, processes, and technology.

Here’s what makes this distinction practical: two companies can have identical business models while running completely different operating models.

Element	Business Model	Operating Model
Revenue approach	Subscription pricing tiers	Billing systems, renewal processes, finance team structure
Customer segments	SMB, Mid-Market, Enterprise	Segmented sales teams, differentiated support levels, regional account management
Value proposition	“All-in-one project management”	Product development squads, feature prioritization governance, release management
Distribution	Direct sales + self-serve	Inside sales org, marketing automation stack, partner channel management

The practical implication: when business strategy changes, the operating model usually needs to change too.

Between 2021 and 2024, countless companies pivoted from one-time product sales to recurring revenue models. Many underestimated how much their operating model would need to evolve. Sales incentives designed for large upfront deals didn’t work for land-and-expand motions. Support organizations built for break-fix tickets couldn’t deliver the proactive success management that reduces churn. Finance teams struggled with revenue recognition rules they’d never encountered.

Strategy changes require operating model redesign. There’s no shortcut.

Core components of a modern operating model

Every organization creates a unique operating model fingerprint based on its history, strategy, and competitive context. But most effective operating models share common building blocks that work together as an integrated system.

The familiar people-process-technology framework still applies, but the digital and AI era demands we go further. Modern operating models must explicitly address data and governance, ecosystem relationships, and the cultural elements that determine whether the design actually works in practice.

Here are the core operating model elements:

• Guiding principles and governance – The rules that shape decision making and resolve trade-offs
• Organizational structure and ecosystem – How teams, partners, and external resources are organized
• Processes and ways of working – How work flows from idea to customer outcome
• Technology and data – The platforms, systems, and information architecture that enable operations
• People, skills, and culture – The capabilities and behaviors that bring the model to life
• Performance management – How you measure, review, and improve what matters

These components must work as a system. Organizations that pursue “technology-only” transformations or restructure without rethinking processes consistently underperform. The operating model is only as strong as its weakest integrated element.

Guiding principles and governance

Guiding principles are a concise set of rules that determine how decisions get made and how trade-offs get resolved when reasonable people disagree. They translate abstract values into operational guidance.

For example, a principle like “customer first” sounds generic until it’s made specific: “When a customer issue conflicts with an internal process, we default to resolving the customer issue and fixing the process afterward.” That’s actionable. Teams can apply it without escalating every decision.

In 2026, operating model principles must explicitly address topics that didn’t exist or mattered less a decade ago:

• Data privacy and compliance – How GDPR, CCPA, and emerging regulations shape data handling
• AI and automation usage – When and how AI can be used in customer-facing and internal decisions
• ESG commitments – How sustainability and social responsibility factor into operational choices
• Hybrid and remote work – How location flexibility interacts with collaboration requirements

Here are examples of principles from different industries:

• Global bank: “All customer data is treated as regulated data by default. When in doubt, escalate to the data office within 24 hours.”
• Direct-to-consumer brand: “We ship weekly. If a feature isn’t ready for this week’s release, it waits for next week rather than delaying the train.”
• Digital health startup: “Clinical decisions require human oversight. AI can recommend, but licensed clinicians approve.”

Governance provides the forums, cadence, and decision rights that ensure principles are applied consistently across the organization. This typically includes:

• Monthly portfolio reviews to assess progress against strategic priorities
• Quarterly architecture boards to maintain technology coherence
• Weekly leadership syncs to resolve cross-functional blockers
• Clear escalation paths for decisions that exceed team-level authority

Without governance mechanisms, principles become wall posters rather than operating reality.

Organizational structure and ecosystem

Organizational structure defines reporting lines, teams, and collaboration patterns across locations and time zones. But in 2024-2026, structure extends beyond the organization chart to include the ecosystem of partners, vendors, and external resources that contribute to value delivery.

Common structural archetypes include:

Archetype	Best suited for	Trade-offs
Functional	Specialized expertise, economies of scale	Slower cross-functional coordination
Product-based	Customer-centric delivery, end-to-end ownership	Potential duplication of capabilities
Geographic	Local market responsiveness, regulatory alignment	Fragmentation and inconsistency
Platform / hub-and-spoke	Reusable capabilities, balanced standardization and flexibility	Requires strong governance to avoid bottlenecks

Modern operating models increasingly incorporate ecosystem elements that extend beyond the org chart:

• Strategic technology partners (cloud providers, SaaS platforms)
• Outsourced operations (APAC contact centers, nearshore engineering hubs in Eastern Europe or Latin America)
• Gig and contract workers for specialized or variable-demand roles
• Distribution and fulfillment partners

Consider the contrast between two structural approaches for a consumer goods company:

Centralized European HQ model: All strategic decisions flow through headquarters. Regional teams execute with limited autonomy. This delivers consistency and control but can slow response to local market changes.

Regional mini-P&L model: North American, European, and Asian businesses operate as semi-independent units with their own P&Ls. This enables faster local adaptation but risks fragmentation and duplicated overhead.

Neither is inherently right. The choice depends on where competitive advantage comes from—global scale or local responsiveness—and the capabilities available at each level.

Processes and ways of working

Processes describe how work flows from idea to customer outcome. The most important shift since roughly 2018 has been the move from siloed departmental procedures to cross-functional, end-to-end process ownership.

Instead of optimizing “marketing’s part” and “sales’ part” and “operations’ part” separately, leading organizations now assign owners to entire value streams like order-to-cash, incident-to-resolution, or campaign-to-lead. This end-to-end view reveals handoff delays and misaligned incentives that departmental optimization misses.

For instance, end to end solutions:

Digital onboarding at a European bank (launched 2022): The bank redesigned its account opening process from a 7-day paper-based flow to a 15-minute digital journey. This required coordinating changes across marketing (lead capture), compliance (KYC checks), technology (identity verification APIs), and operations (exception handling). No single department could have delivered this alone.

B2B sales pipeline for account-based marketing: A software company restructured its sales process to align with account-based marketing principles. Marketing, sales development, field sales, and customer success now share a unified view of target accounts and coordinate touches rather than operating as separate funnels. Pipeline velocity improved 35% within 12 months.

Beyond formal processes, operating models define “ways of working”—the rituals and norms that shape daily collaboration:

• Agile ceremonies (standups, retrospectives, sprint planning)
• Cross-team rituals (weekly demos, monthly all-hands, quarterly planning)
• Escalation paths for blockers and decisions
• Communication norms (when to use async vs. synchronous channels)

Redesigning 3-5 core processes typically yields the largest performance uplift. Trying to map everything at once leads to analysis paralysis.

Start with the business processes that most directly affect customers or represent the largest sources of friction. Get those right before expanding scope.

Technology and data

In 2024-2026, technology and data are no longer back-office enablers. They’re central to operating model design, shaping what’s possible and constraining what’s practical.

Practical technology layers include:

• Core systems: ERP (SAP, Oracle, Workday), CRM (Salesforce, HubSpot), industry-specific platforms
• Cloud infrastructure: AWS, Azure, GCP—determining scalability, cost structure, and integration options
• Collaboration tools: Teams, Slack, Zoom—defining how distributed teams work together
• Analytics and AI platforms: Data warehouses, BI tools, machine learning infrastructure

Data architecture deserves equal attention. The ability to create a single customer view, maintain a data lakehouse for analytics, and govern master data effectively shapes what the operating model can achieve.

Consider this example: A specialty retailer spent 2019-2023 unifying inventory and point-of-sale data across 400+ locations. Previously, each store operated as an island—customers couldn’t check online if a product was available nearby, and stores couldn’t fulfill online orders from local inventory.

The unified data foundation enabled same-day delivery in major cities, curbside pickup, and ship-from-store capabilities. Comparable-store sales increased 12% in the first full year after launch. The technology investment was substantial, but the operating model transformation it enabled drove the business outcomes.

Technology choices must align with operating model principles. If your principles include “API first” or “low-code for internal tools,” those commitments shape which platforms you select and how you integrate them. And technology decisions must match the talent you can attract. Choosing cutting-edge tools that your teams can’t operate creates technical debt rather than capability.

People, skills, and culture

People bring the operating model to life. The most elegant design fails if roles, capabilities, and behaviors don’t match.

Since 2020, hybrid and remote work have fundamentally changed operating model options. Distributed teams enable access to global talent markets but require deliberate design for collaboration. Time zone coverage becomes an operating model input, not an afterthought.

Critical capability areas for 2026 include:

• Data literacy – Everyone needs basic skills to interpret data and use analytics tools
• Product management – Bridging customer needs, technology possibilities, and business outcomes
• DevOps and cloud engineering – Operating modern technology platforms
• Change management – Helping organizations adopt new ways of working
• Customer experience design – Understanding and improving end-to-end journeys

Culture is often described as “how things really get done”—the unwritten rules that shape behavior when no one’s watching. Consider the contrast:

Risk-averse legacy insurer: Decisions require multiple approval layers. Mistakes are career-limiting. Innovation happens slowly because failure isn’t tolerated.

Experimentation-driven fintech (launched 2017): Teams run A/B tests weekly. Failures are expected and learned from. Speed matters more than perfection.

Neither culture is inherently right, but each must match the operating model’s requirements. A highly regulated environment may genuinely need more controls. A fast-moving market may demand more experimentation.

Practical levers to shape culture include:

• Performance management – What you measure and reward signals what matters
• Leadership role modeling – How executives behave demonstrates real priorities
• Recognition systems – Public celebration of desired behaviors reinforces norms
• Physical and virtual environment – Space design and tool choices shape collaboration

How operating models enable strategy execution

Many strategies fail not because they’re wrong, but because the operating model is misaligned or outdated. The strategy-to-execution chain breaks when organizations attempt to run new plays using old infrastructure.

Here’s how the connection works in practice:

1. Define strategic outcomes – What must change? New markets, new products, new customer segments, improved margins?
2. Translate into operating model requirements – What capabilities, processes, and structures would enable those outcomes?
3. Identify gaps – Where does the current operating model fall short?
4. Redesign components – Make targeted changes to close gaps
5. Implement and iterate – Roll out changes, measure impact, adjust

Consider a practical example: In 2022, a B2B services company decided to pivot from project-based consulting to a digital subscription offering. The strategy was clear—recurring revenue, higher margins, greater scalability.

But execution required transforming the operating model:

• Sales incentives – Reps compensated on bookings needed retraining and new comp plans for recurring revenue
• Delivery structure – Custom project teams needed to become product teams maintaining a shared platform
• Support organization – Break-fix support needed to evolve into proactive customer success
• Billing and finance – One-time invoicing needed to become subscription management with usage tracking

The company underestimated the scope initially, treating the pivot as a “product launch” rather than an operating model transformation. After a difficult first year, they invested in redesigning each component. By 2024, subscription revenue represented 40% of total revenue and was growing at twice the rate of traditional services.

Strategy refresh cycles have shortened—often annual or rolling rather than every 3-5 years. Operating models must be designed for ongoing adaptation, not one-off redesigns. Build in mechanisms to detect when the model is falling out of alignment with strategy, and treat operating model updates as continuous rather than episodic.

Benefits of a well-designed operating model

When operating model elements align with strategy and with each other, the results compound. Organizations can expect improvements across multiple dimensions:

Speed and responsiveness

• Decision cycle times cut by 40-60%
• Time-to-market for new products reduced by 25-50%
• Faster response to market changes and competitive moves

Efficiency and cost

• Process lead times down 20-40%
• Reduced duplication of effort across the organization
• Lower overhead as a percentage of revenue

Customer outcomes

• NPS improvements of 10-20 points
• Higher customer retention and lifetime value
• More consistent experience across channels and touchpoints

Employee experience

• Clearer roles and decision rights reduce frustration
• Better tools and processes improve productivity
• Stronger connection between individual work and organizational performance

Risk and compliance

• Built-in controls reduce operational risk
• Clearer governance simplifies regulatory responses
• Faster detection and resolution of issues

Consider this example: A global logistics company embarked on an operating model transformation between 2020 and 2023. They consolidated fragmented regional operations, implemented a unified technology platform, and redesigned core processes around end-to-end visibility.

Results after three years:

• On-time delivery improved 18 percentage points
• Operating costs reduced 12% as a percentage of revenue
• Customer churn dropped by one-third
• Employee engagement scores increased significantly

These gains weren’t from a single initiative. They emerged from coherent design across structure, processes, technology, and governance. Isolated technology deployments or restructuring alone wouldn’t have produced comparable outcomes.

Benefits compound when components work together. Better clarity frees up time and capital to reinvest in sustainable growth and drive innovation.

Designing or redesigning an operating model

When leaders decide to refresh their operating model—whether triggered by a new CEO, M&A integration, or strategic shift—a structured approach increases the odds of success.

Here’s a practical roadmap in 5-7 stages:

1. Diagnose today’s reality

• Map the current operating model across all components
• Gather data on performance, bottlenecks, and friction points
• Interview frontline employees who understand real obstacles (not just executive perceptions)
• Artifacts: Current-state capability maps, process performance data, pain point inventory

2. Define future strategy and value agenda

• Clarify the strategic goals the new operating model must enable
• Identify the critical capabilities required for competitive advantage
• Establish priorities and trade-offs (e.g., speed vs. cost, standardization vs. flexibility)
• Artifacts: Strategic priorities document, capability requirements list, design principles

3. Design operating model options

• Generate 2-3 alternative designs for key components
• Evaluate options against strategic priorities and practical constraints
• Engage cross-functional leaders—not just strategy or HR—in design choices
• Artifacts: Operating model blueprints, option comparison matrices, org chart sketches

4. Test and prioritize

• Assess feasibility, cost, and risk of each option
• Identify dependencies and sequencing requirements
• Select the target model and define implementation phases
• Artifacts: Business case, risk assessment, phased implementation roadmap

5. Plan implementation

• Define detailed changes to structure, processes, technology, and governance
• Develop change management and communication plans
• Establish performance metrics and governance for the transition
• Artifacts: RACI matrices, process blueprints, location strategy, technology roadmaps

6. Execute and iterate

• Roll out changes in defined phases
• Monitor adoption and impact through agreed metrics
• Adjust based on feedback and observed results
• Artifacts: Progress dashboards, retrospective findings, updated playbooks

7. Embed and sustain

• Transition from “transformation” to “operating rhythm”
• Build mechanisms for continuous improvement
• Document the operating model for future reference and onboarding
• Artifacts: Operating model documentation, governance calendar, training materials

Throughout this process, involve frontline managers and employees. They understand where processes actually break down, where workarounds have emerged, and where policy and reality diverge. Executive-only design produces elegant models that don’t survive contact with operations, highlighting the importance of achieving commercial excellence in financial services.

Examples of operating models in different contexts

The “best” operating model is always context-dependent. Industry dynamics, organizational size, geography, and regulatory environment all shape what works. Here are illustrative examples from different domains:

Nonprofit scaling impact across cities Between 2019 and 2024, mid-sized nonprofits increasingly adopted shared services for finance, HR, and IT to reduce overhead while expanding program reach. One youth services organization serving 12 cities implemented a hub-and-spoke model: a central shared services team handles back-office functions while local program teams retain autonomy over service delivery. This freed up 15% of budget previously spent on duplicated administration for direct program investment.

B2B software company A 500-person enterprise software company organized around product squads, each owning a portion of the platform end-to-end. Engineering, product management, design, and customer success are embedded in each squad. A platform team provides shared infrastructure (authentication, data services, deployment pipelines) that squads consume via APIs. This structure enables rapid feature development while maintaining architectural coherence.

Healthcare provider network A regional health system operating 8 hospitals and 40+ clinics adopted a dual operating model. Clinical operations remain decentralized, with each facility’s leadership accountable for patient care. Support functions—revenue cycle, supply chain, IT, and human capital—are centralized to capture scale economies and ensure consistency. A governance layer coordinates capital allocation and strategic planning across the network.

Consumer goods manufacturer A European food company shifted from a country-by-country operating model to a regional structure between 2020 and 2023. Manufacturing consolidated into 4 hubs serving the continent. Commercial functions retained country-level presence but report into regional business units. Shared services for finance and procurement operate from a single location in Poland. This reduced organizational performance variation across markets and cut overhead by 8% of revenue.

Each example demonstrates how operating model choices flow from strategic priorities. There’s no universal template—only principles that must be adapted to context.

Leadership, people, and change in operating model transformations

Operating model changes are fundamentally people and leadership challenges, not just organizational charts or systems projects. The design work matters, but execution depends on human adoption.

Effective leadership during operating model transformation looks like:

• Visible sponsorship from the CEO and top team, demonstrating commitment through time investment and personal behavior change
• Shared design principles that leaders consistently reference in decisions and communications
• Willingness to change their own behaviors before asking the same of others—restructuring executive team operations if needed

People-related investments determine whether the new operating model takes hold:

• Strategic workforce planning – Understanding future capability needs and gaps
• Upskilling programs – Data and AI academies, product management training, change management certification (many organizations launched these between 2022 and 2026)
• Location and sourcing decisions – Thoughtful choices about where work happens and which capabilities to build vs. buy vs. partner

Change management deserves explicit attention and budget:

• Narrative and storytelling – Help people understand why the change matters and what’s in it for them
• Engaging middle managers – These influential leaders make or break adoption; equip them to lead their teams through transition
• Quick wins – Sequence visible improvements in the first 6-12 months to build momentum and credibility

Common failure patterns to avoid:

• Underestimating cultural resistance and treating it as something to “manage through”
• Cutting change management budget when the project runs long
• Treating the redesign as a one-off “project” rather than an ongoing capability
• Expecting technology deployments to drive behavior change without supporting interventions

Operating model transformation typically takes 18-36 months for full adoption. Leaders who expect faster results often declare premature victory, only to see the organization revert to old patterns.

Making your operating model adaptive and resilient

The volatility of 2020-2024 taught a clear lesson: operating models designed for stability struggle when conditions shift rapidly. The models that thrived were those built for adaptation.

As you design for 2025-2030, build in mechanisms for continuous improvement:

• Quarterly retrospectives – Regularly assess what’s working and what’s not
• Operating reviews – Monthly or quarterly sessions that examine performance data and identify adjustment opportunities
• Experimentation sandboxes – Safe spaces to test new processes or tools before broad rollout
• Feedback loops – Systematic collection of input from customers and employees

Resilience requires designing for disruption before it arrives:

• Supplier diversification – Avoid single points of failure in critical supply chains
• Remote-ready collaboration – Ensure teams can maintain productivity regardless of physical location
• Scenario-based capacity planning – Model how operations would respond to demand shocks, supply disruptions, or regulatory changes

Consider what enabled rapid adaptation in early 2020. A professional services firm that had already invested in cloud collaboration tools, documented its core processes, and trained leaders on remote management was able to shift to fully remote operations in under two weeks. Competitors who had deferred similar investments struggled for months.

That capability wasn’t luck. It was the result of prior operating model choices that prioritized flexibility alongside efficiency.

Your operating model shouldn’t be discovered by accident—it should be designed with intention.

As you finish reading this guide, consider your next step. Document your current operating model, even if it’s imperfect and incomplete. Identify the gaps between your organization’s strategy and your ability to execute. Pick one component—one process, one governance mechanism, one capability gap—and start there.

The companies that stay ahead through 2026 and beyond will be those that treat their operating model as a living system, continuously tested and refined. They won’t wait for the next disruption to force change. They’ll build the capacity to adapt before they need it.

Start today.

Contact HEIMDALL – Commercial Excellence Partner 

Written by Thomas Flarup (CEO, HEIMDALL)