Optimizing Your Organization's 'Fingerprint' A Holistic Systems Approach to Value Creation Based on McKinsey Report: "A New Operating Model for a New World"

 

Optimizing Your Organization's 'Fingerprint'

A Holistic Systems Approach to Value Creation

Based on McKinsey Report: "A New Operating Model for a New World"

 

Executive Summary

In an era where uncertainty has become the norm, even companies with superior strategies struggle to realize their full potential. McKinsey's latest research reveals that high-performing organizations experience a 30% gap between their strategy's potential and actual outcomes, primarily due to deficiencies in their operating models.

 

This report represents a significant evolution of the 7-S Framework（Strategy, Structure, Systems, Shared Values, Skills, Style, Staff）, which has guided organizational design for half a century. It introduces a new paradigm capable of responding to rapidly shifting geopolitical, technological, and societal trends: the "Organize to Value" system—a dynamic operating model design methodology comprising 12 interconnected elements.

We recommend that global leaders use this report to intentionally design their organization's unique "Operating Model Fingerprint" and dramatically enhance strategic execution capabilities.

 

1. Why Rethinking the Operating Model is Critical Now

The Strategy-to-Performance Gap

Many CEOs believe that "the right strategy is the key to success." Indeed, strategy provides the foundation for how organizations allocate scarce resources—people, capital, and materials. However, even the best strategy does not automatically yield strong performance.

To transform strategic potential into market-leading results, organizations need an effective operating model that is intentionally designed to deliver four outcomes that all organizations covet: Clarity, Speed, Skills, and Commitment.

 

The Challenge of Frequent Reorganizations

Leaders understand this importance, which is why they frequently attempt to adapt their operating models. Research shows that two-thirds of organizations have redesigned their operating models in the past two years, and half plan to embark on a redesign in the next two years.

These numbers highlight the ongoing challenge of creating high-functioning organizations that consistently generate value. Many redesigns fail to deliver expected outcomes because leaders focus primarily on "structure" while lacking a more comprehensive systems perspective.

 

2. Beyond the Traditional 7-S(Strategy, Structure, Systems, Shared Values, Skills, Style, Staff): Organizational Design as a Holistic System

 

Structure Alone is Insufficient

When rethinking their operating models, many leaders begin by focusing on organizational structure. This was a natural starting point for executives trained in traditional hierarchical structures and more stable environments. Structure provides visibility into how strategy is implemented, creates accountability, and establishes the basis for performance management.

However, structure alone does not create value. Structure is merely one of 12 interconnected design elements that together form an integrated system through which organizations truly generate value.

 

Responding to Environmental Change

Operating model design has evolved substantially over the past decade. Organizations have been forced to respond to fast-moving geopolitical, technological, and societal trends. A tailored operating model and the degree of transformation required for implementation depend partly on how organizations experience these trends and the design choices they imply.

McKinsey's research asked executives to identify the most significant opportunities and challenges affecting their business and organizational structure approach. The results revealed:

 

Greatest Opportunities (Technology-related):

• Scaling AI and automation
• Accelerating digitalization
• Expanding data value

Greatest Challenges:

• Increasing regulatory complexity (Geopolitical)
• Declining trust in business (Geopolitical)
• Shifting workforce demographics, particularly skills loss from aging in developed economies (Societal)

 

The Potential of Emerging Structures

Eighty-nine percent of surveyed organizations still primarily use traditional hierarchical structures (business unit/holding company, matrix management, or functional organization). The remaining 11% have adopted one of three emerging structures: product platform model, enterprise agile model, or decentralized network.

 

The crucial finding is that no single structure is universally effective. High-performing organizations can be found using any of these six structures. However, organizations using emerging structures tend to prioritize innovation, technology, and data, and demonstrate higher readiness to handle the impact of AI scaling and digitalization.

 

This research explains why many leaders focus on structural redesign while revealing a critical fact: structure alone does not determine whether an organization is prepared to fulfill its business strategy in the current volatile context.

 

3. The 12 Elements of the 'Organize to Value' System

The 12 Elements as a System

Decades of organizational experience and new data collected on high-performing operating models have yielded an updated system of 12 elements that represent the best of modern operating model design.

 

In addition to structure, these elements include: purpose, value agenda, ecosystem, leadership, governance, processes, technology, behaviors, rewards, footprint, and talent.

 

Strategic Foundation

1. Purpose

• Definition: How the organization defines its core reason for being
• Link to Performance: Clear purpose helps employees and stakeholders navigate uncertainty

2. Value Agenda

• Definition: How the organization creates value
• Link to Performance: Clarity on the value agenda enables optimal resource allocation

3. Structure

• Definition: How accountable units and mission teams are designed
• Link to Performance: Internal organization in the service of strategy enhances prioritization and accountability

External Collaboration

4. Ecosystem

• Definition: How the organization works with partners to create value
• Link to Performance: External partnerships create and share value beyond organizational boundaries and capabilities

Operating Mechanisms

5. Leadership

• Definition: How leaders make decisions and catalyze action
• Link to Performance: Roles and dominant approach to decision-making are clear and consistently implemented

6. Governance

• Definition: How to set priorities, allocate resources, and manage business performance
• Link to Performance: Enterprise resources are managed in a consistent, integrated way aligned with strategy

7. Processes

• Definition: How workflows are designed
• Link to Performance: Approach to value-creating activities is clear and consistent across the enterprise

8. Technology

• Definition: How digital, data, and AI enable value creation
• Link to Performance: Data and AI are deployed to increase productivity and drive new sources of value creation

Human Elements

9. Behaviors

• Definition: How culture is nurtured across the organization
• Link to Performance: A unique "secret sauce" creates value for employees and customers

10. Rewards

• Definition: How people are rewarded for performance
• Link to Performance: Rewards support desired behaviors and practices that increase value

11. Footprint

• Definition: How the organization locates and deploys talent
• Link to Performance: The right skills are available in the right locations aligned with business needs and priorities

12. Talent

• Definition: How the organization attracts and develops talent
• Link to Performance: The right capabilities are available to meet value creation goals

 

The Significance of the 'Fingerprint' Concept

These 12 elements function as a system that enables the organization to deliver on its strategy. By mapping current organizational choices across all 12 elements, leaders can better understand their organization's unique Operating Model Fingerprint and determine whether each choice aligns with strategic goals.

 

This system offers leaders two options:

1. Move to an adjacent fingerprint by refining only the elements most critical to strategy execution
2. Shift all 12 elements to create an entirely new fingerprint

Either choice can create a unique form of competitive advantage.

 

Case Study: The Airline Example

A top-performing airline illustrates how an intentionally designed Operating Model Fingerprint can support performance. The company focused on achieving two business outcomes: delivering an exceptional passenger experience and driving industry-leading efficiency and financial resilience.

To reach these goals, the airline made specific choices across each of the 12 elements:

• To support passenger experience, it anchors its purpose in organizational reputation and customer benefit
• To ensure the same high standards for every passenger, it maintains an integrated footprint approach with globally distributed workforce directly employed
• To spur efficiency and resilience, it leverages a traditional value chain ecosystem
• To make its matrix structure work, it emphasizes decisive leadership to ensure clarity and speed of decision-making
• Given the importance of costs and safety, it relies on control-oriented processes

These choices collectively formed the airline's unique Operating Model Fingerprint, helping leaders execute the strategy on passenger experience, efficiency, and financial resilience.

Results: Through intentional operating model design, the airline achieved higher performance compared to peers—better on-time performance, an EBITDA margin several percentage points higher than peers, and customer satisfaction scores above the sector average.

 

4. Future-Proofing the Operating Model: A Four-Step Approach

Why Redesigns Frequently Fail

Leaders frustrated with organizational performance often turn to redesigns. However, they again focus primarily on structure rather than the 12 elements and the system they form. This explains why redesigns happen so frequently—and why they tend to leave value on the table.

Four actions can help organizations avoid this constant churn.

Step 1: Document the Current Fingerprint

As noted earlier, the first step is understanding the organization's unique Operating Model Fingerprint—the combination of design choices made across all 12 elements.

By assessing the current fingerprint, leaders can identify what is working and what is misaligned with strategic goals.

Step 2: Compare Performance with Successful Fingerprints

Next, leaders can compare their fingerprint and outcomes to highly successful Operating Model Fingerprints across industries.

This comparison enables leaders to choose whether the best course is to move to an adjacent fingerprint by refining select elements, or to move to an entirely new fingerprint.

Step 3: Choose Between Refinement and Radical Redesign

Leadership teams establish and validate the value and risks of two options:

Option 1: Selective Evolution Make changes to only the most critical elements, retaining existing strengths while making incremental improvements. Lower risk but limited value creation potential.

Option 2: Fundamental Transformation Implement transformation across all 12 elements, moving to an entirely new fingerprint. Higher risk but potential for significantly higher value realization.

The decision should employ both top-down analysis (comparing outcomes with exemplar companies) and bottom-up analysis (setting specific targets for key capabilities) to create a robust business case for each option.

Step 4: Commit to Specific Performance Outcomes and Delivery Path

Equipped with a complete definition of the target Operating Model Fingerprint, the leadership team collaborates with a broader executive group (e.g., 50 executives), providing them the opportunity to refine implementation approaches and talent decisions.

Implementation encompasses fundamental changes to not only "hard" operating model elements such as structure, processes, and technology, but also "soft" elements including leadership style, culture (new roles, behaviors, and rewards), and talent development.

Additionally, comparing the organization's historical performance and future plans against benchmarks for digitally native companies enables commitment to significantly more ambitious goals—revenue growth, enhanced customer experience, and accelerated new product development.

After completing the transition, leaders continue to evaluate their new Operating Model Fingerprint, refining it as needed to align with strategic aspirations.

 

5. Expected Outcomes: Four Measurable Results

A fit-for-purpose operating model that maximizes value creation enables CEOs to achieve four measurable outcomes:

1. Clarity

Resources and accountabilities are aligned to strategy

In volatile times, it is essential that CEOs can see for themselves how resources and teams deployed throughout the organization reflect strategic priorities. By clarifying who is accountable for the value agenda, the entire organization can navigate change and replace bureaucratic layers with flexible teams that have a clear sense of purpose.

Creating ideal spans of control and flattening the organization are crucial. The value of clarity also extends beyond traditional organizational boundaries by enabling ecosystem development.

 

2. Speed

Workflows are fast, tech-enabled, and frictionless

Getting resource allocation and accountability right is important, but it is just the first step in translating strategy into performance. Executing a great strategy quickly is often difficult when leaders take too long to make decisions or poor governance prevents identification of the right decisions.

When work is done in silos with multiple hand-offs rather than streamlined workflows, it becomes hard to capture the value of emerging technologies, including generative AI. For leaders needing to move quickly, codifying decision rights and incrementally improving processes to automate repetitive work is no longer enough.

Instead, leaders must establish how to use technology to spur human creativity, including determining how people and AI work together.

 

3. Skills

A future-ready workforce is equipped to deliver the highest value

Geopolitics and new technologies are challenging long-held assumptions about how to source talent and whether to develop skills in-house or through partnerships. Leaders can go beyond static workforce planning by continually upgrading talent and reevaluating location and outsourcing decisions.

This allows organizations to keep pace with a dramatically changing labor market. With the wrong Operating Model Fingerprint, the risk is that the market for skills changes faster than the organization's ability to source, hire, develop, and deploy talent.

 

4. Commitment

Creating a performance-oriented culture

Strategy implementation, especially in a volatile era, requires a highly committed workforce and motivating culture. By creating a shared set of behaviors—a cultural "secret sauce"—organizations can move more quickly and engage colleagues effectively.

Reward systems can be designed to encourage these behaviors, support how decisions are made, and ensure the right work gets done. When employees adopt common behaviors, it creates a healthy organizational culture that acts as a multiplier effect on performance, further focusing resources and accelerating strategy.

 

Quantitative Impact

When organizations take this holistic approach to operating model redesign, what can they expect for their bottom line? McKinsey's research reveals that a great operating model can go a long way toward closing the strategy-to-performance gap.

Organizations that shifted from traditional structures to emerging structures and redesigned the other 11 elements of the system achieved results including:

• 10-30% improvement in customer satisfaction, operational performance, and efficiency
• 5-10x increase in speed of driving change and decision-making
• 10-30 percentage point increase in employee engagement

 

6. Practical Questions for Global Leaders: Five Critical Inquiries

Before embarking on an operating model redesign, CEOs should step back to identify the outcomes and risks of evolving or more radically redesigning their model.

Many leaders overestimate the results of changing individual elements, particularly structure, yet underestimate the degree of difficulty in implementing more holistic change. Therefore, a practical approach to refining and evolving the model as a system starts with asking five key questions:

Question 1: What is the gap between your value agenda and delivered performance?

Assess recent strategic plans, identify areas where goals were not fully achieved, and identify potential root causes for these gaps.

Question 2: What are the critical outcomes your operating model should generate to enable the value agenda?

Define desired future performance across the four outcomes, creating accountability for your most important initiatives and the specific performance metrics you must achieve.

Question 3: How does your operating model work as a system to create value?

Assess the 12 operating model elements to make design choices that work together and reinforce your ability to deliver business outcomes and strategy. This includes identifying obvious inconsistencies across the 12 elements and areas where poor execution has limited the effectiveness of design choices.

Question 4: What are the trade-offs between refining your current operating model and moving to a new design?

Evaluate the degree of change required to capture the value creation potential of a new model and determine the hard and soft factors that could prevent you from doing so effectively.

Question 5: How will leaders need to engage differently to enable the operating model at scale?

Take stock of how leaders (including middle managers) can lead in the ways required in the new operating model and demonstrate the mindset and behavior shifts necessary for the model to succeed.

 

Conclusion: Systems Perspective Creates Competitive Advantage

Organizations looking to make their operating models more effective can start by identifying the causes of their strategy-to-performance gap, followed by choosing whether to redesign several of the 12 elements or all of them.

Whatever choice they make, viewing the elements as a holistic system can help leaders meet strategic goals and bolster performance in a complex business environment.

In a world where uncertainty has become the norm, the ability to intentionally design and continuously evolve your organization's unique "Operating Model Fingerprint" becomes the source of sustainable competitive advantage for winning in global competition.

 

Source: McKinsey & Company, "A new operating model for a new world"
Target Audience: Global Leaders, Executive Leadership, Organizational Transformation Officers

Next Steps:

1. Map your organization's current Operating Model Fingerprint across the 12 elements
2. Quantify the strategy-to-performance gap and identify root causes
3. Compare your organization with industry leaders and exemplar companies across sectors
4. Work with your leadership team to decide between refinement and radical redesign
5. Commit to specific outcome metrics and an implementation roadmap

Ready to Optimize Your Organization's Operating Model Fingerprint?

In an era where uncertainty has become the norm, closing the strategy-to-performance gap is the most critical challenge for winning in global competition.

Keisho Global Risk Management offers comprehensive consulting services based on the 12-element system introduced in this report—from diagnosing your organization's current Operating Model Fingerprint to designing and implementing transformative change.

How We Can Support Your Organization

✓ Current State Assessment - Visualize your organization's fingerprint across all 12 elements
✓ Gap Analysis - Identify root causes of your strategy-to-performance gap
✓ Optimal Design - Design your target model based on industry leader benchmarking
✓ Transformation Execution - Develop and execute implementation roadmaps with your leadership team
✓ Continuous Evolution - Support ongoing model refinement in response to environmental changes

For CEOs and Leaders Facing These Challenges

• You have a strong strategy, but aren't achieving expected results
• You've undergone multiple reorganizations without fundamental change
• Digital transformation and AI adoption aren't progressing as planned
• You're experiencing challenges in global organizational operations
• Your organization struggles to respond to rapid environmental changes

Let's start by understanding your unique situation.

We offer a complimentary 30-minute consultation session for candid dialogue about your challenges and opportunities.

Contact Us

Email: info@keishogrm.com

Please include "Operating Model Assessment Inquiry" in your subject line and provide:

• Your name and title
• Company name and industry
• Current organizational challenges (brief description is fine)
• Preferred consultation format (online/in-person)

Our consulting team will respond within 48 hours.

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Let's co-create the organizational "fingerprint" that will help you win in global competition.

Keisho Global Risk Management
Your Partner in Organizational Excellence

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