Any building to survive big storms needs to have a good building foundation. The same is for any business that wants to survive any economy or competitors challenges - there should be a good foundation for execution.
Companies might have a great strategy in mind but don't have a good foundation. Then a strategy execution becomes a struggle. "A foundation for execution is the IT infrastructure and digitized business processes automating a company's core capabilities". Core capabilities are created by core business processes that company should own and do not outsource. Having a great foundation for execution increases company's agility, improves business discipline, and creates business value.
One of the first steps in building the effective foundations for execution is to define an operating model which will provide the best support for the company's strategy. Integrations and standardization are the two dimensions of the operating model. There are four operating models
1. Diversification
2. Coordination
3. Replication
4. Unification
The choice of the operating model will drive the level of the business unit autonomy. Each operating model provides a different way for the business growth:
- organic growth through expansion of the business or
- growth through a rip-and replace approach for acquisition.
Depends on the company, business units can apply different operating models to their activities to meet business objectives and satisfy the market reality.
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