Operating Models - What exactly is an Operating Model?
In the second of a series of blogs on Operating Models, we answer with the question: “What exactly is an Operating Model?”.
The industry uses a variety of terms when discussing a formal operating model. Characterizations include a ‘playbook,’ or a ‘management operating system,’ … all are correct, though each is incomplete to a degree. For our purposes, we will describe an operating model as a comprehensive, rigorously designed, clearly defined, formally documented description of how an organization does business. An operating model addresses the entirety of the organization, to include both corporate and operational functions and all supporting entities and stakeholders.
A proper operating model has both static and dynamic characteristics. In its static form, an operating model can be described as a blueprint. Like a blueprint, an operating model describes all the pieces and indicates how they are supposed to fit together to create a whole. No single piece of an operating model stands alone. The pieces form an interconnected network.
In its dynamic form, an operating model can be described as a system. Like a system, all the pieces are integrated and work together to yield performance results. The degree to which these pieces connect, complement, and reinforce each other will determine the potential results you can ultimately achieve. Again, like a system, your operating model results will be constantly monitored, and feedback will be provided to correct performance as required. The pieces of your operating model will work together interdependently.
The static pieces of your operating model are designed to interconnect and work in unison as a dynamic system. Your operating model comes alive when it is rigorously executed. It becomes the basis for day-to-day activity, personnel behaviours, and decision-making by your organisation. The strength of your operating model and the mining and staff performance it yields is a direct function of three things:
• How well every individual component and element of the operating model is defined.
• How well all the detailed pieces fit together and complement each other.
• How rigorously the organisation executes the model as written.
Your operating model is the foundation of your mining business. All the pieces of your operating model will need to work together as a system to yield safe and efficient operational results.
What should your operating model look like?
Your operating model will define every aspect of your business and how each piece of the organisation and operation will work together to yield the intended performance results. A comprehensive operating model should include the following structural components:
1. Defined business and cultural attributes
• Vision and mission statement.
• Declaration of company values and beliefs.
• Defined areas of strategic performance: safety, plant reliability, generation, cost.
• Identification of key stakeholders.
2. Structure of management controls
• Administrative architecture and set of controlled documentation
• Systems architecture and controlled set of data and information
3. An organizational structure and associated principles of personnel staffing, development, and retention
4. Suite of integrated policy, process, and program guidance and supporting operational procedures and administrative tools
5. Defined standards of quality and performance defined for…
• The operations
• The organisation and each of its functional areas
• Personnel knowledge, skills, and fundamental behaviours
6. A performance management regimen
• Routines for daily management oversight and performance review
• Suite of continuous improvement processes, programs, and techniques
• Accommodations for internal and external oversight
7. Methodology for annual business planning
• Performance measurement infrastructure
• Industry performance benchmarking regimen
• Gap analysis and action planning process.
We recommend that you plan to summarise the entirety of your operating model in a single governing document to serve as a simple description of the blueprint for the whole of your organisation and its operation. A summary document will prove useful when attempting to communicate and educate all key stakeholders on your operating model.
In our next blog on Operating Models, we answer the question: “How do you approach building an Operating Model?”.
