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In the dynamic business environment of today, it's essential to align the strategy, portfolio, and operating model to ensure sustained success. While many organisations are proficient in creating strategy and aligning their portfolio accordingly, they often overlook the crucial role of the operating model. It's important to remember that many things may have changed from one strategy cycle to the next, including the business's size and ambition. Neglecting the operating model can lead to significant challenges when the business tries to scale or adjust its operations to meet new ambitious goals.

Organisations typically begin by developing a clear and (sometimes) ambitious strategy. This roadmap outlines their future direction with specific objectives, priorities, budget requirements and key performance indicators. In alignment with this strategy, they manage their portfolios, selecting and prioritising products or projects or businesses that best advance the strategic goals. But the process should not stop there. The operating model -- the framework that specifies how the business is structured and operates -- must also be considered from the outset.

The danger lies in assuming that existing operating models will automatically scale to meet new strategic ambitions. Such assumptions can lead to operational chaos, inefficiencies, and the failure to meet strategic objectives. The operating model should be capable of supporting the new strategy; this means being robust enough to handle increased scale, complexity, and the specific demands of new strategic initiatives.

Consider a small biopharmaceutical company that has achieved significant success in a particular therapeutic area. As a young and nimble organisation, it has been able to deliver quickly and attract more investments. As part of its new strategy, the company decides to build on these successes and expand its portfolio to new therapeutic areas. This new focus on innovation and rapid development of new medicines in these areas will be reflected in the company's strategy and portfolio. However, the company is no longer a small entity that can operate with great agility and responsiveness. Many processes exist, but they have developed opportunistically, which hinders operational excellence. Decision-making processes have become increasingly complex. The company's culture may also be impacted by this rapid growth and expansion. As a result, the company may find itself unable to ramp up processes or manage the complexities of a more diverse portfolio, thereby failing to meet its strategic goals.

To avoid such pitfalls, organisations must pressure-test their operating models at the same time they are developing their strategies. This involves assessing whether the current processes, governance structures, technology systems, people and culture are capable of supporting the strategic plan. Are the decision-making processes responsive enough? Does the company have the necessary skills and capabilities? Are the IT systems adequate to support a scale up in operations or to handle new types of data or analytics?

Integrating the strategy with the operating model also means regularly revisiting and revising the model as the strategy evolves. As strategic goals are updated or as external market conditions change, the operating model may also need to be adapted to continue to support the organisation effectively.

One effective approach to ensure this alignment is to adopt a design thinking perspective, viewing the strategy, portfolio, and operating model not as separate elements but as interconnected components of a single system. This perspective encourages holistic thinking and problem-solving, ensuring that changes in one area naturally lead to necessary adjustments in others.

Moreover, involving a diverse range of stakeholders in the design and continual adaptation of the operating model can provide multiple perspectives and expertise, enhancing the organisation’s ability to implement its strategy successfully. This collaborative approach ensures that all aspects of the organisation are geared towards the same strategic objectives, significantly increasing the likelihood of achieving them.

In conclusion, the alignment of strategy, portfolio, and operating model from the outset is crucial. Organisations must ensure that their operating models are equipped to deliver on new strategies and should remain flexible to adapt to changes. By doing so, they can avoid operational disruptions and are better positioned to achieve strategic success, ultimately securing a competitive advantage in their respective markets.

Christelle Dujardin is a Partner Consultant at AvisenRx Consultants. Christelle brings over 20 years of experience in the biopharmaceutical industry in portfolio, strategy and operations role, coupled with specific functional experience of Medical Affairs

AvisenRx Consultants, https://avisenrx.com