Affan: Every major consultancy has published an AI report, and they've all found the same thing that technology is not the bottleneck, the operating model is. Governance, decision rights, accountability, and execution infrastructure. That is what separates the twenty percent who succeed from the eighty percent who are experimenting. Welcome to the Agentic Op Model Podcast. My name's Affan. we have Wout and Marc. And between the three of us, we're going to talk about a contemporary operating model. We have mixed backgrounds, working across the spectrum, in various organizations and enterprises, from large to small. And what we'd like to do is we'd like to share some thoughts with you. before I introduce myself, I'm gonna hand over to Wout who's going to introduce himself and I'd just like to say a couple of words about Wout before he does, is that he is an absolute black belt in user experience, user interface, UX UI and all things to do with AI leading into the modern era. So Wout, over to you.
Wout: Affan, thanks so much for that kind introduction. Yes, I'm Wout I work in Belgium. So been like around 15 years in UX, started as a UX designer, working for large organizations, looking at how are people actually going through processes? how can we improve their experience, their user experience through technology? And it's very much related to operating models because what we see is that the end user experience is always what matters. This is what you want to change, either on the client side or inside a company. so I'm really happy to bring that perspective to operating models. And I've also been working on operating model transformation from that user experience perspective.
Affan: thank you. And I'm gonna hand over to Marc. But before I do I'd just like to say so Marc has taught me so much about op models and I think it'd be fair to say that he's probably forgotten more about operating models than I will ever know. So on that Marc, over to you.
Marc: You're far too kind, Affan. it also makes me reflect on the fact that it's nearly thirty years since I first actually was involved in a project to develop an operating model. 1998, I can still remember. And it wasn't called an op model, funnily enough, in those days. It was called a management system. And there are days when I still think that's quite a interesting use of the term and when it's actually applied to to to what we're looking at. But yes, it's been, you know, a fascinating journey. I've worked on operating models, management systems, across service industries, defence, banking, in pharmaceutical, security, and security being probably the biggest challenge where I've been privileged to actually work on the design of security operating models for a number of governments and countries. So hopefully we can leverage some of the knowledge that I've gained and And we can put it to developing what it really is the challenge, which is how do we build an operating model for the future that incorporates agentic and agentic working.
Affan: yeah, absolutely. And and my background is isn't actually in operating models. It's it's more to do with operations. It's more on the execution side of life. And so before I knew what an operating model was, I didn't realise I was actually operating within one. And but if you know somebody was to ask me well what is what was to ask me before I knew about operating models, what an operating model was for the organization I was working in, I don't think I'd be able to describe it. I know what it was inherently, but I don't think I'd be able to describe it. And so I think what what we're going to do with this podcast is we're going to take you all on a journey to try and understand some of the pain points that we've encountered through our experiences and also where AI fits in. What is the role of the agent within the contemporary operating model? Wout, what what are your thoughts on that?
Wout: Yeah, super interesting. And it resonates to me that not knowing what an operating model is, everyone has their own definition of an operating model. there's a lot of confusion, what it is, so so I'd love to go into that topic where we kind of explore, maybe start by defining what an operating model is, have our own perspective of it. how we've gotten to understand it, and then have a sneak peek into the future.
Affan: Yes, please.
Wout: maybe Marc, is that something like I'm I'm very interested because you have so much experience. if you would define an operating model, how would you define that? What is it? Where does it live? Do organizations always have one or not?
Marc: if I go back to what I was saying before, when I first you know got involved in building and operating Model I wasn't exactly sure what I was doing, but it became very apparent that the management system that was in place was developed for a department so that the organization and the two preferred vendors suppliers could effectively work together. And so when we're actually going back through what made up this management system, it was predominantly policy, process, and people structure. Now, I think an awful lot of people do think of an operating model as an organizational chart. But it's so much more than that. And this is often the problem that originally operating models may well have evolved out of the quality management system. So when I first started work, I was working in the construction industry for quite a large PLC. And the very first thing you have to do is to go through the quality management system, the quality book. in that there were lots of diagrams of the hierarchy of the organization and who did what and what policies to actually follow. So I do think people really probably have quite an old-fashioned view of of what an operating model is because historically it has come from from that QMS quality management system domain where a lot of organizations printed out a book or printed out posters and information. So a very two-dimensional view of what an operating model is. So to expand on that, I think it's worth considering that to me and my background is predominantly in enterprise architecture, I see it as people, process and technology. And it's a combination of how each of those things can work together to actually deliver value and deliver capability. And, you know, as as most business organizations are there to make deliver value to customers, to value to services, etcetera, then the value manifests as money and profit. then there's a quite a big responsibility on the operating model to be effective, to be able to ensure that teams of people working as a small function or part of a department and part of maybe a much more bigger entity in an organization can be effective in delivering what they do. So if we look at you know a very common example, HR or legal, they are quite well-defined services. HR is is governed by HR policy, governed by regulation that sits outside the organization. So it's very clear what sort of rules that have to be followed. Therefore, the policy and the instructional side of things is quite structured and ordered. Therefore, the people who then have to undertake and follow these instructions can also, in a sense, be ordered in that way. Now, this is where, in a sense, the organizational chart plays a role, but at the same time, the individuals within that structure must follow process and predominantly follow process that's delivered through technology and Unless the the three of those things work well together, you are not going to be able to realize the value and capability that I just described.
Wout: Right. So it's mostly about performance Or as I have understood, you set out a strategy as a company. You you want certain outcomes to be achieved. but then you have to actually go about and do it. And the end result, the output of your organization will be different from your your initial set out strategy. And there's going to be a gap between Strategy and performance. Your performance is what you're actually able to achieve as a company. Your strategy is what you set out to do. And in between, there's probably some things going wrong or some things are happening. on technology people, processes on those three lenses. would you say that's always because of the operating model that those gaps arise?
Marc: And I think It's an interesting point you're making because this is where the balance shifts between what is an architectural activity to build something and the operating model's responsibility to enact something. That may strange like it sounds like a strange description of the things, but architecture has to build whatever the organization i is requiring through its strategy. So if their organization wants to set up a new department or set up a new office somewhere you know in another country perhaps then it has to go through the process of defining the strategy, planning, implementing, finding the funding, going out, procuring. All of these things are quite procedural, process based activities. Now when it comes to actually the finished product and the new building is complete, it then has to be populated by all of the things like the people, the processing, the technology. Right? Once the people who've built the thing have gone moved on, then the actual building itself, that new department, needs to be able to take shape. This is where the guidance of an operating model comes into its own. Yes, it will follow some of the requirements that are that are defined by enterprise architecture. But it then has to be able to have that guidance so that the people can work together, follow the process, and use the technology in a synchronized way that's effective and delivers value. And this is one of the challenges that when we look forward to incorporating agentic activity, how are we going to be able to build something that's then not going to Create a situation or imbalance so that where you've had humans that have worked together or follow a process instinctively know what they're actually doing, how is this technology then going to be able to come in and take a role, quite a a predominantly you know varied role across all the various different types of agentic services and solutions there are? But That to me is going to be the challenge of this this target operating model in the future. Is how do we get all these things to to to work together?
Affan: And being, you know, an ITIL man myself, everything has to align to a business objective. So I think there's a cascade and we need to be very clear on what the cascade is in order to deliver an operating model. And it's a model. You know, it's it's so it's not just a way of operating, it's a way of thinking, it's a it's a mental model, more you know, more so than anything, because the the organization has to be able to deliver the op model rather than individuals within the organization. So the whole organization has to come together. But in order to do that, the op model has to be able to achieve business objectives. Where do those business objectives come from? They come from something called the business model. And there's a we'll we'll come on to this later in the podcast. Is there's a difference between the business model of an organization and the operating model of an organization. And that there are overlaps and there are similarities, but we have to differentiate that There are they are two different layers or levels, and then on top of all of that is the strategy. So the strategy has to be at a different layer, at a different level than the business model, which then filters down or distills down into the operating model. a strategy needs to be able to identify the challenges required in terms of the competition, in terms of your inner frictions that need to be overcome and so on and so forth and then how you overcome those from a strategic point of view, from a big picture point of view and then it filters down into the business model and then the strategy helps you decide what your business objectives are. What is it that you want to achieve? How do you achieve it? And then the Op Model gives you the tools and the better understanding of the operational side of life. going all the way back and there has to be a visible traceability between what you deliver in an operating model back to the business model, back to the strategy. Because if there's not, then it just doesn't make sense and it's incoherent. then so you're the operational side of life are delivering something different to what the strategic layer is doing. But then the thing is that the strategic layer can't be sat in an ivory tower issuing edicts. and telling people how it is, they have to be very realistic and, you know, like you say, incorporate that feedback, talk to the people who are actually doing the enactment of the strategy through the Op Model And I think there's a book called Team of Teams by General Stanley McChrystal. Sorry, I'm a military person. I like reading books by fellow military personnel. And although he's far more accomplished than I will ever be. He wrote a book called Team of Teams, in which he writes about the difference between complicated and complex. So operating models, by their very nature, are complicated in that they have many moving parts. They are also complex in that those many moving parts have many interactions between them: one way, two ways, several ways, diagonally across, and so on and so forth. And then and also operating models need to be both robust and resilient. And you know, General McChrystal describes robust as Being able to withstand anticipated impact and resilient as being able to withstand unanticipated impact. So, you know, the contemporary op model with AI agents embedded within them are intrinsically complex, complicated, must be robust and must be absolutely resilient if the organisation is to succeed. What are your thoughts, Wout?
Wout: Yeah, that is great Affan, because it's actually quite a big topic. a lot of people are now saying, on a agentic you have to change the underlying operating model to really have impact. But what is it? A lot of people don't really know what an operating model is. you know, if it is is it a set of documentation? Is it a management system, like Marc just said? and to get a grasp on operating models myself, I tried to come up with an analogy to understand what is it, what is it not. for example, you could use a a restaurant as an analogy. you say that okay the thing you see is the menu. So you go into your restaurant, you order from the menu. Or sometimes outside, there's a menu as well. And you're reading actually, what are what what are you being served? What can you get? It's the value proposition, I assume, right? It that that's a bit probably a bit more your business model. But everything going on to deliver that value in the restaurant, it's the the whole kitchen, right? It's your stations, it's the roles, it's all the the the recipes, the standards that are being set, the systems, the fridges, the tooling. that has to make that menu possible. you also have the floor, how is the floor managed, how things are being served, how complaints are being resolved. and to me, to my understanding, that's your whole operating model because it's everything going on inside the company to deliver that value, but also those those tacit rules that are being set. And the link with agentic is interesting because if your agent has to be applied in the kitchen, an agent doesn't know that your oven maybe overheats at 300 degrees, or it doesn't know how a chef makes a certain recipe the way that people like it. It's all not written down. and that's something I want to discuss later also or on a different episode is what is being documented, what is not, and what does an agent need? to to actually effectively be be able to be used. Because a lot of organizations haven't documented those things that agents need to run effectively. And in that analogy, the end state is your your your plate, what you deliver, and that's performance. So and for a restaurant, performance is actually what guests experience. you could say it's both the food and the atmosphere. but they don't see necessarily everything that's going on. They don't see the kitchen, all the systems in place to deliver. They just experience a great, hopefully a great meal and a great experience. and that's a bit what we talked about is that gap. So you have your your businessmodel is the beautiful menu, the the beautiful dishes. And you want to actually then see, okay, so between the menu and the plate, what is going on? you could you could even take that analogy further and say that governance and controls are are different checks, line checks. if a plate is going out to the the floor, is it being checked by someone or not? health inspection, etc. and and to me I needed that analogy to understand what the operating model is, what what its boundaries are, and how it interrelates with the business model and how it relates to performance. now I'm really interested in your your perspective on that analogy. Like are there things you agree or disagree or things you could challenge
Affan: You know, I will say, Wout I will say that having worked with Op Models for a number of years now, I think you've just described an Op Model far better than I can, with that analogy. Thank you very much. And especially with the relationship between the operating model and the business model. And so, you know, and as... that the purpose of this podcast is to discuss the role of agents within the contemporary op model, then where does that fit? Is that at the business model level? Is that at the op model level? Do we discuss that at both levels? Or even, you know, does it go all the way back up to the strategy and then filter that out? And again, you know, as I said, during the introduction of this podcast is that all the big consultancies and all the big enterprises globally have realized that Technology isn't the bottleneck. Technology is readily available. It's the use of that technology. It's understanding those decision rights. It's understanding who does what with the technology and how the technologies seem together within the organization.
Marc: I do like this. this restaurant example because it does help to try and simplify something which is a major problem and yes you could look at a procurement agent for the kitchen to be able to buy just in time products and to be able to source from you know, the most immediate supplier and equally to be able to s to look at sourcing sustainable foods by judging on the distance and the and the carbon footprint of every product that's ordered. And again, humans could do that, but why not, you know, give some of that rollover to an agent and bring that part of the restaurant up to date with an agentic capability. that would complement how the rest of the restaurant works.
Affan: Who would be responsible for that level of understanding and then the change that's required?
Marc: Good question. I mean a exactly in a sense the owner of the restaurant has to be able to understand the impact of that change. and you know, how is that change then going to affect the various different roles that would you know come into contact with that new change to that technology and that service and that process?
Wout: That would be the CEO or or the management team needing to have an overall view of all departments.
Marc: yes, to use your analogy that yes, the head chef or the owner of the restaurant, you know, may have employed someone to to do the procurement of all the food on a daily, weekly, monthly basis. And I don't know how you know, depending on the size of the restaurant, there may be a lot of food. Very specific things have to be ordered depending on the size of the menu. And it may well be quite a complicated thing. Could it be trusted to an agent to be able to understand that you know you're buying meat from various different small providers around the country. You're providing supplies of herbs and spices from a range of different other organizations. And If all of these things aren't actually delivered on time, there's a good chance that the restaurant won't be able to actually cook that particular meal. Now, you know, anybody who's ever worked in a restaurant probably knows how difficult it is to be able to source some products at different times of the year. Is the agent going to understand that products are only sometimes seasonal and not only your products seasonal, but there may well be times when certain things aren't available. Therefore a workaround is required. Maybe you have multiple suppliers. So what may actually seem like a simple process then turns out to be actually quite a difficult thing. And going back to the point Affan you were making about the complexity, this is where this thing does become a bit more complicated. than than there's there's always as obvious. And understanding that complexity and understanding just what goes on in that complex mix is one of the things that agentic operating model is gonna have to deal with, I think.
Wout: That's also where you have that massive amount of tacit knowledge, right? Like knowing, all right, this type of food, you get only those two months from that supplier. It's only combined and prepared this way. At the same time, we know that tourists come in and they require this type of dish, or we need to increase margins, it becomes quite complex. and your agents will will need to have more. documented documentation than humans often do. But how is it done today? Probably humans are just trained human to human stories, certain skill transfers by word of mouth, human to human. But if you want your agent to understand all of that context, you'll probably need to document it. And many restaurants don't do it. And many companies don't do it because they don't see the purpose of it. and that's a really good point, Marc, is if your agent wants to be able to work effectively, it will need to get that information from somewhere.
Marc: And I think this is the problem. I think that as you say, someone who's an experienced procurement person, you know, may well have done this for several years. They may know which markets or which suppliers to go to. They may have personal contacts with these suppliers. They can ask a favor. You know, how do you then encapsulate a favor into an agentic operating model? when a favor is a very much a human thing and, you know, it's not necessarily bound in a contract, but it may well be that it's just what one supplier will do because they've had a long relationship with that restaurant, and because of that, they want to keep the business, therefore, they will do something above and beyond. These are these are things that we take for granted all the time and every day that what we do, you know. And when we're going to then move to another a future operating model where we're working with technology solutions that don't necessarily understand some of those nuances, then it may well be that they are too regimented in their in their coding structure. They follow the rules. An order must be procured by 7 p.m tomorrow. By 7 pm it must buy 200 or 50 kilos of something. It just goes out to market, sources it and buys it and has it delivered. Doesn't matter where it comes from. I mean it may well be as black and white as that, that it's just literally following a particular transactional process. Now that may well be very different to somebody who has to phone around multiple suppliers and actually find a quality set of products that fits the standard of the reputation of the restaurant, not just where can I get twenty kilos of pork and I need to have that you know by seven o'clock tomorrow.
Affan: What? The understanding of seasonal availability or flavors of something or quality, depending on the time of the year, time of the day even, for whatever reason. And is the agent able to handle that? Or then we'll talk about something called the division of labor later on. But it's an understanding of how labor is divided within the organization. Let's talk about the future. Let's talk about Orbit Method. So Wout over to you.
Wout: Right. Thanks. Affan Yeah, so of course, we want to go to solution mode as well. there's a lot still to discover around agentic solutions and how that will impact the operating model. one solution is actually a much better methodology that looks at the agentic impact on operating models. So Orbit Method is one of those methods that's been developed with a lot of experience taken into account. Orbit Method is a framework for AI transformations, actually building on those three lenses we've been discussing: architecture, operations, experience. and what it actually does is it tries to indeed combine those lenses, but also have the impact of AI on there. so a lot of organizations are looking to transform their organization. to do so, they need a more structural approach. so there's four phases. There's first mapping out the as is. You need to understand your current capabilities of the organization. where is AI used? What kind of capabilities do we deliver? What are the roles? What's our value? Before you can actually design a future state, a future state of humans and AI collaborating together, that division of labor you discussed earlier. And then actually your transformation program moves into a guide phase where you set into guardrails into place, both for humans and agents, and you're defining your governance controls and trust patterns. You then evolve and you roll out the transformation and you continuously measure for performance and where things might improve for the better. So the three lenses as discussed are architecture, which are your systems, your data, your agents, your integrations, your operations, of course, which is about roles, decision rights, your accountability, and of course, experience as your third lens, where you see how people interact. With AI, with each other. Training is also part of that experience. Workflows and also the trust they place into adopting new systems and collaborating with agents. Because that's something not to be underestimated. How can we make sure that people trust? And how can we make sure that workflows are effective when they're a combination of agents and people? Yeah, so I think this was an excellent episode to understand what an operating model is. it's it's it's a complex subject like Affan discussed. but I hope that we shed a bit of light on the on the subject from different perspectives. I think we can really dive deeper into a lot of topics that have been touched here. in the next episode we'd like to go a bit deeper on the three lenses, which is people, process, technology. And see, okay, what's the impact of that lens on the operating model and what's the impact of agentic on that particular lens? if you enjoyed listening to this podcast, please like or subscribe in your favorite channel where you're listening to. and Affan Marc, thank you so much for your insights. It was very valuable. and I hope we can record many more of these episodes for the agentic operating model.
Affan: Thank you.
Marc: Thank you, Wout.
Wout: See you next time.
Wout: Affan, thanks so much for that kind introduction. Yes, I'm Wout I work in Belgium. So been like around 15 years in UX, started as a UX designer, working for large organizations, looking at how are people actually going through processes? how can we improve their experience, their user experience through technology? And it's very much related to operating models because what we see is that the end user experience is always what matters. This is what you want to change, either on the client side or inside a company. so I'm really happy to bring that perspective to operating models. And I've also been working on operating model transformation from that user experience perspective.
Affan: thank you. And I'm gonna hand over to Marc. But before I do I'd just like to say so Marc has taught me so much about op models and I think it'd be fair to say that he's probably forgotten more about operating models than I will ever know. So on that Marc, over to you.
Marc: You're far too kind, Affan. it also makes me reflect on the fact that it's nearly thirty years since I first actually was involved in a project to develop an operating model. 1998, I can still remember. And it wasn't called an op model, funnily enough, in those days. It was called a management system. And there are days when I still think that's quite a interesting use of the term and when it's actually applied to to to what we're looking at. But yes, it's been, you know, a fascinating journey. I've worked on operating models, management systems, across service industries, defence, banking, in pharmaceutical, security, and security being probably the biggest challenge where I've been privileged to actually work on the design of security operating models for a number of governments and countries. So hopefully we can leverage some of the knowledge that I've gained and And we can put it to developing what it really is the challenge, which is how do we build an operating model for the future that incorporates agentic and agentic working.
Affan: yeah, absolutely. And and my background is isn't actually in operating models. It's it's more to do with operations. It's more on the execution side of life. And so before I knew what an operating model was, I didn't realise I was actually operating within one. And but if you know somebody was to ask me well what is what was to ask me before I knew about operating models, what an operating model was for the organization I was working in, I don't think I'd be able to describe it. I know what it was inherently, but I don't think I'd be able to describe it. And so I think what what we're going to do with this podcast is we're going to take you all on a journey to try and understand some of the pain points that we've encountered through our experiences and also where AI fits in. What is the role of the agent within the contemporary operating model? Wout, what what are your thoughts on that?
Wout: Yeah, super interesting. And it resonates to me that not knowing what an operating model is, everyone has their own definition of an operating model. there's a lot of confusion, what it is, so so I'd love to go into that topic where we kind of explore, maybe start by defining what an operating model is, have our own perspective of it. how we've gotten to understand it, and then have a sneak peek into the future.
Affan: Yes, please.
Wout: maybe Marc, is that something like I'm I'm very interested because you have so much experience. if you would define an operating model, how would you define that? What is it? Where does it live? Do organizations always have one or not?
Marc: if I go back to what I was saying before, when I first you know got involved in building and operating Model I wasn't exactly sure what I was doing, but it became very apparent that the management system that was in place was developed for a department so that the organization and the two preferred vendors suppliers could effectively work together. And so when we're actually going back through what made up this management system, it was predominantly policy, process, and people structure. Now, I think an awful lot of people do think of an operating model as an organizational chart. But it's so much more than that. And this is often the problem that originally operating models may well have evolved out of the quality management system. So when I first started work, I was working in the construction industry for quite a large PLC. And the very first thing you have to do is to go through the quality management system, the quality book. in that there were lots of diagrams of the hierarchy of the organization and who did what and what policies to actually follow. So I do think people really probably have quite an old-fashioned view of of what an operating model is because historically it has come from from that QMS quality management system domain where a lot of organizations printed out a book or printed out posters and information. So a very two-dimensional view of what an operating model is. So to expand on that, I think it's worth considering that to me and my background is predominantly in enterprise architecture, I see it as people, process and technology. And it's a combination of how each of those things can work together to actually deliver value and deliver capability. And, you know, as as most business organizations are there to make deliver value to customers, to value to services, etcetera, then the value manifests as money and profit. then there's a quite a big responsibility on the operating model to be effective, to be able to ensure that teams of people working as a small function or part of a department and part of maybe a much more bigger entity in an organization can be effective in delivering what they do. So if we look at you know a very common example, HR or legal, they are quite well-defined services. HR is is governed by HR policy, governed by regulation that sits outside the organization. So it's very clear what sort of rules that have to be followed. Therefore, the policy and the instructional side of things is quite structured and ordered. Therefore, the people who then have to undertake and follow these instructions can also, in a sense, be ordered in that way. Now, this is where, in a sense, the organizational chart plays a role, but at the same time, the individuals within that structure must follow process and predominantly follow process that's delivered through technology and Unless the the three of those things work well together, you are not going to be able to realize the value and capability that I just described.
Wout: Right. So it's mostly about performance Or as I have understood, you set out a strategy as a company. You you want certain outcomes to be achieved. but then you have to actually go about and do it. And the end result, the output of your organization will be different from your your initial set out strategy. And there's going to be a gap between Strategy and performance. Your performance is what you're actually able to achieve as a company. Your strategy is what you set out to do. And in between, there's probably some things going wrong or some things are happening. on technology people, processes on those three lenses. would you say that's always because of the operating model that those gaps arise?
Marc: And I think It's an interesting point you're making because this is where the balance shifts between what is an architectural activity to build something and the operating model's responsibility to enact something. That may strange like it sounds like a strange description of the things, but architecture has to build whatever the organization i is requiring through its strategy. So if their organization wants to set up a new department or set up a new office somewhere you know in another country perhaps then it has to go through the process of defining the strategy, planning, implementing, finding the funding, going out, procuring. All of these things are quite procedural, process based activities. Now when it comes to actually the finished product and the new building is complete, it then has to be populated by all of the things like the people, the processing, the technology. Right? Once the people who've built the thing have gone moved on, then the actual building itself, that new department, needs to be able to take shape. This is where the guidance of an operating model comes into its own. Yes, it will follow some of the requirements that are that are defined by enterprise architecture. But it then has to be able to have that guidance so that the people can work together, follow the process, and use the technology in a synchronized way that's effective and delivers value. And this is one of the challenges that when we look forward to incorporating agentic activity, how are we going to be able to build something that's then not going to Create a situation or imbalance so that where you've had humans that have worked together or follow a process instinctively know what they're actually doing, how is this technology then going to be able to come in and take a role, quite a a predominantly you know varied role across all the various different types of agentic services and solutions there are? But That to me is going to be the challenge of this this target operating model in the future. Is how do we get all these things to to to work together?
Affan: And being, you know, an ITIL man myself, everything has to align to a business objective. So I think there's a cascade and we need to be very clear on what the cascade is in order to deliver an operating model. And it's a model. You know, it's it's so it's not just a way of operating, it's a way of thinking, it's a it's a mental model, more you know, more so than anything, because the the organization has to be able to deliver the op model rather than individuals within the organization. So the whole organization has to come together. But in order to do that, the op model has to be able to achieve business objectives. Where do those business objectives come from? They come from something called the business model. And there's a we'll we'll come on to this later in the podcast. Is there's a difference between the business model of an organization and the operating model of an organization. And that there are overlaps and there are similarities, but we have to differentiate that There are they are two different layers or levels, and then on top of all of that is the strategy. So the strategy has to be at a different layer, at a different level than the business model, which then filters down or distills down into the operating model. a strategy needs to be able to identify the challenges required in terms of the competition, in terms of your inner frictions that need to be overcome and so on and so forth and then how you overcome those from a strategic point of view, from a big picture point of view and then it filters down into the business model and then the strategy helps you decide what your business objectives are. What is it that you want to achieve? How do you achieve it? And then the Op Model gives you the tools and the better understanding of the operational side of life. going all the way back and there has to be a visible traceability between what you deliver in an operating model back to the business model, back to the strategy. Because if there's not, then it just doesn't make sense and it's incoherent. then so you're the operational side of life are delivering something different to what the strategic layer is doing. But then the thing is that the strategic layer can't be sat in an ivory tower issuing edicts. and telling people how it is, they have to be very realistic and, you know, like you say, incorporate that feedback, talk to the people who are actually doing the enactment of the strategy through the Op Model And I think there's a book called Team of Teams by General Stanley McChrystal. Sorry, I'm a military person. I like reading books by fellow military personnel. And although he's far more accomplished than I will ever be. He wrote a book called Team of Teams, in which he writes about the difference between complicated and complex. So operating models, by their very nature, are complicated in that they have many moving parts. They are also complex in that those many moving parts have many interactions between them: one way, two ways, several ways, diagonally across, and so on and so forth. And then and also operating models need to be both robust and resilient. And you know, General McChrystal describes robust as Being able to withstand anticipated impact and resilient as being able to withstand unanticipated impact. So, you know, the contemporary op model with AI agents embedded within them are intrinsically complex, complicated, must be robust and must be absolutely resilient if the organisation is to succeed. What are your thoughts, Wout?
Wout: Yeah, that is great Affan, because it's actually quite a big topic. a lot of people are now saying, on a agentic you have to change the underlying operating model to really have impact. But what is it? A lot of people don't really know what an operating model is. you know, if it is is it a set of documentation? Is it a management system, like Marc just said? and to get a grasp on operating models myself, I tried to come up with an analogy to understand what is it, what is it not. for example, you could use a a restaurant as an analogy. you say that okay the thing you see is the menu. So you go into your restaurant, you order from the menu. Or sometimes outside, there's a menu as well. And you're reading actually, what are what what are you being served? What can you get? It's the value proposition, I assume, right? It that that's a bit probably a bit more your business model. But everything going on to deliver that value in the restaurant, it's the the whole kitchen, right? It's your stations, it's the roles, it's all the the the recipes, the standards that are being set, the systems, the fridges, the tooling. that has to make that menu possible. you also have the floor, how is the floor managed, how things are being served, how complaints are being resolved. and to me, to my understanding, that's your whole operating model because it's everything going on inside the company to deliver that value, but also those those tacit rules that are being set. And the link with agentic is interesting because if your agent has to be applied in the kitchen, an agent doesn't know that your oven maybe overheats at 300 degrees, or it doesn't know how a chef makes a certain recipe the way that people like it. It's all not written down. and that's something I want to discuss later also or on a different episode is what is being documented, what is not, and what does an agent need? to to actually effectively be be able to be used. Because a lot of organizations haven't documented those things that agents need to run effectively. And in that analogy, the end state is your your your plate, what you deliver, and that's performance. So and for a restaurant, performance is actually what guests experience. you could say it's both the food and the atmosphere. but they don't see necessarily everything that's going on. They don't see the kitchen, all the systems in place to deliver. They just experience a great, hopefully a great meal and a great experience. and that's a bit what we talked about is that gap. So you have your your businessmodel is the beautiful menu, the the beautiful dishes. And you want to actually then see, okay, so between the menu and the plate, what is going on? you could you could even take that analogy further and say that governance and controls are are different checks, line checks. if a plate is going out to the the floor, is it being checked by someone or not? health inspection, etc. and and to me I needed that analogy to understand what the operating model is, what what its boundaries are, and how it interrelates with the business model and how it relates to performance. now I'm really interested in your your perspective on that analogy. Like are there things you agree or disagree or things you could challenge
Affan: You know, I will say, Wout I will say that having worked with Op Models for a number of years now, I think you've just described an Op Model far better than I can, with that analogy. Thank you very much. And especially with the relationship between the operating model and the business model. And so, you know, and as... that the purpose of this podcast is to discuss the role of agents within the contemporary op model, then where does that fit? Is that at the business model level? Is that at the op model level? Do we discuss that at both levels? Or even, you know, does it go all the way back up to the strategy and then filter that out? And again, you know, as I said, during the introduction of this podcast is that all the big consultancies and all the big enterprises globally have realized that Technology isn't the bottleneck. Technology is readily available. It's the use of that technology. It's understanding those decision rights. It's understanding who does what with the technology and how the technologies seem together within the organization.
Marc: I do like this. this restaurant example because it does help to try and simplify something which is a major problem and yes you could look at a procurement agent for the kitchen to be able to buy just in time products and to be able to source from you know, the most immediate supplier and equally to be able to s to look at sourcing sustainable foods by judging on the distance and the and the carbon footprint of every product that's ordered. And again, humans could do that, but why not, you know, give some of that rollover to an agent and bring that part of the restaurant up to date with an agentic capability. that would complement how the rest of the restaurant works.
Affan: Who would be responsible for that level of understanding and then the change that's required?
Marc: Good question. I mean a exactly in a sense the owner of the restaurant has to be able to understand the impact of that change. and you know, how is that change then going to affect the various different roles that would you know come into contact with that new change to that technology and that service and that process?
Wout: That would be the CEO or or the management team needing to have an overall view of all departments.
Marc: yes, to use your analogy that yes, the head chef or the owner of the restaurant, you know, may have employed someone to to do the procurement of all the food on a daily, weekly, monthly basis. And I don't know how you know, depending on the size of the restaurant, there may be a lot of food. Very specific things have to be ordered depending on the size of the menu. And it may well be quite a complicated thing. Could it be trusted to an agent to be able to understand that you know you're buying meat from various different small providers around the country. You're providing supplies of herbs and spices from a range of different other organizations. And If all of these things aren't actually delivered on time, there's a good chance that the restaurant won't be able to actually cook that particular meal. Now, you know, anybody who's ever worked in a restaurant probably knows how difficult it is to be able to source some products at different times of the year. Is the agent going to understand that products are only sometimes seasonal and not only your products seasonal, but there may well be times when certain things aren't available. Therefore a workaround is required. Maybe you have multiple suppliers. So what may actually seem like a simple process then turns out to be actually quite a difficult thing. And going back to the point Affan you were making about the complexity, this is where this thing does become a bit more complicated. than than there's there's always as obvious. And understanding that complexity and understanding just what goes on in that complex mix is one of the things that agentic operating model is gonna have to deal with, I think.
Wout: That's also where you have that massive amount of tacit knowledge, right? Like knowing, all right, this type of food, you get only those two months from that supplier. It's only combined and prepared this way. At the same time, we know that tourists come in and they require this type of dish, or we need to increase margins, it becomes quite complex. and your agents will will need to have more. documented documentation than humans often do. But how is it done today? Probably humans are just trained human to human stories, certain skill transfers by word of mouth, human to human. But if you want your agent to understand all of that context, you'll probably need to document it. And many restaurants don't do it. And many companies don't do it because they don't see the purpose of it. and that's a really good point, Marc, is if your agent wants to be able to work effectively, it will need to get that information from somewhere.
Marc: And I think this is the problem. I think that as you say, someone who's an experienced procurement person, you know, may well have done this for several years. They may know which markets or which suppliers to go to. They may have personal contacts with these suppliers. They can ask a favor. You know, how do you then encapsulate a favor into an agentic operating model? when a favor is a very much a human thing and, you know, it's not necessarily bound in a contract, but it may well be that it's just what one supplier will do because they've had a long relationship with that restaurant, and because of that, they want to keep the business, therefore, they will do something above and beyond. These are these are things that we take for granted all the time and every day that what we do, you know. And when we're going to then move to another a future operating model where we're working with technology solutions that don't necessarily understand some of those nuances, then it may well be that they are too regimented in their in their coding structure. They follow the rules. An order must be procured by 7 p.m tomorrow. By 7 pm it must buy 200 or 50 kilos of something. It just goes out to market, sources it and buys it and has it delivered. Doesn't matter where it comes from. I mean it may well be as black and white as that, that it's just literally following a particular transactional process. Now that may well be very different to somebody who has to phone around multiple suppliers and actually find a quality set of products that fits the standard of the reputation of the restaurant, not just where can I get twenty kilos of pork and I need to have that you know by seven o'clock tomorrow.
Affan: What? The understanding of seasonal availability or flavors of something or quality, depending on the time of the year, time of the day even, for whatever reason. And is the agent able to handle that? Or then we'll talk about something called the division of labor later on. But it's an understanding of how labor is divided within the organization. Let's talk about the future. Let's talk about Orbit Method. So Wout over to you.
Wout: Right. Thanks. Affan Yeah, so of course, we want to go to solution mode as well. there's a lot still to discover around agentic solutions and how that will impact the operating model. one solution is actually a much better methodology that looks at the agentic impact on operating models. So Orbit Method is one of those methods that's been developed with a lot of experience taken into account. Orbit Method is a framework for AI transformations, actually building on those three lenses we've been discussing: architecture, operations, experience. and what it actually does is it tries to indeed combine those lenses, but also have the impact of AI on there. so a lot of organizations are looking to transform their organization. to do so, they need a more structural approach. so there's four phases. There's first mapping out the as is. You need to understand your current capabilities of the organization. where is AI used? What kind of capabilities do we deliver? What are the roles? What's our value? Before you can actually design a future state, a future state of humans and AI collaborating together, that division of labor you discussed earlier. And then actually your transformation program moves into a guide phase where you set into guardrails into place, both for humans and agents, and you're defining your governance controls and trust patterns. You then evolve and you roll out the transformation and you continuously measure for performance and where things might improve for the better. So the three lenses as discussed are architecture, which are your systems, your data, your agents, your integrations, your operations, of course, which is about roles, decision rights, your accountability, and of course, experience as your third lens, where you see how people interact. With AI, with each other. Training is also part of that experience. Workflows and also the trust they place into adopting new systems and collaborating with agents. Because that's something not to be underestimated. How can we make sure that people trust? And how can we make sure that workflows are effective when they're a combination of agents and people? Yeah, so I think this was an excellent episode to understand what an operating model is. it's it's it's a complex subject like Affan discussed. but I hope that we shed a bit of light on the on the subject from different perspectives. I think we can really dive deeper into a lot of topics that have been touched here. in the next episode we'd like to go a bit deeper on the three lenses, which is people, process, technology. And see, okay, what's the impact of that lens on the operating model and what's the impact of agentic on that particular lens? if you enjoyed listening to this podcast, please like or subscribe in your favorite channel where you're listening to. and Affan Marc, thank you so much for your insights. It was very valuable. and I hope we can record many more of these episodes for the agentic operating model.
Affan: Thank you.
Marc: Thank you, Wout.
Wout: See you next time.
