As a CEO or Founder of a startup, you have many decisions when setting up your business. Many of these happen organically as you grow the business, and some are dictated by the choices required to build a successful business. One such change that can affect your business's future, is the choice of what operational and organisational models you set up for the business.
Both concepts are used in business and management, but they refer to different aspects of how a company or organisation is structured and functions.
So what is an organisational model and an operational model? And what are the key differences?
The organisational model, also known as the organisational structure, defines an organisation's hierarchy, relationships, roles, and responsibilities.
The operational model defines the day-to-day activities, processes and methods needed to achieve the organisation’s goals.
The organisational model outlines how various departments, teams, and individuals are organised and how they interact with each other. The organisational model provides a framework for communication, decision-making, and the flow of information within the organisation.
Common types of organisational models include functional, divisional, matrix, flat, and network structures. Each type has its advantages and disadvantages regarding efficiency, flexibility, and communication.
The operational model defines and optimises the workflows, procedures, and methods used to produce your goods or services. The operational model encompasses everything from production processes to supply chain management, quality control, distribution, customer service, and more.
It's about ensuring that the organisation's resources are effectively utilised to deliver products or services in a consistent and efficient manner.
So what are the Differences?
The four main differences between organisational and operational models can be summed up as focus, scope, purpose and structure.
Organisational Model focuses on the hierarchy, roles, and relationships within the organisation's structure. An operational model focuses on the processes, activities, and methods used to achieve the organisation's goals.
The scope of organisational models is to define the overall structure of the organisation, including how different departments or units are organized and how authority and communication flow. For operational models, the scope is to define the specific processes and procedures that drive the day-to-day operations of the organisation.
The purpose of an organisational model is to provide clarity on reporting lines, decision-making authority, and responsibilities to ensure people are aligned to the organisation’s goals. In contrast, an operational model aims to optimize processes, enhance efficiency, improve quality, and deliver products or services effectively to customers.
Organisational models define the structures of departments, teams, reporting relationships, and managerial positions. Where the operational model involves defining workflows, procedures, resource allocation, and performance metrics.
Summary
In summary, while the organisational model focuses on the structure and hierarchy of an organisation, the operational model is concerned with the practical aspects of how the organisation's day-to-day activities and processes are carried out. Both models play important roles in shaping an organisation's overall success and effectiveness.
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