Most organisations are relatively good at defining strategy.
The harder part is changing how the business actually operates once the strategy changes.
In electrification and other complex industrial businesses, a new direction may call for different markets, different customers, new capabilities or a different balance between growth, efficiency and investment. Yet the organisation often continues to make decisions through the same structures, budgets, KPIs and functional priorities that were designed for the previous strategy.
That is where execution starts to break down.
A strategy can change on paper much faster than an operating model changes in reality.
Strategy creates new trade-offs
Any meaningful strategy changes what the business needs to optimise.
Growth may require investment before returns appear. Customer responsiveness may require more flexibility. A new segment may need resources that historically belonged somewhere else. Global scale may conflict with local market needs.
These are not implementation details. They are strategic trade-offs.
If those trade-offs are not made explicit, different parts of the organisation will interpret the strategy through their existing objectives.
The result is often not resistance to the strategy. It is something more subtle: every function continues doing what is rational from its own perspective, while the organisation struggles to move in one direction.
Consider an industrial business moving further into project-based solutions. Sales needs faster responses to customer requirements. Engineering capacity is already committed to the product roadmap. Operations is measured on efficiency and standardisation. Finance is protecting margins and working capital.
The leadership task is to make those trade-offs explicit: which opportunities justify additional complexity, what capacity should move, and which financial or operational constraints must remain.
Resource allocation is one concrete test of whether strategic priorities are reflected in how the business operates. A McKinsey survey illustrates the gap between identifying priorities and routinely funding them.
Only
53%
of respondents in a McKinsey global survey said their organisations routinely fully funded the priorities they had identified.
About this survey figure: fieldwork in October 2023; 617 middle managers, senior managers and C-suite executives at companies with reported revenues of at least US$500 million, across regions and industries. It describes respondents’ reports of funding practices, not the share of projects receiving full funding. Published 20 May 2024.
Funding is one part of the operating model. Investment still needs evidence, sequencing and an acceptable return. The leadership question is how budgets, decision rights and accountabilities work together to deliver the chosen direction.
Decision rights reveal the real operating model
One of the clearest ways to understand an operating model is to follow a consequential decision.
Who owns the business outcome? Who can commit resources or change priorities? Who can veto the decision? Where does a disagreement go when functions cannot resolve it?
An executive may be accountable for growth while depending on several teams whose objectives reward different outcomes. If the executive cannot influence the relevant resources or resolve competing priorities, accountability becomes a responsibility to keep escalating.
Accountability without decision authority creates escalation.
Decision authority without accountability creates fragmentation.
The operating model needs to connect the two.
That does not require every function to report to one person. It requires clarity about which decisions can be made locally, which need cross-functional agreement, and who resolves the remaining trade-offs.
Decisions should sit where the best combination of knowledge, speed and accountability exists. For a general manager, the test is whether the business can make these decisions at the right level and within a useful timeframe.
Functional excellence is not always business performance
Functions create expertise, standards and scale. Their individual performance measures also shape daily choices.
Sales may optimise growth. Portfolio teams may reduce complexity. Procurement may seek lower purchase prices. Operations may maximise utilisation. Finance may minimise working capital.
Those objectives can each make sense while producing an unsatisfactory result for the customer or the business.
A leadership team therefore needs to decide how functional targets should work together. When they conflict, the overall business outcome needs an explicit owner and a clear basis for making the trade-off.
A company can therefore be locally optimised and still underperform as a business. The organisation can keep improving individual functions while leaving the connections between them unresolved.
The operating model lives in recurring decisions
Reporting lines show part of how a company works. The rest becomes visible in its management routines: how resources are allocated, budgets renewed, investments approved, capacity assigned and performance reviewed.
These routines deserve attention when the strategy changes.
If an existing activity keeps its resources by default, what allows a new priority to compete for them? If a business unit releases people to a more valuable opportunity elsewhere, how is that decision recognised? If a customer commitment crosses several functions, who follows the outcome through to delivery?
Changing an organisation chart can be relatively quick. Changing how these decisions are repeatedly made takes sustained management attention.
Some parts of the existing operating model may already support the new direction. The task is to identify where it helps and where it preserves choices the business now needs to reconsider.
Strategy becomes real through different decisions
A useful review starts with a few decisions that matter to the new direction.
Have resources moved? Have priorities changed? Are accountabilities clear? Are functional objectives aligned with the business outcome? Can important trade-offs be resolved at the right level and at the right speed?
Look at how disagreements were resolved and whether the resulting actions supported the intended business outcome. If those mechanisms remain unchanged, the organisation may understand the new strategy while continuing to operate according to the old one.
Strategy becomes execution only when direction, accountability and decision-making reinforce each other.
That is why strategy execution depends on an operating model aligned with business priorities.
Questions worth asking
Which decisions should now be different because our strategy has changed?
What have we stopped, delayed or reduced to resource the new priorities?
Does the person accountable for the outcome have sufficient decision authority?
Where are functional targets still pulling against the overall business result?