Digital strategy and operating models
Domain 2 - Digital strategy and operating models
This domain tests how a chosen strategy is made executable: the operating model. Questions ask you to distinguish business model from operating model, identify design choices, and recognise which structural change a strategic goal actually requires.
Core distinctions
- The business model answers what value is offered, to whom, and how value is captured. The operating model answers how the organization arranges people, processes, technology, partners and governance to deliver that value repeatedly.
- An operating model becomes concrete through value streams (end-to-end flows from demand to value), practices, capabilities, resources, and the four dimensions: organizations and people; information and technology; partners and suppliers; value streams and processes.
- Design choices include centralised versus federated versus decentralised control; project-based versus product-based delivery; platform versus bespoke builds; build, buy or partner; and where decision rights sit.
Fit with strategy
The operating model is designed backwards from strategic intent. If the strategy promises speed, the model needs short value streams, persistent cross-functional teams, delegated decisions and funding released incrementally. Culture, incentives and measurement are part of the model, not decoration.
Worked example
An insurer wants to launch products in eight weeks rather than nine months. Current model: functional silos, sequential handoffs, annual funding. Target model: product-oriented value streams with persistent teams, a shared API platform, and quarterly outcome-based funding. Reasoning: the constraint is handoffs and funding cadence, not staff effort. Changing structure alone fails if funding and metrics stay annual and functional, so all three elements move together.
Traps
Using business model and operating model interchangeably; transplanting a famous company's model without matching strategy and context; restructuring without touching funding, metrics or decision rights; overlooking the partners and suppliers dimension.