03 June 2024 - UCISA24 Thought leadership - Chapter Four
Strategy and Digital Operating Model – What is the connection and does one drive the other?
On first appearance, the topic presents a bit of a ‘the chicken or the egg?’ conundrum doesn’t it…
If strategy is the direction that an organisation sets to achieve its long-term goals, and the operating model defines how the people, processes, and technologies work together to execute the strategy effectively, then surely you need the strategy first and the operating model is dictated by it?
Spend any time considering this though and you start to realise that it isn’t as straight forward as that. Most institutions will have an embedded operating model in place long before a new strategy is devised. How often does the new strategy take into consideration, and build in time for, the operational changes that will be needed across the entire institution to realise it’s strategic ambition? And how open to macro change are we actually anyway? Many universities still operate in the same silos and divisional structures as they have over the past decade – indeed many also still employ the same processes. Throw the term ‘digital’ into the operating model equation and this extends the concept by emphasising a new ‘customer-centric’ approach to activity. Are there many in the UK HE sector that can truly say they have fully embraced customer-centricity; most that I am aware of still balk at the term customer!
So perhaps the digital operating model needs to drive the strategy and that will be the best way to ensure its execution?
Where parts of an operating model do not function effectively, strategy falls over. A one-size-fits-all approach to digital operations will fail to realise, for example, the nuances required to deliver world-class research services and that in turn will reduce the potential for optimum research outputs. The digital operations required to maximise research success will need to be specific to the research community, the research itself and even potentially the individuals involved. Does this mean the operating model should be designed and then the strategy be considered based on what the optimum returns will most likely be?
As is always the case, the answer probably lays somewhere in-between. For me, the connection between strategy and digital operating model is that they are interdependent – they represent the ‘Why’ and ‘How’, they need to be considered in tandem. The target operating model will define how our institutions will achieve their strategic objectives by outlining the structure, processes, people, technology and governance required to execute. But the strategy will only ever be as good as its execution. This implies that a strategy has to articulate a vision for why we need to ‘be’ digital. A well-designed target operating model provides a framework for executing effectively by clarifying roles and responsibilities, streamlining processes, and ensuring resources are allocated appropriately. The strategy, however, needs to be cognisant of surplus generation for investment, external funding, the regulatory environment, the culture (will come back to that later!), the talent pool and any skills gap – these are core considerations of why an existing operating model is most likely in place and how it is structured. A strategy that overlooks the reality of these items will be set up to fail as the existing operating model might not be capable of changing to, nor executing, digital effectively.
At the Digital Strategies roundtable session at UCISA24 in Edinburgh, numerous leaders from across the sector discussed the topic. There was a consensus that a digital operating model should be a live entity – something that is constantly adapting and evolving but many suggested that they did not buy into their institutional strategies, commenting that the concept of a digital operating model was at odds with the way that their organisations worked in the day-to-day – and indeed, the way that they engage ‘customers’. This misalignment is something that is damaging for the sector. If our strategies talk about digital but do not set up to deliver as digital, then there will always be friction and conflict which will challenge the ability to execute. Strategies that talk about embracing digital need to reflect that through their operations, structures and investments. If they don’t then it just becomes lip service.
Given that part of the digital operating model will be the selection of tools, some commented that by leveraging digital technologies effectively, universities can improve operational efficiency, enhance teaching and research capabilities, and better engage with students, faculty, and other stakeholders. For instance, implementing a cloud-based infrastructure or adopting data analytics tools can enable more efficient resource allocation and decision-making, thereby supporting strategic priorities related to cost optimisation or research excellence. Yet, many commented about how ‘digital’ doesn’t take in account the years of legacy IT investment and the failure to address it (technical debt). Some felt that digital was about ‘new’ which leaves a challenge about what to do with the ‘old’ (IT) – particularly if investment is supposed to be linked to strategic outcomes. Clearly there is a tension in some organisations about the journey ahead of them as digital becomes the norm (and already is) for most students. This has major potential to create divide between IT and digital in mindset, in perception and in support of great outcomes. It is also problematic for those that have to create an operating model (and cost model) when strategy fails to address the reality of the tech estate.
For me, the discussion gave a sense that there is an impending inflection point for tech leaders within UK HE. When we discussed ‘old’ and ‘new’ there was a sense that strategy and institutional operating model was something that was being done to IT teams – not something that we were shaping, driving… leading. This links back to Emma Woodcock’s earlier blog about the ‘seat at the top table’.
If we want to properly embed a digital operating model, or shape strategy, so that it is delivers in reaching our ambitions and addressing the things that need fixing, then we need to step up and grab hold of leadership in the digital space. It is not enough to be ‘traditional IT’ and keep the lights on. Or to talk about digital without demonstrating what it means to be digital. We must disrupt and change the views and, subsequently, operating model across the whole institution. Who else is going to do it and make it a success?
As new technologies emerge at an ever-increasing velocity, it can be argued that universities need flexible operating models that can adapt to evolving conditions and staff/student needs but how many of us truly have these? Or have a budgeting process that allows for an agile, flexible approach to staffing? A siloed or rigid operating model will hinder ability to respond quickly to new opportunities or threats. If therefore, a university strategy refers to embracing emerging tech (AI, bioinformatics, quantum, etc) those who create it must also appreciate, indeed advocate, for responsive operating models that prioritise speed, innovation, and continuous improvement. An acceptance of experimentation and failure. This is where culture and leadership too, become critical factors.
Leaders play a fundamental role in setting the tone for organisational culture and driving alignment between strategy and operations. The phrase "culture eats strategy for breakfast", stresses that while strategy is important for any organisation, a company's culture - the values, norms, and behaviours shape that how people work together - can have a greater impact on its success or failure. This is a commonly accepted principle but fostering a culture of that enables collaboration, innovation, and accountability has to be driven through the successful implementation of a target operating model. Therefore, strategy and operating model are not isolated – they are part of an overall consideration that needs to also incorporate leadership and culture. This is holistic.
In conclusion, a well-crafted strategy can inform the design of an effective digital operating model, and a robust digital operating model should enable the execution of the chosen strategy for the digital landscape – but they need to be considered together not separately. The right leadership is then paramount to garner a conducive culture within which the digital operating model can thrive. Neither the strategy nor the digital operating model should be static for any enduring period as this will affect culture and ultimately, execution. So, in respect of the question, ‘What is the connection and does one drive the other?’, my answer is they drive each other… but there are more vehicles on the road!
Jason Oliver
CDTO, University of Sussex
