As organizations navigate the complexities of digital transformation, one question repeatedly arises:
“How do we shift from functional design to horizontal design when designing our Operating Model?”
Traditionally, functions like Finance, Procurement, Operations, and Marketing operate within their own silos, each developing its own operating model. However, to drive efficiency and enhance customer experience, organisations must transition to a horizontal, customer-centric design that integrates all functions seamlessly.
This transition is particularly critical as organizations incorporate AI into their end-to-end processes. AI’s potential can only be fully realized if it is embedded in a structure that fosters cross-functional collaboration, data-driven decision-making, and seamless process integration.
Even if different teams work independently, aligning on a shared set of design principles ensures consistency across the organization. This alignment fosters interoperability, clarity in decision-making, and a uniform approach to AI-driven transformation.
To break down silos, organizations need a high-level Operating Model Blueprint—a single-page visual representation of how various functions interact. This helps teams drill down into their specific designs while maintaining a unified, enterprise-wide perspective.
End-to-end processes like Source-to-Pay (S2P) or Order-to-Cash (O2C) serve as the foundation for horizontal design. They ensure visibility across functions, clarify handoffs, and eliminate inefficiencies in workflows spanning multiple departments. This approach forces an organization-wide mindset, promoting AI’s role in optimizing these processes.
Understanding the organization’s core business capabilities—both shared and function-specific—prevents redundant efforts and encourages resource optimization. A well-defined capability model helps leaders identify synergies across teams, ensuring AI investments deliver enterprise-wide benefits.
Governance should be an enabler, not a bottleneck. Establishing a governance framework ensures alignment between teams, facilitates collaboration, and prevents duplication of AI-powered initiatives. It also creates clear communication channels to sustain horizontal integration.
At some stage, all functions must come together—whether at the start of detailed design or during execution. Convergence helps prioritise initiatives based on enterprise-wide value, rather than individual departmental gains. AI implementation particularly benefits from this approach, ensuring resources and technologies are deployed strategically.
Transformational change is most effective when it complements ongoing efforts. Instead of disrupting current initiatives, organizations should focus on enhancing existing processes and integrating AI solutions where they add the most value. This collaborative mindset fosters a smoother transition to a horizontal model.
The shift to a horizontal design is not just a structural change—it’s a strategic necessity in today’s AI-driven world. Organizations that successfully transition can achieve:
With AI at the core, organizations must ensure their operating models evolve to support digital transformation, intelligent automation, and business process optimization. A siloed approach will only limit AI’s impact, while a horizontal, integrated structure will enable long-term, scalable success.
Transitioning from a functional to a horizontal operating model is challenging, particularly in large, complex organizations. However, businesses that embrace a cross-functional, AI-integrated approach will be better positioned to drive operational excellence and unlock future growth.
© Hudson & Hayes | Privacy policy
Website by Polar
