Why Strategy Keeps Failing and How Operating Models Quietly Break It
Jan 26, 2026
Many organizations spend months refining strategy. Vision statements are sharpened, priorities are debated, and targets are approved at the highest level. Then execution begins and results disappoint. The issue is rarely the ambition of the strategy itself. More often, the organization is simply not built to deliver it.
Recent research into operating models highlights a persistent gap between strategic intent and actual performance. Even high-performing organizations typically realize only a portion of the value their strategies promise. The missing value sits inside the organization’s design: how work flows, how decisions are made, how people are rewarded, and how technology is used. Strategy sets direction, but the operating model determines whether that direction can be followed at speed and at scale.
For years, organizations treated structure as the core lever for fixing execution problems. They reorganized charts, merged departments, introduced matrix reporting, or launched agile teams. Structure matters, but structure alone does not create value. What actually drives performance is the interaction of multiple design choices working as a system.
The research reframes the operating model as a dynamic system made up of twelve interdependent elements. These include purpose, value agenda, structure, ecosystem, leadership, governance, processes, technology, behaviors, rewards, footprint, and talent. Each element shapes how work happens.
Together, they define the organization’s operating fingerprint.
This fingerprint explains why two companies with similar strategies perform very differently. One may move fast while the other stalls. One may attract scarce skills while the other struggles. One may adapt smoothly to market shifts while the other reacts late. The difference lies in how consistently these elements reinforce one another.
Consider decision-making speed. It is influenced by leadership style, governance mechanisms, clarity of accountability, process design, and the way technology supports decisions. Improving only one of these rarely produces lasting results. Speed emerges when all of them align around clear priorities.
The same applies to talent. Hiring strong people is insufficient if the operating model cannot deploy them effectively. Skills must be located where value is created, supported by the right tools, encouraged through rewards, and enabled by ways of working that allow judgment and initiative. Otherwise, talent becomes an underutilized capacity.
One of the most practical insights from the research is the idea of consciously choosing how much change is needed. Organizations can either refine their existing fingerprint by adjusting selected elements or shift to an entirely new one. Refinement works when the strategy remains largely sound and the gaps are specific. A full shift becomes necessary when performance plateaus due to deeper misalignment across the system.
Examples from different sectors show that there is no single ideal operating model. High performance appears in traditional hierarchies, agile enterprises, and decentralized networks. What distinguishes winners is fit. Their operating model matches their value agenda, market context, and risk profile. It evolves as conditions change.
When organizations get this right, four outcomes consistently improve. Clarity increases because priorities, roles, and resource allocation align with strategy. Speed improves as workflows become simpler and decisions move closer to where value is created. Skills remain relevant through continuous adjustment of talent and capability models. Commitment rises when behaviors and rewards reinforce shared goals.
The lesson is straightforward. Execution problems are rarely execution problems alone. They are design problems. Treating the operating model as a living system, rather than a static structure, turns strategy from intent into impact. Organizations that internalize this shift stop redesigning in cycles and start delivering results with consistency, even in volatile conditions.
