In my first blog post, I explained how value creation starts and ends with people and subsequently depends on their beliefs about other people and systems.

One such system, and a very essential one, is the operating model. An operating model explains why we do what we do and how to stay on course towards the shiny north star. The operating model helps to prioritize. Most other systems derive from it. The illustration below shows Northern.tech’s operating model. The rest of this blog post explains it in greater detail.

Company mission

At the top of the operating model shines the company mission. The mission statement should answer the “why” question, first and foremost. Why are we doing this? What is it that we (the company) want to achieve in life? What is it that makes it meaningful to contribute to this mission? Employees who do not align with the mission are better off elsewhere. For the ones who do align, a clear mission instills pride, motivates, provides meaning, and helps overcome challenges in the days ahead. After all, if you are spending a significant part of your life at work, it better be for some good purpose.

Northern.tech’s mission is to “Secure the world’s connected devices”. You can learn more about our mission and why we think it matters here.

Vision

Whereas 'mission' shines like an unreachable bright star, vision should be time-boxed and obtainable. A vision can be a delightful (realistic) dream about the future. Assume sunshine and tailwind, what could the future look like in 3-10 years? Now, having imagined that vision, start working towards it!

Vision works well for products, product groups, departments, or the whole company. You could even have your own personal vision. Dreaming it is the first important step in making it come true.

The development of a vision should be led and eventually decided on by the ones who can impact it the most. Company vision by owners, products by product owners, etc. It is smart to allow anyone who desires to contribute an avenue or forum to do so, especially in smaller companies where everyone’s work tends to be critical to the company.

Given my educational background in business, I would never have thought that the one who inspired me the most on creating vision would be an anarchist. If you are looking for a good read on how to create a vision, check out Ari Weinzweig’s A Lapsed Anarchist's Approach to Building a Great Business.

Rolling company objectives

With a mission (why) and visions (delightful achievable dreams) in place, it is time to descend to earth and get practical: enter rolling company objectives.

Rolling company objectives play the role of important tangible short-term company goals. The number and scope of rolling company objectives depend on the size of the company.

At Northern.tech, we tend to have 3-4 objectives. When creating a new objective, everyone in the company is encouraged to fill out an online form and share what they consider currently to be of most importance for the company in the coming (3-8) months. The employee input becomes the background for discussions and final decisions. An example of a rolling company objective for us is to: "Launch Mender as a hosted service."

At Northern.tech, new objectives typically replace previous successfully/unsuccessfully attained objectives. Success in attaining an objective is celebrated by donation (decided by random employees) to a non-profit organization. Unsuccessful objectives must be contemplated upon free of punitive measures and repercussions, culpable or not.

Continuous Improvement

Rolling company objectives tend to focus on new things. However, perseverance and efforts in improving existing processes/products deserve equal attention. Being a software company, one can never pay down enough technical debt, can always improve metrics related to software releases, and can continuously be better at human operations, customer support, etc. Within the framework of the operating model, we call this Continuous Improvement.

At Northern.tech, we do periodic peer-based performance reviews. Prior to a new period, each employee writes areas they want to improve on. Often, these areas relate to continuous improvement. Having continuous improvement in the model ensures everyone in the organization can work on “stuff” of importance to the company. Often, “stuff” of importance to the company exclusively belongs to employees working on new stuff. This can alienate or make the maintenance work less attractive. Focus on Continuous Improvement in our operating model helps avoid such negative perceptions or situations.

In the Continuous Everything blog post, you can read more about this important topic.

The importance of metrics

Operating models serve no good unless one is willing to live by them. How does one know if the ship sails in the right direction? Most organizations have created models and plans on how to run things, but reality and theory might differ. Diligent and comprehensive reporting mechanisms, I think, are the best way to secure model relevance.

At Northern.tech, we use the following measures to give life to the operating model and thereby track company direction and employee satisfaction:

• Rolling company objectives are regularly and successfully met. As a qualitative measure, this progress is mainly observed without further ado. Progress towards each objective can be found in monthly updates.

• High degree of employee satisfaction. Three times a year, companywide reviews produce both quantitative and qualitative feedback. On our intranet, a great number of time-series graphs show the evolution of employee satisfaction across various metrics.

• Expected/positive monthly company metrics. Metrics from across the organization are summarized monthly. Quantitative metrics show up in intranet charts. In the monthly status update, selective metrics are elaborated upon.

• Bi-weekly sprint demos leave us with "good-feeling". We write software. Bi-weekly, each product line demonstrates tangible outcomes since the last iteration and agrees upon the plan for the next period. Sprint evaluations come with a mix of quantitative and qualitative measures.

That’s it, and that’s all. The combination of the four elements above constitutes company performance and employee satisfaction, both short-term and long-term. Besides this, there is not much we really care about or govern by. No specific number or metrics automatically warrants action. What matters most comes from trends. Metrics with a significant declining trend over time must be taken seriously and looked into. Luckily, due to the transparency and level of detail in reports, consensus on where to put extra efforts emerge naturally by itself most of the time.

Our operating model seeks to encourage self-improvement at individual, team, and organizational levels while serving as a motivator for why we do what we do. Although the current operating model serves us well today, it is frequently refined.

I hope our eclectic operating model has given birth to new ideas on how to improve or adjust existing operating models or even create new ones from scratch. And if you have ideas of your own that could help extend this approach – you know us; we believe in continuous improvement!