A board meeting in late September. The chair pulls up the colour-coded operating model on the second screen. Most boxes green. Two amber. One, customer support, has been amber for three quarters now.
The CRO walks through. Says the right things. The board nods. Twelve minutes. Next agenda item.
Nobody asked the only question that mattered.
There is a difference between a quarterly operating-model review and what passes for one in most boardrooms. The difference is whether the colour on the picture is being defended, or only displayed.
When the colour is displayed, the review is theatre. The CRO summarises. The chair nods. The amber box gets a one-line update. Everyone agrees something is being done. The picture refreshes for the next quarter. Nobody owns the question of whether the amber box is moving, why, and by when it will close.
When the colour is defended, the review is governance. Every box has a named owner present in the room. Each owner explains, in their own words, why their box is the colour it is. If a box is amber, the question is not “what colour” but “what changed in the last quarter, and what specifically will change in the next.” If a box stayed amber from last quarter, the question is harder still. Two quarters of amber, in our discipline, is not a process problem. It is a leadership problem. The board is no longer reviewing the function. It is reviewing whether the function has the right person running it.
Most boards do not run this version. They run the first version. And they wonder why their operating model never improves quarter to quarter.
Three things make the difference.
The first is named ownership in the room. Not on the slide. In the room. Customer support amber means the head of customer support is in the room to defend the colour. If the colour is defended by the COO on behalf of an absent function head, the review is already softer than it should be. The first discipline of a real review is that the owner of every box that moves has to be the person who explains why.
The second is scoring criteria written down once and not re-litigated. Every box is scored on impact and likelihood. Those criteria are set at the start of the year and they do not move. If support escalation rates were the metric for the customer-support box in Q1, they are still the metric in Q3. The temptation in a soft review is to redefine the metric to make the colour move in the desired direction. The discipline of a hard review is that the score is a function of the criteria, not of the politics. If the criteria need to change, that is a board decision, taken explicitly, not absorbed by drift.
A box amber for one quarter is a process problem. A box amber after two reviews is a leadership problem.
The third is the two-quarter rule. A box amber for one quarter is a process problem. The owner has a plan. The plan runs for a quarter. By the next review, the box has moved. If the box has not moved after two reviews, the discipline shifts. The question is no longer “what is the plan.” The question is “is this the right owner running this function.” This is the hardest conversation a board has, and it is the conversation that the soft version of the review specifically protects everyone from.
I will say something uncomfortable. Most boards do not want to run the hard version. The chair is friends with the CEO. The CEO is friends with the function head. The non-executives are time-poor. The pack ran over by twenty minutes. The amber box is uncomfortable. The pre-meet between chair and CEO already decided to “give it another quarter.” The review chamber confirms what the pre-meet agreed. Theatre.
The cost of running theatre is invisible at first. It compounds invisibly. Quarter four, the same amber. Quarter five, the same amber, plus one of the green boxes starts to slip because the underlying culture of “we do not have hard conversations here” has spread. By the time the board notices the second amber, the first one has been amber for a year. The fix is no longer operational. It is structural.
When I was COO at Lumeon, the operating-model review was a quarterly item at the executive team and a colour summary up to the board. The discipline at the executive level was the hard version. Every owner explained their own box. The scoring criteria were written down and the only board-level decision about them was at year-start. The two-quarter rule was explicit. When a box moved from green to amber, somebody had to explain why. When it stayed amber, the work was on the plan. When it stayed amber a second time, ownership was on the table.
What that produced, in practice, was a culture in which amber was not a comfortable place to sit. Owners moved their boxes back to green or escalated for help long before the second review. Most issues never reached the two-quarter rule. The rule’s job was not to fire people. The rule’s job was to make sure nobody let an amber drift because they hoped the chair would not look closely.
This is the operating maturity that distinguishes a business that scales from a business that survives. It is not glamorous. It is not the strategy day everybody likes. It is the unloved fourth agenda item that quietly determines whether the operating model is a living artefact or a slide that nobody updates.
A coloured operating model is only as honest as the review that produces the colour. The map is the easy bit. The discipline that keeps the colour real is the work.
Pick which review you want your board to run.
For a worked example of an operating model with risk and AI-readiness overlays, explore the interactive Target Operating Model.