How Internal Operating Design Shapes Productivity and Value Creation

Despite significant investment in digital tools, many organisations continue to operate with workflows designed for earlier systems and operating conditions. Internal reviews frequently reveal process steps that add limited value, having been built around outdated responsibilities, controls and handoffs. When automation is layered onto these foundations, it often amplifies fragmentation instead of reducing it.

Inconsistent internal service models further compound the issue. Functions such as finance, HR, procurement and legal frequently operate without shared service standards or predictable turnaround times. As a result, handoffs between teams become a source of delay and variability, particularly in high-volume workflows such as contracting, onboarding and approvals.

Decision structures introduce additional friction. Even with real-time visibility, documents and requests often move through extended approval chains. McKinsey’s research indicates that some workflows still require six to twelve approvals despite minimal underlying risk. These patterns slow execution, reduce reliability and limit the organisation’s ability to scale operations effectively.

To reduce internal friction, organisations are rethinking how work moves across teams and functions. Rather than launching broad transformation programmes, many are starting with a small number of high-volume internal workflows that generate the greatest delays, manual effort and operational risk.

In sectors such as financial services, procurement and contract approval are often prioritised. Companies simplify fragmented workflows by reducing parallel process variants across business units and aligning data requirements for suppliers and contracts. Eliminating duplicate checks and streamlining approval logic shortens cycle times and creates a more stable foundation for automation.

Decision-making routines are redesigned in parallel. Low-risk, repeatable decisions are increasingly separated from those requiring managerial judgement. Routine approvals are handled through automated rules and predefined thresholds, while managers focus on exceptions and higher-impact cases. This reallocation of decision authority often accelerates execution more effectively than standalone technology deployments.

Automation then reshapes how work is performed. AI-enabled tools support documentation, validation and data processing, allowing teams to redirect time toward coordination, analysis and decision support. When applied to simplified and well-governed processes, automation strengthens execution reliability and increases the organisation’s capacity to absorb further change.

In large, complex organisations, particularly in financial services and industrial sectors, procurement and contract approval are often among the first areas to be redesigned. These workflows typically combine high volumes, multiple handoffs and legacy controls, making them a significant source of internal friction.

Rather than treating these areas as isolated functions, organisations standardise core workflows across business units, reduce parallel process variants and align data requirements for suppliers and contracts. Eliminating duplicate checks and simplifying approval logic shortens cycle times and creates a more stable foundation for automation and AI-enabled controls.

Decision-making routines are reconfigured in parallel. Low-risk, repeatable decisions are increasingly separated from those that require managerial judgement. Routine approvals are handled through automated rules and predefined thresholds, while managers focus on exceptions and higher-impact cases. In practice, reducing approval layers in standard workflows often accelerates execution more effectively than standalone technology initiatives.

Automation then reshapes how work is performed across finance, operations and customer-facing functions. AI-enabled tools support documentation, validation and data processing, allowing teams to reallocate time toward coordination, analysis and decision support. Research on AI-enabled operating models indicates that, when applied to simplified and well-governed processes, automation can redirect approximately 20 to 30 percent of employee time toward higher-value activities.

Across industries, internal transformation is increasingly driven by a small set of recurring operating changes. Rather than broad transformation programmes, organisations are making targeted adjustments to how processes are designed, internal services are delivered and operational decisions are made. These shifts represent concrete changes to operating models rather than high-level transformation frameworks.

‍Core operating changes observed across organisations

Organisations are entering a phase in which internal operations evolve faster than external products or services. Automation is becoming more deeply embedded in everyday workflows, AI tools are increasingly used for knowledge and decision support, and data foundations are being unified to reduce variability across teams.

At the same time, responsibility for core processes is shifting toward clearer cross-functional ownership. Executives are introducing accountability models tied directly to operational outcomes, rather than functional activity.

The next phase of internal transformation will focus on improving individual workflows while building operating models capable of continuous adaptation as technology and business requirements change.

Internal operating design is becoming a decisive factor in organisational performance. Legacy workflows, slow approvals and inconsistent internal services increasingly define how quickly and reliably a company can execute, regardless of how advanced its external technologies may be.

Organisations that redesign their operating models around clear processes, predictable service levels and streamlined decision routines achieve faster delivery, lower operational risk and greater readiness for automation and AI. In contrast, technology layered onto fragmented internal systems delivers limited and uneven results.

As competitive pressure intensifies, internal systems are no longer a support function. Companies that treat operating design as a strategic asset will be better positioned to adapt, scale and sustain performance in the next phase of business transformation.