An operating unit is a group of people who work together over a long period of time (generally years) to build a business that solves a specific problem for a specific set of customers in a specific manner.

It is a good idea to move in the direction of forming and developing operating units as opposed to amassing clusters of one-off projects. This is because operating units tend to be more stable, easier to grow, and generally provide more connectedness, interest and fun for the people in them.

An operating unit has:

• A leader with a bias for action and who sets direction, aligns resources, and motivates action
• A leadership team of two to seven people with complementary skills that are important to the business and who are compatible with each other
• A defined product or service offering
• A defined set of clients and prospects
• A business model that shows how the finances of the business are supposed to work. I.e., what portion of revenue covers what cost components and how much results in operating income
• A clear picture of where the business is now and where it can be three years from now and identification of the factors that constrain growth
• A strategy to deploy the leadership team to achieve growth and performance plan
• A clear set of rewards that will be earned if the plan is achieved in a manner that is consistent with the business model.
• A staff of permanent resources assigned to execute business functions
• A systematic and programmatic approach used to sell the offering to the target market
• A repeatable process used to deliver product or service offerings
• A systematic and programmatic approach to hiring and developing resources to sell and deliver the product or service offering.