Blog: Target Operating Model Design – How to Get It Right
A TOM is a blueprint for how your organisation will operate in the future, outlining its structure, processes, data flows and technology. Fundamentally it sets out how the Business Strategy will be delivered operationally to achieve its strategic goals and deliver its value proposition.
DESIGN: HOW TO GET IT RIGHT
It’s important to firstly step back and take a holistic view of your organisation, considering its strategy, outcomes, and unique value., Ensuring you understand the current landscape is essential for designing a target operating model (TOM) that will enable your business to achieve its goals.
It is important to look for a step change in capability, this may be in some or all areas of the TOM. This will identify where you can make a significant improvement in your ability to achieve your strategic goals. Be prepared to adopt new technologies, implement new processes, change your organisational structure, and upskill your workforce.
UNDERSTAND YOUR BUSINESS STRATEGY
Without a strategic vision, designing processes becomes almost impossible, leading to the risk of replicating past practices and failing to seize competitive advantage.
Before you start to design your TOM, you need to understand your business strategy. Ask yourself these fundamental questions:
- What will be the key drivers of the business?
- What are the business’s competitive advantages?
- What will the organisation look like in 3 – 5 years’ time?
The answers will provide you with a clear understanding of your strategy, once you have this you can start to develop a TOM that will support it.
ASSES YOUR CURRENT STATE
Before making any significant changes, it’s crucial to have a thorough understanding of your organisation’s current state.
It could be your business is at a growth inflexion point or you’re introducing new service offerings, or it’s reaching a new level of maturity. Essentially the current state isn’t going to be sustainable and will not deliver the results the organisation needs to remain in a competitive position.
Document your strengths and weaknesses and identify the opportunities and threats facing your business. This information will help you to identify the gaps between your current and desired future state.
IDENTIFY YOUR FUTURE STATE
Define what the new future might look like to successfully achieve your strategic aim. Consider how your systems, processes, locations, partners, people, and data will need to operate in order to achieve your target state.
Make sure that you create a clear message of what good looks like for the future, a set of ground rules and ways of working that allows you to structure what will be delivered.
This clarity is essential for planning and executing the steps needed to transition from the current state to the desired target state.
BRIDGE THE GAP
Design your TOM to address the gaps you identified to achieve your target state. It should also be flexible and adaptable so that it can be updated as needed, to respond to changes in the environment.
Remember, a TOM is not a one-size-fits-all solution. It needs to be tailored to the specific needs of your organisation and its industry.
One of the things that organisations can often fail to give enough focus to is the impacts to your people by this new organisational future.
Don’t just tell them what it’s going to look like when it’s delivered, take them on the journey with you, share with them what the process to get there looks like, so they know what to expect.
TAKE A PHASED APPROACH
Don’t try to implement the entire TOM at once. Start with a few key processes or systems and gradually implement the rest over time.
This will help to minimise disruption and ensure that the TOM is implemented successfully.
A TOM is a critical tool for helping organisations achieve their strategic goals. By designing a TOM that is aligned with your business strategy, you can develop a roadmap for bridging the gap between your current and desired future state.
Implementing a TOM in a phased approach will help to minimise disruption and ensure success. By focusing on a few key processes or systems at a time, you can gradually transform your organisation into a more efficient, effective, and agile enterprise.
By following these steps, you can ensure that your TOM is aligned with the current and future needs of your business, helping you to unlock your full potential and achieve your desired outcomes.