A target operating model (TOM) is a blueprint that defines the desired state of an organization’s design and its mechanisms to deliver its strategic objectives It serves as a roadmap for businesses looking to enhance their operational efficiency, streamline processes, and improve overall performance Crafting an effective TOM requires careful planning, analysis, and consideration of various factors In this article, we will explore the key steps to design a successful target operating model.
1 Understand the Current State:
The first step in designing a target operating model is to gain a deep understanding of the organization’s current state This involves reviewing the existing structure, processes, capabilities, and systems By conducting a thorough assessment, businesses can identify areas of improvement and define their specific goals and objectives for the TOM.
2 Define Strategic Objectives:
To create a comprehensive target operating model, companies need to clearly articulate their strategic objectives These objectives should align with the overall corporate strategy and provide a clear direction for the design process Whether the focus is on growth, cost reduction, innovation, or any other aspect, it is crucial to outline specific goals that the TOM will aim to achieve.
3 Analyze Stakeholder Requirements:
Stakeholder analysis is a critical component in designing an effective target operating model Businesses must identify and understand the needs, expectations, and preferences of various stakeholders, including employees, customers, suppliers, and partners This analysis allows organizations to ensure that the TOM supports and addresses the requirements of all relevant parties, creating a more holistic and inclusive approach.
4 Create Future State Vision:
Based on the understanding of the current state and stakeholder needs, the next step is to develop a clear and compelling future state vision This vision should articulate how the TOM will enable the achievement of strategic objectives while addressing the identified areas of improvement It serves as the guiding principle for the redesign process and defines the desired outcomes of the TOM implementation.
5 Determine Core Operating Model Components:
The core components of a target operating model encompass the organization’s structure, processes, systems, people, and culture While designing the TOM, businesses need to carefully consider each of these components and tailor them to fit the defined strategic objectives This involves defining roles and responsibilities, designing efficient processes, implementing suitable technologies, and nurturing a supportive and collaborative organizational culture.
6 design target operating model. Develop Implementation Roadmap:
Once the target operating model components have been determined, organizations must devise a detailed implementation roadmap This roadmap should outline the steps, timelines, resource requirements, and dependencies for each phase of the TOM’s transformation It is important to involve key stakeholders in this process to ensure buy-in and alignment at every stage.
7 Test, Iterate, and Monitor:
Designing a target operating model is an iterative process that requires continuous testing, refinement, and monitoring Businesses should thoroughly evaluate the TOM design by creating prototypes, running pilot programs, and gathering feedback from relevant stakeholders This iterative approach allows organizations to identify potential issues, make necessary adjustments, and optimize the TOM’s effectiveness before full-scale implementation.
8 Communicate and Engage:
Effective communication and stakeholder engagement are vital throughout the design and implementation of a target operating model Organizations must communicate the benefits, objectives, and expected outcomes of the TOM to all employees and stakeholders Engaging them in the process encourages ownership, fosters collaboration, and minimizes resistance to change, facilitating a smoother transition to the new operating model.
In conclusion, designing a target operating model is a multifaceted process that requires a thorough understanding of the organization’s current state, strategic objectives, stakeholder requirements, and future vision By following the key steps outlined above, businesses can create an effective TOM that optimizes operational efficiency, fosters innovation, and supports the achievement of strategic goals Remember, designing a target operating model is not a one-size-fits-all approach, and organizations should continuously reassess and refine their TOM to adapt to changing business environments.
References:
– Basher, A., & Walter, A (2019) Target Operating Models: Mastering Business Architecture CreateSpace Independent Publishing Platform.
– Ross, J (2015) The operating model that helps businesses win MIT Sloan Management Review, 56(3), 15-17.