Target Operating Models (TOMs) are not a new concept. However, requests from a number of organisations seeking our support to develop or implement them, indicates a resurgence in the public and not-for-profit sector. Speaking to our clients, there seem to be three major drivers leading to this:
- Recognition that current processes have been designed around the organisation’s structures and systems rather than delivering customer value. Additionally there has been more of a realisation that customer expectations are evolving, and they are also interacting with organisations differently.
- The availability and accessibility of new technology. This has so far centred on implementing more digital and automated processes, creating a more agile working environment, and customers being involved in services in a different way, such as self-service portals.
- A desire to become more efficient, accentuated by a need to realise substantial cost savings and deliver more with less resource due to increased demand and/or less resource.
The three drivers outlined above require organisations to rethink how they do things, with a view on what they want to achieve in the future. While an organisation’s objectives, mission and strategy (the what and why) are critical in the development stage, the purpose of an operating model is to answer the how, where and when. A TOM is simply a future state of how an organisation will need to operate to deliver their objectives.
Using a TOM is a great way for an executive team to agree and articulate the organisation’s purpose and the means by which that purpose will be delivered. This includes the processes that need to be in place, the skills and capabilities required and where the work will take place. The diagram below is our outline of the key components of a TOM.
The business objectives and strategy outline what the organisation wants to achieve in the future, its purpose for existing and what it will offer to meet customer needs. A TOM then articulates how this will be delivered.
A good TOM is critical to ensure organisation-wide change is effective. Unfortunately, the absence or poor development of a TOM often leads to organisational design being driven by the wrong things. We see this take shape in many ways, including:
- Changes being uncoordinated and often conflicting against each other
- Operations being determined by the technology an organisation has invested in
- Restructures not being aligned to the demands on the organisation or delivering value to customers
- Investment being put into areas that will not help the organisation move forward.
Implementing a TOM
A TOM is an output of strategic planning. To do this the organisation needs a clear mission and purpose, based upon the customers it wants to serve, and the outcomes it wants to deliver for these customers. It must decide on the services (or products) they will deliver. This is followed by development of business objectives and strategy to outline what they want to achieve and how. The TOM takes all this information and effectively operationalises the strategy and business objectives.
Creating a TOM is only the beginning. It must be followed by implementation, which in practical terms is the execution of the strategy. Failure to take this step will result in the TOM simply remaining a vision, but with limited investment in less effective change activity.
The execution means delivering a transformation that takes an organisation from the current operating model to the Target Operating Model. In practical terms it is clearly understanding how your operations are now, identifying what needs to change, and then developing and delivering an effective transformation programme to achieve the required change.
How Ad Esse can help
Ad Esse specialise in supporting organisations deliver sustainable transformation. Our approach is based on understanding what customers value and putting this at the heart of all process and organisational design. With many years of experience, we can support your executive team to design a Target Operating Model that will provide clarity on what the organisation needs to do to meet its objectives and ensure that limited resource is deployed wisely. We differ from many consultancies by actually working with our clients to deliver the outcomes identified in the TOM, rather than just producing a fat report or presentation. All managers know that execution is the hardest part of managing, support at this stage is vital for any transformation.
If you would like to know more, please contact us by emailing firstname.lastname@example.org.