A recent increase in requests for support to develop or help implement new Target Operating Models (TOMs) suggests that more organisations are seeking ways to make sense of complex situations. A TOM is a description of the desired state of an organisation. There appear to be three major interlinked drivers for the resurgence in the use of TOMs:
- The availability of new technology and the need to keep up with other organisations and customer expectations. Two particular themes in new sector technology have emerged recently: ‘self-service portals’ so customers can complete the whole or part of a process for themselves without the need for staff involvement, and ‘agile’ working. This means having staff that can work from anywhere, reducing the reliance on travel, fixed hardware and office space.
- A growing recognition that current processes have not been designed around customer value. Customers are changing the way they interact with organisations and are more vocal about the service they receive. Therefore there is an increased awareness about the extent to which they are satisfied.
- Inefficiencies in current operations, sometimes accentuated by a need to reduce costs or do more with the resources.
The drivers described above point to the need for rethinking ‘processes’ and ‘place’ – the how and where business is conducted.
Using a TOM is a way for an Executive Team to agree and articulate the organisation’s purpose: the means by which it will achieve that purpose, the high-level processes that need to be in place, the skills and other resources required (including systems), and where work will take place. The act of building the picture provides clarity in itself and helps leaders provide direction for customers, staff and other stakeholders alike. The diagram below is our outline of the key components of a TOM.
Technology drivers unfortunately sometimes lead to organisations designing their TOM around new hardware or systems, rather than customer demand and value. The efficiency and customer value drivers often lead to organisations restructuring as a first step. The disadvantage of this is that the structure is often based on assumptions or non-challenged data. For example, creating a larger complaints team because of the volume of complaints received rather than a model that seeks to improve services and reduce complaints.
The way forward
The key factors for developing a good target operating model are:
- Ensuring it is an executive-led activity with all of the team in attendance
- Starting with the organisation’s objectives
- Working through each section and agreeing what is needed rather than starting with technology.
How Ad Esse can help
Ad Esse is first and foremost a specialist consultancy primarily using Lean Thinking principles to achieve sustainable business transformation. Lean Thinking puts the customer and their values at the heart of all processes.
With many years experience, Ad Esse can provide challenge and support to your Executive Team to design a target operating model that will provide clarity and enable effective deployment of limited resources.
If you would like to know more, please contact us by emailing firstname.lastname@example.org.