A target operating model (TOM) outlines the ideal structure and processes for an organisation to achieve its goals and objectives. It defines how work should be done and how resources should be deployed to deliver value to customers, stakeholders, and employees.
Creating a TOM requires a clear understanding of the organisation's business strategy, objectives, and goals, as well as a thorough analysis of its current operating model and how it compares to industry best practices.
Image courtesy of IBM: https://www.ibm.com/garage/method/practices/culture/target-operating-model/
The steps below outline a common approach to creating a TOM:
Define the organisation's business strategy and objectives: The first step in creating a TOM is to clearly define the organisation's business strategy and objectives. This includes identifying the target market, the products or services offered, and the value proposition. It also includes defining the organisation's mission, vision, and values. This helps to ensure that the TOM is aligned with the organisation's overall goals and objectives and enables the organisation to deliver value to customers, stakeholders, and employees.
Analyse the current operating model: The next step is to assess the organisation's current operating model and determine how well it aligns with the business strategy and objectives. This may involve conducting a gap analysis to identify any weaknesses or areas for improvement. The gap analysis should examine all aspects of the organisation's operations, including structure, processes, systems, and capabilities. It's important to be honest and objective in this analysis, as it will help to identify the changes that need to be made to create a more effective TOM.
Identify industry best practices: To create the perfect TOM, it's important to understand what other organisations in the same industry are doing and how they are achieving success. This may involve benchmarking against competitors or researching industry best practices. By understanding what works well in other organisations, it's possible to identify new ideas and approaches that could be applied to the organisation's own operations.
Define the target operating model: Once the organisation's current operating model has been analysed and industry best practices have been identified, it's time to define the target operating model. This includes outlining the ideal structure and processes for the organisation to achieve its goals and objectives. The target operating model should be based on the organisation's business strategy and objectives and should take into account the needs of all stakeholders, including customers, employees, and investors.
Create a roadmap for implementing the TOM: Implementing a new operating model is a complex and often time-consuming process. It's important to create a roadmap that outlines the steps needed to transition to the new model, including timelines and key milestones. The roadmap should include a detailed plan for each step in the implementation process, as well as an assessment of the resources and support needed to ensure a smooth transition.
Communicate the TOM to stakeholders: Once the TOM has been defined and a roadmap for implementation has been created, it's important to communicate the new model to all stakeholders, including employees, customers, and investors. This may involve training and support to ensure a smooth transition. It's also important to involve stakeholders in the TOM development process, as their input and feedback can help to ensure that the model meets the needs of all parties involved.
Monitor and adjust the TOM as needed: The perfect TOM is not a one-time effort; it's an ongoing process that requires ongoing monitoring and adjustment to ensure it remains effective. This may involve regularly reviewing and updating the TOM to ensure it continues to align with the organisation's business strategy and objectives. It's also important to gather feedback from stakeholders and employees to identify any areas for improvement and make necessary adjustments.
In summary, creating the perfect TOM requires a clear understanding of the organisation's business strategy and objectives, a thorough analysis of the current operating model, identification of industry best practices, definition of the target operating model, creation of a roadmap for implementation, communication to stakeholders, and ongoing monitoring and adjustment. By following these steps, organisations can create a TOM that helps them achieve their goals and objectives and deliver value to customers, stakeholders, and employees.
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