Subject Matter
Operations & Process
The Target Operating Model
The missing link?
The Target Operating Model can be a good way to clarify what the organisation is trying to achieve, in business and operational terms.
Back to first principles…
An operating model is simply a picture or diagram which shows how something operates. In earlier days, operating models were quite simple to understand.
More recently…
In the world of commerce, a Target Operating Model (or TOM) describes how the organisation intends to operate at some time in the future, for example how a mortgage company intends to structure its retail business. It usually involves a series of pictures, charts and diagrams that explain how some aspect of the organisation will work. And as a model, it only reflects a sub-set of the total company, and will focus on the key elements that are changing. However, it must also show how the change will affect other parts of the organisation.
It can be a useful way to integrate a view of a number of design elements, such as organisation, location, people, process and systems. It will also include the key numbers that underpin its purpose, such as future operating costs, business volume projections, staff numbers across channels and sales conversion rates, as appropriate.
As a “target”, it corresponds to a vision of the future, usually no further than 3-5 years away. The TOM, once agreed, represents a picture that all stakeholders can buy into. It represents that shared understanding of, and commitment to, where we are heading. This can be extremely powerful during the challenges of implementation.
