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Creating a Target Operating Model (TOM)

A target operating model (TOM) is essentially a blueprint that defines how an organization should operate to achieve its strategic objectives. It encompasses the structure, processes, people, technology, and governance required to deliver on its strategic goals efficiently and effectively.

Target operating model
Target operating model

Creating a target operating model involves several key steps:

  • Define Strategic Objectives: Clearly articulate the organisation's (or departments) strategic objectives and goals. These objectives should be specific, measurable, achievable, relevant, and time-bound (SMART).

  • Assess Current State: Evaluate the organisation's (or departments) existing operating model, including its structure, processes, capabilities, technology, and culture. Identify strengths, weaknesses, opportunities, and threats.

  • Gap Analysis: Compare the current state with the desired future state based on the strategic objectives. Identify the gaps and areas for improvement that need to be addressed to achieve the target operating model.

  • Design Future State: Develop the target operating model based on the strategic objectives and the findings from the gap analysis. This involves defining the desired organisational/departmental structure, processes, roles and responsibilities, technology requirements, performance metrics, and governance mechanisms.

  • Stakeholder Engagement: Engage key stakeholders across the organisation to ensure alignment and buy-in for the target operating model. Solicit feedback and incorporate inputs from relevant stakeholders to enhance the model's effectiveness and relevance.

  • Implementation Planning: Develop a detailed implementation plan outlining the steps, timelines, resources, and responsibilities required to transition from the current state to the target operating model. Prioritize initiatives based on their impact and feasibility.

  • Change Management: Implement change management strategies to facilitate the transition to the target operating model smoothly. This may involve communication, training, leadership support, and fostering a culture of continuous improvement.

  • Monitor and Evaluate: Establish mechanisms to monitor and evaluate the implementation of the target operating model. Measure performance against key performance indicators (KPIs) and adjust the model as needed to address emerging challenges and capitalize on opportunities.

  • Continuous Improvement: Foster a culture of continuous improvement where feedback is solicited, lessons are learned, and the operating model is refined over time to adapt to changing business dynamics and evolving stakeholder needs.

  • Governance: Establish robust governance structures and mechanisms to oversee the implementation and ongoing management of the target operating model. This may include regular review meetings, steering committees, and accountability frameworks.

By following these steps, businesses can create a target operating model that aligns with their strategic objectives, enhances operational efficiency, and drives sustainable business performance.

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