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We have categorized 12 documents as Target Operating Model. All documents are displayed on this page.

"Leadership is the capacity to translate vision into reality," said Warren Bennis, an American scholar, organizational consultant, and author widely regarded as a pioneer of the contemporary field of Leadership studies. When it comes to the strategic management side of the business, it is the design and implementation of the Target Operating Model (TOM) that truly tests this translation.

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Flevy Management Insights: Target Operating Model

"Leadership is the capacity to translate vision into reality," said Warren Bennis, an American scholar, organizational consultant, and author widely regarded as a pioneer of the contemporary field of Leadership studies. When it comes to the strategic management side of the business, it is the design and implementation of the Target Operating Model (TOM) that truly tests this translation.

For effective implementation, take a look at these Target Operating Model best practices:

Explore related management topics: Leadership

Understanding the Target Operating Model

The Target Operating Model is a key element of Organizational Strategy, which provides a clear view and agreement of how the company will operate to achieve its strategic objectives. It is a blueprint that shows the future state of the business operations across multiple dimensions, such as structure, process, technology and people, and establishes the guiding principles for designing the company's operating model.

Best Practices for Defining the TOM

The approach to designing the TOM should begin with a clear understanding of the company's Strategic Intent, and a commitment to pushing the boundaries of traditional Operational Excellence. The following practices have proven to be effective:

  1. Align the TOM closely with enterprise strategy to ensure it is not merely a series of logistical changes but a method of delivering Strategic Value.
  2. Identify differentiating capabilities that will give the company a competitive advantage, and ensure that these are central to the future operating model.
  3. Consider Customer Experience and journey in designing the TOM, to ensure that operational changes enhance, rather than detract from, the customer's perspective.
  4. Use robust Project Management and Change Management processes to manage the transition to the new Operating Model.

Explore related management topics: Operational Excellence Change Management Customer Experience Competitive Advantage Project Management

Unique Insights into TOM Design

One of the key principles in designing a TOM is to aim for 'fit-for-purpose' rather than 'best-in-class'. A fit-for-purpose operating model does not necessarily copy the best in the industry, but instead is best for the organization's specific strategy and context. Additionally, it’s crucial to recognize that the TOM is a dynamic model and should evolve with the changing needs and strategies of the business.

The Role of Digital Transformation in the TOM

A critical aspect of any Target Operating Model is the role of Digital Transformation. As companies integrate digital technologies into all areas of their business, the TOM must reflect these changes, harnessing the power of technology to improve efficiencies and drive competitive advantage. This includes the integration of Artificial Intelligence and Advanced Analytics into business decision-making processes, and leveraging cloud computing for increased agility and scalability.

Explore related management topics: Digital Transformation Artificial Intelligence

Strategic Risk Management in TOM Design

Any change in the operating model of a company entails significant risks, and the design and implementation of a Target Operating Model are no exceptions. Therefore, incorporating Strategic Risk Management into the process of designing a TOM is crucial to anticipate and manage potential risks.

This can include risks related to people—such as resistance to change or loss of key staff; processes—such as business disruption during the transition; technology—such as cyber threats or technology obsolescence; and structural—such as loss of economies of scale or scope with the new model. Thoughtful risk management can not only reduce potential impacts but also create opportunities for Performance Management and competitive advantage.

Explore related management topics: Performance Management Risk Management Disruption

Target Operating Model FAQs

Here are our top-ranked questions that relate to Target Operating Model.

What role does organizational culture play in the successful implementation of a Target Operating Model, and how can it be aligned?
Organizational culture is crucial for the successful implementation of a Target Operating Model, requiring alignment through leadership, strategic planning, and communication to achieve strategic objectives and adaptability. [Read full explanation]
How does the integration of sustainability goals into the Target Operating Model influence business strategy and operations?
Integrating sustainability goals into the Target Operating Model transforms Strategic Planning, drives Innovation, enhances Operational Excellence, and necessitates Leadership and Culture shifts, leading to improved profitability, brand reputation, and resilience. [Read full explanation]
How can a Target Operating Model facilitate a company's agility in responding to market changes?
A Target Operating Model enhances a company's agility by defining operations, roles, and processes for Strategic Agility, Operational Excellence, and a Culture of Innovation, enabling swift adaptation to market changes. [Read full explanation]
How can the integration of digital technologies in a Target Operating Model improve operational efficiency?
Integrating digital technologies into the Target Operating Model enhances operational efficiency by streamlining processes, improving decision-making, and enabling agility, as evidenced by Amazon, GE, and Netflix. [Read full explanation]

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