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Flevy Management Insights Case Study
Strategic Target Operating Model Redesign in Telecom


There are countless scenarios that require Target Operating Model. Fortune 500 companies typically bring on global consulting firms, like McKinsey, BCG, Bain, Deloitte, and Accenture, or boutique consulting firms specializing in Target Operating Model to thoroughly analyze their unique business challenges and competitive situations. These firms provide strategic recommendations based on consulting frameworks, subject matter expertise, benchmark data, best practices, and other tools developed from past client work. Let us analyze the following scenario.

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Consider this scenario: The company is a mid-sized telecommunications provider facing significant market pressure due to rapidly changing technology and customer expectations.

Despite a strong customer base, the organization's operating model has not evolved at the pace of the industry, leading to lagging service delivery and operational inefficiency. The organization now seeks to overhaul its Target Operating Model to become more agile and cost-efficient while improving service quality.



Given the organization's stagnant operating efficiency and customer service issues, initial hypotheses might focus on outdated technology infrastructures, misaligned organizational structures, and inefficient processes. Another potential root cause could be a lack of clear communication channels and decision-making pathways which hampers swift responsiveness to market changes.

Strategic Analysis and Execution

Addressing the organization's challenges necessitates a methodical 5-phase approach to revamp the Target Operating Model, ensuring a structured transformation that aligns with strategic business objectives. This proven process facilitates thorough analysis, strategy formulation, and effective execution, providing a roadmap to operational excellence and competitive advantage.

  1. Assessment and Baseline: Initially, we undertake a comprehensive assessment of the current operating model, evaluating technology stacks, workforce capabilities, and process efficiency. Key questions include: What are the existing capabilities and gaps? How does the current model support or hinder business strategy?
  2. Strategy Formulation: This phase focuses on developing a future-state vision. It identifies the capabilities needed to achieve strategic objectives, including digitalization, organizational restructuring, and process redesign. Key activities encompass benchmarking against industry standards and identifying strategic enablers.
  3. Design and Planning: Here, we design the new operating model, detailing the organizational structure, key processes, and technology architecture. This involves creating detailed roadmaps and transition plans to ensure the new model supports the desired strategic outcomes.
  4. Implementation: The execution phase involves rolling out the redesigned operating model. It encompasses change management initiatives, stakeholder engagement, and continuous monitoring to ensure alignment with the strategic vision.
  5. Continuous Improvement: Post-implementation, the focus shifts to establishing a culture of continuous improvement. Performance is regularly monitored against KPIs to ensure the operating model evolves in line with industry trends and business goals.

Learn more about Operational Excellence Change Management Target Operating Model

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

Mergers and Acquisitions (M&A): Target Operating Model (TOM) (32-slide PowerPoint deck)
How to Build a Target Operating Model (TOM) (35-slide PowerPoint deck)
Operating Model Strategy (110-slide PowerPoint deck)
End-to-end (E2E) Operating Model Transformation (30-slide PowerPoint deck)
Digital Transformation: Next-gen Operating Model (24-slide PowerPoint deck)
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Implementation Challenges & Considerations

The CEO may question the alignment of the new model with current strategic priorities. Ensuring strategic fit is crucial, and it involves continuous engagement with leadership to validate the model against evolving business objectives. Another concern could be the impact on employees; thus, a robust change management strategy is essential to facilitate smooth transitions and maintain morale.

After full implementation, the company can expect to see a 20-30% improvement in operational efficiency, a reduction in service delivery times, and increased customer satisfaction. These outcomes will be quantified through performance metrics and customer feedback.

Potential challenges include resistance to change from staff, integration of new technologies with legacy systems, and maintaining business continuity during the transition. Each challenge requires proactive planning and management to mitigate risks.

Learn more about Customer Satisfaction

Implementation KPIs

KPIS are crucial throughout the implementation process. They provide quantifiable checkpoints to validate the alignment of operational activities with our strategic goals, ensuring that execution is not just activity-driven, but results-oriented. Further, these KPIs act as early indicators of progress or deviation, enabling agile decision-making and course correction if needed.


Efficiency is doing better what is already being done.
     – Peter Drucker

  • Operational Efficiency Ratio: Indicates improvements in resource utilization and process efficiency.
  • Customer Satisfaction Score: Reflects the impact of the new operating model on service quality.
  • Time to Market for New Services: Measures the agility of the organization in launching new offerings.

For more KPIs, take a look at the Flevy KPI Library, one of the most comprehensive databases of KPIs available. Having a centralized library of KPIs saves you significant time and effort in researching and developing metrics, allowing you to focus more on analysis, implementation of strategies, and other more value-added activities.

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Key Takeaways

Adopting a structured approach to redesign the Target Operating Model allows telecommunications companies to remain competitive in a dynamic market. It is critical to leverage technology advancements, optimize processes, and align the workforce with strategic goals. This transformation is not just about cost-cutting but also about enabling innovation and customer-centricity.

Deliverables

  • Target Operating Model Framework (PowerPoint)
  • Operational Efficiency Analysis (Excel)
  • Change Management Plan (Word)
  • Technology Integration Roadmap (PowerPoint)
  • Implementation Progress Report (Word)

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Target Operating Model Best Practices

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Case Studies

Major telecommunications firms have successfully implemented similar transformations, leading to significant enhancements in customer experience and operational agility. For instance, a European telecom leader redesigned its operating model, resulting in a 40% reduction in operational costs and a 50% improvement in time to market for new services.

Explore additional related case studies

Strategic Alignment with Evolving Business Objectives

To ensure the strategic alignment of the new operating model with the company's evolving business objectives, we engaged in continuous dialogue with the leadership team. This included regular strategy sessions to review market trends, competitive dynamics, and internal performance metrics. By synchronizing the model's design with the company's long-term vision and short-term goals, we established a robust framework that is both flexible and scalable. The strategic alignment involved aligning the technology infrastructure, workforce development plans, and process improvements with the core business priorities, such as customer experience enhancement, market share growth, and digital innovation.

One key initiative was the introduction of a digital transformation committee, comprising cross-functional leaders who oversaw the integration of new technologies within the operating model. This committee played a critical role in prioritizing investments in technology that would yield the highest return on investment and keep the company at the forefront of the telecommunications sector. For example, the adoption of AI-driven analytics tools enabled the company to better understand customer behavior and preferences, leading to more personalized service offerings and improved customer retention rates.

Learn more about Digital Transformation Customer Experience Process Improvement

Change Management and Employee Impact

Addressing the impact on employees during the transition to the new operating model was paramount. We developed a comprehensive change management plan that included extensive communication, training, and support programs. To mitigate resistance, we established a network of change champions within the organization who were responsible for driving the adoption of new processes and systems at every level. These champions also gathered feedback from their peers, which was crucial for fine-tuning the implementation approach and addressing concerns in real-time.

Training programs were tailored to various job roles and included both technical skills development and soft skills enhancement to foster a more adaptive and collaborative work culture. In addition, we created an internal platform for continuous learning, where employees could access resources and courses to further their professional development in alignment with the company's strategic direction. This focus on employee development not only facilitated a smoother transition but also positioned the company as an employer of choice in the industry.

Learn more about Soft Skills

Quantifying Improvements in Operational Efficiency

Post-implementation, we established a set of KPIs to quantify the improvements in operational efficiency. The operational efficiency ratio was particularly insightful, revealing a 25% improvement in resource utilization within the first six months following the model redesign. This was attributed to streamlined processes, better project management practices, and the elimination of redundant activities.

Additionally, we conducted a comprehensive review of service delivery workflows, identifying bottlenecks and implementing automation where possible. By doing so, we reduced service delivery times by an average of 35%, which not only improved customer satisfaction but also enabled the company to redeploy resources to more strategic initiatives. Through continuous monitoring and performance analysis, we ensured that the operational improvements were sustainable and aligned with the company's growth trajectory.

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Overcoming Integration and Continuity Challenges

Integrating new technologies with legacy systems presented significant challenges. To address this, we adopted a phased approach to technology integration that prioritized critical systems and minimized disruption to ongoing operations. We conducted thorough testing and validation processes to ensure compatibility and performance standards were met. This approach also allowed us to gather learnings that informed subsequent integration efforts, thereby reducing risks and ensuring a smoother transition overall.

Maintaining business continuity during the transition was another critical consideration. We developed detailed contingency plans and conducted scenario planning exercises to prepare for potential disruptions. These plans were communicated to all stakeholders and included clear protocols for maintaining service levels and responding to unexpected issues. Regular drills and simulations were conducted to ensure that the organization was well-prepared to manage any challenges that arose during the implementation phase.

By proactively addressing these challenges, we were able to maintain high levels of service continuity throughout the transition period, which was instrumental in retaining customer trust and confidence. Moreover, the successful integration of new and legacy systems paved the way for future technological advancements and set a strong foundation for the company's continued digital transformation journey.

To close this discussion, the strategic redesign of the Target Operating Model for the telecommunications provider was a comprehensive initiative that addressed multiple facets of the business. By focusing on strategic alignment, employee impact, operational efficiency, and the integration of new technologies, we enabled the company to achieve significant improvements in performance and customer satisfaction. The case study serves as a testament to the value of a structured approach to organizational transformation, and it provides a blueprint for other companies seeking to navigate the complex challenges of the telecommunications industry.

Learn more about Scenario Planning Organizational Transformation Telecommunications Industry

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Key Findings and Results

Here is a summary of the key results of this case study:

  • Achieved a 25% improvement in operational efficiency through streamlined processes and better project management practices.
  • Reduced service delivery times by an average of 35%, significantly enhancing customer satisfaction.
  • Implemented a comprehensive change management plan, fostering a smoother transition and positioning the company as an employer of choice.
  • Integrated new technologies with legacy systems in a phased approach, minimizing disruption and laying the groundwork for future advancements.
  • Maintained high levels of service continuity during the transition, retaining customer trust and confidence.
  • Established a digital transformation committee that prioritized technology investments, leading to improved customer retention rates through personalized services.

The strategic redesign of the Target Operating Model has proven to be a resounding success, evidenced by significant improvements in operational efficiency, customer satisfaction, and employee engagement. The 25% improvement in operational efficiency and the 35% reduction in service delivery times are particularly noteworthy, as they directly contribute to enhanced competitiveness and market positioning. The comprehensive change management strategy and the phased technology integration approach have been critical in minimizing disruptions and ensuring a smooth transition, thereby maintaining service continuity and customer trust. The initiative's success is further underscored by the positive impact on employee morale and the company's ability to attract and retain talent, positioning it as an employer of choice in the telecommunications industry.

For next steps, it is recommended to continue the focus on continuous improvement and innovation. This includes regular reviews of operational processes and technology stacks to identify further efficiencies and staying ahead of industry trends. Expanding the role of the digital transformation committee to explore emerging technologies such as 5G and IoT can open new avenues for growth and customer engagement. Additionally, reinforcing the culture of continuous learning and adaptation among employees will ensure that the company remains agile and responsive to market changes. Finally, considering strategic partnerships or collaborations can enhance the company's service offerings and expand its market reach.

Source: Strategic Target Operating Model Redesign in Telecom, Flevy Management Insights, 2024

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