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Peter Drucker, the father of modern management, once stated, "Efficiency is doing things right; effectiveness is doing the right things." This sentiment aptly captures the essence of Target Operating Models (TOM)—a strategic tool designed to ensure that organizations not only operate efficiently but are also aligned in their operations with broader business objectives. For Fortune 500 C-level executives, understanding and leveraging TOM is integral to steering large enterprises through the turbulent waters of today's business landscape.

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Flevy Management Insights: TOM


Peter Drucker, the father of modern management, once stated, "Efficiency is doing things right; effectiveness is doing the right things." This sentiment aptly captures the essence of Target Operating Models (TOM)—a strategic tool designed to ensure that organizations not only operate efficiently but are also aligned in their operations with broader business objectives. For Fortune 500 C-level executives, understanding and leveraging TOM is integral to steering large enterprises through the turbulent waters of today's business landscape.

A Target Operating Model provides a clear blueprint of how an organization's resources should be structured and operated to achieve its strategic intentions. It encompasses the organization's structure, governance, processes, and infrastructure, presenting a holistic view of how individual components interplay to create value.

Strategic Value of TOM to the C-suite

At the helm of large enterprises, C-level executives are charged with ensuring that every facet of the organization is pulling in the same direction. Herein lies the value of TOM:

  1. Alignment with Vision: TOM ensures that daily operations, from the front office to the back office, are in sync with the company's strategic vision.
  2. Operational Excellence: By outlining best practices and streamlined processes, TOM lays the groundwork for increased efficiency and reduced operational risks.
  3. Flexibility: In a rapidly changing business environment, TOM offers a framework that can be adapted to accommodate shifts in market dynamics or strategic priorities.
  4. Enhanced Stakeholder Value: A well-defined TOM translates into improved services and products, driving stakeholder satisfaction and, by extension, value.

Components of an Effective TOM

To create an impactful Target Operating Model, several components need to be carefully defined and integrated:

Modern Considerations in TOM Design

As the business world evolves, so do the considerations for designing and implementing a TOM:

Best Practices for Implementing a TOM

Implementing a Target Operating Model is not a task to be taken lightly. A few best practices can guide the journey:

For effective implementation, take a look at these TOM best practices:


Explore related management topics: Change Management Target Operating Model Machine Learning Remote Work Best Practices Operational Risk Digital Transformation M&A (Mergers & Acquisitions) Continuous Improvement Kanban Board PMI (Post-merger Integration)




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