A target operating model (TOM) is a high-level representation of how an organization can be best organized to efficiently and effectively deliver and execute its strategic objectives. The target operating model serves as a framework that aligns an organization’s structure, processes, and resources with its strategic goals. It involves defining how different parts of an organization should work together, outlining roles and responsibilities, and ensuring that processes and operations are optimized to achieve desired outcomes.
Key points to consider about a target operating model:
- Efficiency and Effectiveness: The primary goal of a TOM is to make an organization more efficient and effective in delivering its strategic initiatives.
- Alignment with Strategy: It converts strategic ideas and plans into operational activities, ensuring that day-to-day operations support the organization’s strategic direction.
- Structure and Process: A TOM addresses how the organization is structured, how various functions or departments interact, and the processes that need to be in place to achieve strategic goals.
- Role Clarity: It defines roles and responsibilities at different levels of the organization, ensuring that everyone understands their part in executing the strategy.
- Optimization: The TOM aims to optimize the allocation of resources, both human and capital, to achieve maximum efficiency.
- Continuous Improvement: It is a dynamic concept and may evolve as the organization’s strategy changes or in response to market dynamics.
In summary, a target operating model is a strategic tool used to align an organization’s structure, processes, and resources with its strategic goals, enabling the efficient and effective delivery of its mission.