TOM – still high on the client agenda (and heading ever higher…)
The financial crisis, ever-evolving regulatory landscape (or should that read landslide?), increasing macro and micro economic pressures combined with never-ending changes in technology and the old chestnut globalisation all lead to one important conclusion – the discussion around TOMs is moving higher and higher up the executive agenda, often initiated by the arrival of a new executive. To stay ahead of the curve, companies have to keep on adapting. Many managers try to get by with a patchwork quilt of an operating model, which has typically evolved piecemeal over time, without being explicitly anchored to the company’s vision or strategy. Yet this approach leaves them light-years from realising the significant potential benefits of a strategically conceived target operating model.
So what’s this TOM bloke got to say for himself then?
The primary purpose of a Target Operating Model is to enable the effective application of a corporate strategy or vision to a business or operation. It is a high level representation of how a company can be best organised to more efficiently and effectively deliver and execute on that same organisation’s strategy.
So what’s TOM gotta do?
We expect a TOM to cover the processes, controls, systems and organisation (roles and responsibilities) required to fulfil strategic objectives. Its purpose is to describe key changes required in sufficient detail that the impact and levels of investment required to deliver the new strategy can be assessed. The TOM is also a critical element in engaging and communicating with key stakeholders the shifts required to achieve the desired strategic outcomes.
Who needs to know about TOM?
The audience for the operating model will vary depending on organisational strategic drivers, but it can include executives, strategy teams, marketing teams, project teams, risk managers, IT teams and operational teams.
COM or TOM – spot the difference?!
The Current Operating Model (COM) represents how an organisation is configured today, whereas the Target Operating Model (TOM) shows a future state that the organisation should be moving towards in order to best realize its strategy. Developing a winning TOM will often challenge functional boundaries, requiring a level of open-mindedness and collaboration right across the business. Cross-functional working can sometimes come with a little friction.
Effective TOM definition and deployment
It is critical that leaders and decision-makers are aligned on the strategic goals of the business, that time is invested in bringing stakeholders on a journey, and that the overall business sponsor has the authority to set direction and mediate as necessary. Deploying the right model can help ensure that clients remain accurately informed of developments and progress being made to successfully achieve their strategic goals.
Is a dose of TOM good for your (business) health?
Successful implementation of a sound TOM can deliver:
- Shorter time-to-market cycles due to greater agility in launching new businesses and trading new products
- Reduced risk from a more controlled and stable operating environment
- Greater long-term cost-effectiveness
Projective offers tailored approach to support your business to achieve your targets. We work alongside our clients to transform their current operating models to design and then implement a business-relevant TOM that is suited to various scenarios, always ensuring that the key components of the business are aligned with the strategy.
Our extensive delivery experience can help avoid the common pitfalls that can result in a beautifully crafted TOM being undeliverable or un-adopted and reduced to expensive shelf-ware.
A typical TOM-redesign program which covers processes, controls, systems and organisation should have the following activities included, divided into four stages:
Once you’ve invested the time and effort to design and implement a new operating model, you will want to know how well it’s performing, how well it supports your strategic objectives, and what business results it’s helping you attain. Considering the key drivers of business success alongside your operating model design will allow you to build-in the information and measures which you will use, via your decision-making and leadership arrangements, to steer your business towards its strategic and operational goals. In today’s ever-changing technological environment, it’s always a good idea to use external skills and resources to validate whether you’re on the right track…TOM TOM, do you need an update?
Author: Kersten Meyer