Target Operating Models

A Target Operating Model outlines the structure, processes, and systems a business needs to achieve its goals and navigate industry challenges efficiently.

Target Operating Models

In this article, we will explore the concept of Target Operating Models (TOMs), providing professionals with a clear understanding of what TOMs are and how they can be utilized to drive innovation and transformation within an organization.

Where did Target Operating Models come from?

The concept of a Target Operating Model (TOM) has gained prominence in recent decades as organizations strive to improve their efficiency and effectiveness. The TOM provides a blueprint or framework for how an organization should operate to achieve its strategic goals. It outlines the desired structure, processes, capabilities, and resources required to optimize performance and deliver value to stakeholders. This approach traces its roots back to management practices like Total Quality Management (TQM) and Six Sigma, which emphasized the need for systematic improvement and alignment across all aspects of an organization's operations.

What are the key concepts?

Some of the key concepts involved in Target Operating Models include:

  • A Target Operating Model (TOM) defines how an organization executes its strategic goals and objectives.
  • The TOM outlines the organization's structure, processes, technology, and culture needed to achieve desired outcomes.
  • It helps align resources and capabilities with strategic objectives, ensuring efficient operations and effective decision-making.
  • The TOM provides a framework for optimizing business processes and improving cross-functional collaboration.
  • An effective TOM supports organizational transformation by enabling agility, innovation, and continuous improvement.

What's the process?

In developing a Target Operating Model (TOM), several key activities are typically involved to ensure a successful transformation. These activities include analyzing the current state of the organization, setting strategic objectives, identifying gaps and opportunities, designing the future state vision, defining the organizational structure and processes, conducting impact assessments, implementing changes, and monitoring progress. Throughout this process, it is vital to engage stakeholders at different levels to ensure alignment and buy-in. Additionally, regular communication and feedback loops play a crucial role in adjusting the TOM as needed to address any emerging challenges or new opportunities that may arise during implementation.

What outcomes can you expect?

Some of the outcomes you can expect from working with Target Operating Models are:

  • Enhanced organizational efficiency and effectiveness by aligning business processes with strategic goals.
  • Improved collaboration and communication across departments, resulting in better decision-making and problem-solving.
  • Increased agility and flexibility to quickly respond to changes in the market or industry.
  • Streamlined operations and reduced costs through standardization of processes and elimination of duplication.
  • Clear roles, responsibilities, and accountability for employees, leading to higher job satisfaction and engagement.

Are there any debates or criticisms to be aware of?

  • Lack of clarity: There can be confusion or ambiguity about the purpose and scope of a Target Operating Model, leading to debates on its effectiveness.
  • Resistance to change: Stakeholders may resist changes brought about by implementing a new Target Operating Model, causing conflicts and delays.
  • Complexity: Developing and implementing a Target Operating Model can be complex, requiring significant time, resources, and expertise.
  • Adaptability: Some argue that traditional Target Operating Models are too static and rigid to keep up with rapidly changing business environments.
  • Siloed approach: Organizations may focus on improving individual functions without considering the holistic impact on the overall operating model.


A well-designed Target Operating Model (TOM) is crucial for organizations to effectively transform and innovate in today's dynamic business landscape. By aligning resources, optimizing processes, and fostering collaboration, a TOM can enhance organizational efficiency and effectiveness. However, it is important to be aware of the potential challenges such as resistance to change and complexity. As organizations strive for continual improvement, regularly reviewing and adapting the TOM will ensure its relevance and success in an ever-changing market.


  • A target operating model (TOM) helps organizations align their strategies, processes, and systems.
  • Benefits of a TOM include increased efficiency, cost reduction, improved customer experience, and enhanced decision-making.
  • Common issues related to implementing a TOM include resistance to change, lack of stakeholder buy-in, and resource constraints.
  • To overcome these challenges, effective communication, stakeholder engagement, and proper resource allocation are crucial.
  • A well-designed TOM can drive organizational transformation and future-proof the business in rapidly changing markets.


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