What Is A Target Operating Model (TOM)? | Determine Your Organisations Desired State

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External Drivers

Refer to broader economic and market trends that exert their influence not just on a single business, but on the entire industry. The best way to capture this information is to perform PESTLE (political, economic, social, technological, legal, and environmental) analysis or STEEP analysis.

Internal Factors

Are different for each organisation depending on the environment the company operates in. A strong target operational model is not possible without understanding these factors and the current state of business. This understanding can be best achieved through SWOT analysis.

Competitive Dynamics

Involve identifying and accessing the state of current and emerging competitors. This assessment can be done with the help of factor-based analysis.

Culture and Core Values

Imply the morals, ethics, and overall values of the company. The way a company conducts its business and treats its customers is often a deciding factor in attracting a new audience.

Vision and Mission

Should indicate where and what the company wants to be in the future. These visions usually impact the scope of needed changes.

Strategy and Plan

Define the map the company will use to achieve its target operational model and reach its point of arrival. They should provide guidance on how, when, and where the company will implement changes.

Capability Analysis

Should elaborate on what capabilities are needed to reach the TOM. This may lead to evolving current capabilities, acquiring new ones, and phasing out ones that are not necessary.

Strategic Levers

Define conditions needed for the company to maintain or further develop its capabilities in order to attain its target operating model.

Tactical and Operational Levers

Are more specific than strategic ones and refer to particular processes within the TOM. For example, they may include implementing new management systems or expanding certain departments.

Transformation Map

Outlines incremental and sequential evolution as the organisation transforms into the target state.

Initiatives, Programs and Projects

Determine the exact types of actions, efforts, plans, and programs, an organisation needs to accomplish its target.

Governance Structure

Defines how the organisation will govern its future operations. While it’s not possible to accurately predict the future, the governance structure part of TOM attempts to establish a framework for rule-setting and enforcement.