Language
Country/Area
No result found
Do you know what a target operating model is? How can it help companies transform and grow?
Target Operating Model describes the organization's desired operating model. When an enterprise adjusts its operating model, it usually defines the existing model (as is model) and the target model (to be model). The target operating model is exactly this so-called "future model", and its purpose is to help the company formulate its future operating direction.
The target operating model can transform strategic concepts into operational plans and provide a clear vision for the enterprise.
The design of the target operating model often changes based on different challenges. Some models may focus on the link between information technology and strategy, others may focus on organizational design and its connection to strategy. This flexibility allows the target operating model to be adapted to a variety of environments, including commercial, public sector and not-for-profit organizations.
Key components of the target operating model
There are many frameworks that can help companies define their target operating model. One of the widely used frameworks is the POLISM model from the Ashe Ridge Business School.
P – Processes and capabilities; O – Organization, including the people needed to run processes or provide capabilities and related organizational structure, responsibilities, incentives and culture; L – Locations, buildings, infrastructure and other resources; I – Information Systems and other links across organizations or locations; S – external suppliers and business partners; M – management systems and processes.
Alternatively, the target operating model can be reduced to a one-page document—such as the Operating Model Canvas. Whether it’s a brief one-page mockup or a hundred-page document, it should ultimately be presented in a way that’s easy to understand and execute.
How to help enterprises transform and grow
When an enterprise faces major changes, such as poor business performance or the implementation of new strategies, it becomes necessary to activate the target operating model. Central to this type of work is a clear mission and vision so that all relevant parties understand and participate in the improvement process.
“Organizations need to ensure that all transformation efforts are closely connected to the overall strategy, because form must follow function.”
In the process of establishing a target operating model, a company needs to first identify its value proposition, that is, the goods and services it provides, and then define the required value chain activities for each value proposition. This process helps segment individual business processes to identify more optimal ways to operate.
Example of regional target operation model
For example, when conducting transformation projects for regional target operating models, companies need to take into account the standardization requirements for cross-regional coordination. These standards can not only improve operational consistency, but also promote synergy and benefit maximization between different regions.
The formulation of the target operating model is not only an assessment of the current situation, but also a clear description of the ideal future state.
With this model, companies can effectively fill gaps in technical capabilities and set future business requirements to optimize their execution strategies. When planning, companies should remain flexible and make adjustments based on actual circumstances to achieve the best results.
Conclusion
In today's rapidly changing business environment, the target operating model provides a comprehensive framework that enables enterprises to effectively transform and grow. Whether it's improving efficiency, optimizing resources, or enhancing business performance, the right model can guide your business toward a successful future. And have you considered how to apply this model to your organization?
