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Why every business needs a target operating model? Uncover the key to success!
In today's ever-changing business environment, Target Operating Model (TOM) has become one of the key tools for enterprise success. It not only describes the operating model that the organization hopes to achieve, but also is an important way to implement the strategy. Why are companies building their own TOMs one after another? This issue will be discussed in depth below.
The target operating model is a model that transforms strategic concepts into specific operational plans.
What is the target operating model?
The target operating model mainly has two stages: "current situation model" and "target model". The former describes the current operating status, while the latter shows the desired future posture. When companies formulate strategies or undergo business adjustments, they need to rely on this blueprint to guide future operations.
Framework of target operating model
One of the most widely known frameworks comes from the Ashridge Higher Education Institution, called POLISM, and includes the following elements:
- P - Processes and Capabilities
- O - Organizational Structure and Staffing
- L - Location and Infrastructure
- I - Information Systems and Inter-Organizational Links
- S - Suppliers and Business Partners
- M - Management System
The multifaceted nature of the target operating model
The target operating model can not only help the operation of the company's internal processes, but also enhance the synergy with external suppliers and partners. Relying on an accurate TOM, enterprises can clearly identify the resources and capabilities they need to maximize operational efficiency.
For any new model proposed, the driving force behind it often comes from a new strategy or business model.
A booster for integration and transformation
When faced with fierce competition or market pressure, companies need to transform through target operating models. Such a model not only provides a clear direction for the enterprise, but also lays the foundation for continuous improvement and innovation.
Conversion from "current situation" to "goal"
To achieve the target operating model, companies need to carefully plan each step of the action path, which is often called a roadmap. When formulating this roadmap, it is first necessary to determine the value chain of the enterprise, and then use the value proposition as a guide to clarify the activity steps of each value chain.
The key to success: linking strategy and operations
The formulation of the target operating model is closely related to the enterprise's strategy, which means that any change in the operating model will inevitably be accompanied by in-depth thinking and adjustment of the strategy.
Form follows function; in other words, the target operating model should adapt as strategy changes.
The importance of regional target operating models
The Regional Target Operating Model is a transformation program whose solutions span multiple geographies. Such models typically capture the current state of the organization's design, business capabilities, and technology components, as well as clarify future visions.
Conclusion
Ultimately, a target operating model is more than just a document or image; it is intended to be the vision and guidance for change within the organization. Through effective models, companies can face challenges, continue to innovate, and stand out from the competition. So, is your organization ready to build its own purpose operating model?
