How to Build a Target Operating Model: A Step-by-Step Guide
TOM - How To Guide
Creating an Effective Target Operating Model (TOM)
Overview
A Practical Guide to TOM in 7 Steps
Building a Target Operating Model (TOM) offers organisations a roadmap to align operations with strategic objectives. Implementing a TOM requires a structured approach that engages stakeholders, defines each operational component, and ensures adaptability. Here, we present a detailed, step-by-step guide for creating a TOM tailored to your organisation’s unique needs, covering everything from goal setting and stakeholder engagement to component design and ongoing review.
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Table of Contents
In this guide you will learn.
- Introduction: Why Build a TOM?
- Step 1: Set Clear Objectives
- Step 2: Engage Key Stakeholders
- Step 3: Design Each TOM Component
- Step 4: Choose Frameworks and Tools
- Step 5: Conduct a Gap Analysis
- Step 6: Develop an Implementation Roadmap
- Step 7: Ongoing Review and Adjustment
- Conclusion: Building a Resilient TOM
Introduction
Introduction: Why Build a TOM?
A Target Operating Model provides a foundation for sustainable growth and operational alignment. For organisations expanding, restructuring, or navigating digital transformation, TOM offers a structured framework that ensures every function contributes meaningfully to strategic goals.
By following this guide, leaders can create a TOM that aligns with their vision, minimises operational inefficiencies, and adapts to organisational changes.
Not Sure what a TOM is? Read our introduction to Target Operating Models for a quick start
Step 1: Set Clear Objectives
The first step in building a TOM is to set clear, measurable objectives that reflect the organisation’s strategy. These objectives might include:
- Increasing Operational Efficiency
- Improving Customer Experience
- Expanding Market Reach
Setting specific goals guides the entire TOM development process, ensuring that each component is designed to achieve these outcomes.
Step 2: Engage Key Stakeholders
Engaging stakeholders early ensures that the TOM reflects each department’s needs and objectives. Include representatives from key functions such as operations, technology, HR, and finance. This collaborative approach reduces resistance and promotes a shared commitment to TOM’s success.
Step 3: Design Each TOM Component
Break down each component—Processes, Technology, People and Culture, Organisation Structure, Location Strategy, and Performance Management—and design them to align with the set objectives. For example, if your goal is to improve customer service, design workflows and roles within the TOM that streamline service delivery and ensure consistency.
Step 4: Choose Frameworks and Tools
Frameworks like CCPOLDAT+ and POLISM can structure the TOM components effectively, while tools like RACI, Lean, and Six Sigma provide the methodologies needed to improve process efficiency, accountability, and clarity.
Step 5: Conduct a Gap Analysis
A gap analysis identifies the current state versus the target TOM, highlighting necessary resources and areas for improvement. For instance, if technology infrastructure is lacking, a gap analysis will indicate the need for upgrades to support TOM objectives.
Step 6: Develop an Implementation Roadmap
An implementation roadmap breaks down TOM into manageable phases, prioritising actions based on urgency and resource availability. This phased approach enables flexibility and allows for iterative improvement.
Step 7: Ongoing Review and Adjustment
TOM should evolve with the organisation, requiring periodic review to ensure continued alignment with strategy. Regular assessments help adjust the TOM as market conditions or internal goals change, keeping the model relevant and effective.
Conclusion
Creating a Target Operating Model is a process that combines strategy, structure, and adaptability. By following a structured approach, organisations can build a TOM that aligns with their strategic goals, providing a framework for growth, resilience, and continuous improvement.
Further Resources
Want to explore how a TOM could transform your operations?
- Useful Links
- Chris Fox , of StratNavApp, our Strategic Partner, explains how TOM fits into a strategy
- Take a look at The Sixsess Consultancy’s “Insights” Blog
- Join us on one of our residential courses or call us to arrange your own organisation’s bespoke in-house Target Operating Model course
Barry Eustance CMgr MCMI
Principal Change & Transformation Consultant
