How to Design a Target Operating Model That Actually Gets Implemented

Every executive team wants a "Target Operating Model" (TOM). But 70% of TOMs fail to be implemented.

Here's why—and how to design one that actually drives change.

The Problem with Most TOMs

We've reviewed dozens of Target Operating Models. Most suffer from the same issues:

They're Too Theoretical

• Beautiful PowerPoint decks with org charts
• Generic "best practice" frameworks copied from consultants
• No connection to day-to-day operations
• Nobody can explain how to actually get there

They're Too Vague

• "Optimize operations" (what does that mean?)
• "Improve customer experience" (how?)
• "Enhance collaboration" (between who?)
• No measurable outcomes or success criteria

They Have No Roadmap

• Describes future state but no path to get there
• No prioritization of changes
• No implementation timeline
• No change management plan

Result: Expensive consulting project produces a document nobody uses.

What Makes a TOM Actually Work

A successful Target Operating Model has three essential components:

1. Clear Design Principles

Before designing your TOM, establish non-negotiable principles:

Example Principles:

• "Customer-facing teams make decisions without escalation for transactions under $10K"
• "All processes must have a single accountable owner (no shared accountability)"
• "Technology supports process, not the other way around"
• "Regional variations are minimized; global standardization is default"
• "Control functions (Risk, Compliance) are independent from operational teams"

These principles guide every design decision and prevent "design by committee" drift.

2. Integrated Design Framework

A complete TOM addresses five dimensions simultaneously:

Dimension 1: Organization Structure

• Who reports to whom
• Span of control (ideal: 5-7 direct reports for managers)
• Centralized vs. decentralized functions
• Geographic vs. functional organization

Dimension 2: Process Architecture

• Core value streams (e.g., Quote-to-Cash, Order-to-Cash)
• Supporting processes (HR, Finance, IT)
• Process ownership model (who owns end-to-end)
• Service level agreements (SLAs) between functions

Dimension 3: Governance & Decision Rights

• Which decisions are made at what level
• Approval thresholds and limits
• Escalation paths for exceptions
• Governance forums (OpCo, SteerCo, RiskCo)

Dimension 4: Technology & Systems

• Application landscape (what systems support what processes)
• Data architecture (master data, integrations)
• Automation roadmap
• Legacy system retirement plan

Dimension 5: People & Capabilities

• Required skills for future state
• Gap analysis (current vs. required capabilities)
• Hiring, training, or outsourcing decisions
• Change management and adoption plan

Most TOMs only address Dimension 1 (org structure). That's why they fail.

3. 30/60/90 Day Implementation Roadmap

A TOM without a roadmap is just a wish list.

Phase 1: Quick Wins (Days 1-30)

• Low-complexity, high-impact changes
• Don't require system changes or restructuring
• Build momentum and credibility

Example:

• Clarify decision rights for existing roles (RACI)
• Eliminate one redundant approval layer
• Pilot new governance forum (weekly OpCo)

Phase 2: Foundation Building (Days 31-90)

• Process redesign for 3-5 critical processes
• Initial org structure changes (if any)
• Technology enablement projects kicked off

Example:

• Implement new procure-to-pay process
• Create shared service center for finance
• Launch pilot automation for invoice processing

Phase 3: Full Transformation (Days 91-180)

• Complete org restructuring (if required)
• Technology implementations (CRM, ERP, etc.)
• Scale successful pilots across organization

Real Example: Regional Bank TOM

Challenge:

• Broken handoffs between branches, operations, and risk
• Unclear accountability for customer issues
• 15% of transactions required manual intervention
• Failed regulatory review

TOM Design (8-week engagement):

Future-State Organization

• Created "Customer Operations" function (unified branch + ops)
• Separated first-line operations from second-line risk
• Clear RACI for all customer-facing processes

Process Architecture

• Redesigned account opening (end-to-end ownership)
• Documented exception handling for all processes
• Defined SLAs between functions

Governance Model

• Weekly Operational Committee (OpCo)
• Monthly Risk Committee (RiskCo)
• Quarterly Board-level reporting

Technology Roadmap

• Implement workflow automation (6 months)
• Upgrade core banking system (12 months)
• Retire 3 legacy applications (18 months)

Implementation Roadmap

• Month 1: RACI clarification, OpCo launch
• Month 2-3: Process redesign (5 processes)
• Month 4-6: Org structure transition
• Month 7-12: Technology implementations

Results (12 months):

• Manual intervention rate: 15% → 4%
• Customer complaint resolution: 5 days → 1 day
• Passed regulatory review with zero findings
• Employee engagement score increased 18 points

The TOM Design Process

Step 1: Current State Assessment (2-3 weeks)

• Document existing org structure
• Map current processes and pain points
• Identify capability gaps
• Analyze cost structure

Step 2: Future State Design (3-4 weeks)

• Workshop with leadership on design principles
• Design target org structure
• Map future-state processes
• Define governance model
• Create technology roadmap

Step 3: Gap Analysis & Roadmap (1-2 weeks)

• Compare AS-IS vs. TO-BE
• Prioritize changes by impact and complexity
• Create 30/60/90/180-day roadmap
• Estimate costs and resource needs

Step 4: Change Impact Assessment (1 week)

• Who is affected by changes
• Resistance management strategies
• Communication plan
• Training requirements

Common TOM Mistakes to Avoid

❌ Mistake #1: Starting with Org Charts

Most TOMs start by drawing new org charts. Wrong approach.

Right Approach: Start with process architecture, then design org structure to support it.

❌ Mistake #2: Ignoring Technology Constraints

Designing a TOM that requires $10M in new systems without acknowledging budget constraints.

Right Approach: Design multiple scenarios (minimal tech change vs. full modernization) with cost-benefit.

❌ Mistake #3: No Ownership Clarity

Creating "shared" or "matrix" accountability for critical processes.

Right Approach: Every process has ONE owner who is accountable end-to-end.

❌ Mistake #4: Too Much Change at Once

Trying to restructure, implement new systems, and change all processes simultaneously.

Right Approach: Phase implementation with quick wins first, then tackle complex changes.

Your TOM Checklist

Before finalizing your Target Operating Model, ensure:

✅ Design Principles: Do we have clear, agreed-upon principles?

✅ All 5 Dimensions: Have we addressed org structure, process, governance, technology, and people?

✅ Clear Accountability: Does every critical process have a single owner?

✅ Measurable Outcomes: Can we quantify success (error rates, cycle times, costs)?

✅ Implementation Roadmap: Do we have a phased plan with specific dates?

✅ Change Management: Do we have a plan to manage resistance and drive adoption?

✅ Cost-Benefit Analysis: Have we quantified investment required and expected ROI?

✅ Regulatory Alignment: Does our TOM meet regulatory expectations for governance?

Need Help Designing Your TOM?

Most organizations struggle with TOM design because:

• Lack of experience with operating model frameworks
• Internal politics make objective design difficult
• Unclear how to prioritize competing requirements
• No bandwidth to dedicate internal resources

Complimentary: Share your current organizational challenges. We'll provide an executive assessment of TOM design opportunities.

Consulting Engagement: We deliver complete Target Operating Models (all 5 dimensions) with 30/60/90-day implementation roadmaps in 6-10 weeks.

Schedule a consultation →