Blueprinting Growth: Designing a Target Operating Model (TOM)

A strategy without an operating model is just a wish list. You can have the most brilliant strategic vision—"We will be the leading digital bank for Gen Z"—but if your back-office processes are manual, your technology is fragmented, and your people are misaligned, you will fail.

The Target Operating Model (TOM) is the critical bridge between Strategy ("Where we want to go") and Operations ("What we do every day"). It is the blueprint of your future organization.

The Six Layers of a Robust TOM

A comprehensive TOM is not just an org chart. It is a multi-dimensional design that covers six distinct layers. To build a resilient organization, you must design all six in harmony.

1. Process

This is the engine of the TOM. It defines the value chains and workflows.

• Value Chain: High-level view. e.g., "Acquire Customer" -> "Onboard" -> "Service" -> "Retain".
• Processes: The specific activities. e.g., "KYC Check," "Credit Scoring."
• Design Question: Are we optimizing for speed (Straight-Through Processing) or for high-touch relationship management?

2. People (Organization & Culture)

This covers the structure and the skills.

• Structure: Do we organize by Product (Mortgages vs. Cards) or by Function (Sales vs. Ops)?
• Capabilities: What skills do we need in the future? If we are automating, we need fewer data entry clerks and more data scientists.
• Location Strategy: Who sits where? HQ, Nearshore, or Offshore?

3. Technology

The application landscape that enables the process.

• Architecture: Monolithic vs. Microservices. Buy vs. Build.
• Integration: How do systems talk to each other? (API-first vs. Batch files).
• Design Question: Is technology a utility or a differentiator?

4. Data

Data is the lifeblood of the modern TOM.

• Governance: Who owns the "Customer Master" record?
• Lineage: Where does data come from and where does it go?
• Quality: How do we ensure accuracy and completeness?

5. Governance

The decision-making framework.

• Committees: Who approves large transactions? Who approves new products?
• Delegated Authorities: How much money can a manager sign off on?
• Oversight: How does the Second Line (Risk) oversee the First Line (Business)?

6. Performance (KPIs & Metrics)

How do you measure success?

• KPIs: Key Performance Indicators (e.g., "Cost per Transaction," "Onboarding Time").
• KRIs: Key Risk Indicators (e.g., "Number of Breaches," "System Downtime").
• Reporting: Who gets what report and when?

When Do You Need a New TOM?

You don't redesign your operating model every Tuesday. It is a major undertaking. Typically, a TOM redesign is triggered by a significant event:

1. Post-Merger Integration (PMI): Two banks merge. They have two HR systems, two ledgers, and two Heads of Sales. You need a unified TOM to realize the "synergies" promised to shareholders.
2. Digital Transformation: Moving from legacy mainframes to the cloud requires a fundamentally new way of working. You can't just "lift and shift" your old manual processes onto the cloud; you need to redesign them.
3. Regulatory Remediation: If a regulator (ECB/PRA) issues a consent order saying your risk controls are weak, you often need to redesign the TOM to embed risk management into the first line of defense.
4. Hyper-Growth: A startup process that worked for 1,000 customers will break at 100,000. You need a scalable TOM to handle the volume.

The Design Approach: Principles First

Before you draw a single process map, you must agree on your Design Principles. These are the "guardrails" for your design.

• Example Principle: "Standardization over Customization." (Meaning: We will force all countries to use the same process, even if they hate it, to save costs.)
• Example Principle: "Digital First." (Meaning: No paper, no wet signatures, no phone calls unless necessary.)

These principles guide every decision in the TOM design. When a stakeholder asks for a bespoke manual workaround, you point to the principle and say "No."

Conclusion

Designing a Target Operating Model is hard work. It requires deep analysis, tough political decisions, and a clear vision. But the result is an organization that is aligned, efficient, and ready to execute on its strategy. It transforms the "messy middle" of operations into a competitive advantage.