Target Operating Model (TOM) for Strategic Alignment

Strategic alignment is the key to ensuring you're in the top 10% of organisations. In fact, up to 80% of performance differences between organisations can be explained by their level of strategic alignment. When projects are aligned with strategy, they are 57% more likely to achieve their business objectives. However, only 22% of employees feel that leadership provides clear direction.

What if your organisation could achieve not just good results, but exceptional success through flawless strategic alignment? How much more could you accomplish if every part of your business was fully aligned with your vision?

The Target Operating Model (TOM) is a powerful tool to help you align your operations with your strategic objectives. Implementing a TOM ensures that your operations are aligned with your goals, improving efficiency, agility and consistency across the board. It helps you optimise resource allocation, streamline workflows and improve decision making, making your organisation more adaptable to market changes.

1. Define Strategic Objectives

Nearly 48% of leaders spend less than one day per month discussing strategy. You can set your organisation apart by creating a single, forward-looking vision that aligns your company and its stakeholders. The goal is to ensure your TOM fully supports your organisation’s long-term objectives. With proper alignment, your departments, products, services, and individual workflows will all work toward a clearly defined goal.

Steps

1. Gather input from key stakeholders on the organisation's vision and strategic priorities.

2. Translate these into specific objectives that the TOM will support, such as increasing efficiency, improving customer experience, or scaling operations.

2. Assess the Current Operating Model

Your operating model is how you put your strategy into action to create value and fulfil your business purpose. One of the biggest challenges you may face is understanding the operational relationships and complexities within your business. The aim here is to assess your current state so that you can identify gaps and areas for improvement.

Steps

1. Map out existing processes, technology, organisational structure, governance, and culture.

2. Identify strengths, weaknesses, and inefficiencies in the current model.

3. Use data and feedback from employees and customers to validate your assessment.

3. Design the Future State

Your goal is to align strategic direction, organisational structure, capabilities, and the processes that unite your team to achieve company goals. Create a detailed blueprint of your desired future operations that ties directly to your strategic objectives. Once documented, these business process models will serve as a guide for what your organisation needs, helping you develop comprehensive business requirements and ensuring that nothing is missed.

Steps

1. Define the key components of the TOM

2. Processes: Outline streamlined and efficient workflows.

3. Technology: Determine the systems and tools needed to support processes.

4. Organisational Structure: Design a structure that supports collaboration and accountability.

5. Governance: Establish clear decision-making processes and compliance mechanisms.

6. People and Culture: Identify the skills, behaviors, and cultural changes required.

7. Develop a high-level model showing how these components will interact.

"Execution is the ability to mesh strategy with reality, align people with goals, and achieve the promised results." - Larry Bossidy

4. Gap Analysis and Roadmap Development

Rather than starting from scratch, you should focus on identifying gaps and opportunities in your current approach. Roadmaps aren’t just about setting milestones and timelines; they should tell a strategic story that guides product development. With 50% of change initiatives failing and only 34% being clear successes, it's crucial to pinpoint what needs to change and map out the steps needed to achieve your future goals.

Steps

1. Compare the current and future states to identify gaps.

2. Prioritise gaps based on their impact on strategic objectives.

3. Develop a roadmap with key milestones and timelines for implementing the TOM.

5. Engage Stakeholders

You should focus on building strong relationships with the people who matter most. A common mistake is to wait until there's a need before engaging with stakeholders. Involving them early on will ensure their buy-in and support for the TOM, especially from those who will be most affected by it.

Steps

1. Communicate the vision, benefits, and rationale behind the TOM to all stakeholders.

2. Involve key stakeholders in the design and implementation phases to ensure their input and support.

3. Address concerns and resistance by providing clear, consistent messaging and support.

6. Implement the TOM

Your plan should outline high-level steps for rolling out the new model, including how often it will be monitored, the governance structures you'll need, and contingencies in case something goes wrong. Effective change management is essential for ensuring long-term success, helping your employees adapt and operate smoothly during and after the transition. The goal is to move from your current state to the new operating model efficiently.

Steps

1. Break down the roadmap into actionable projects or initiatives.

2. Assign clear ownership and accountability for each project.

3. Manage the change by providing training, resources, and support to employees.

4. Monitor progress regularly against milestones and adjust the plan as necessary.

7. Measure and Optimise

You need to review and adjust your operating model regularly to keep it effective. Remember that strategic planning is an ongoing process - not a one-off event. In fact, 93% of companies with successful strategies have evolved and pivoted from their original plans. Your goal is to ensure that the TOM continues to deliver the expected benefits and remains aligned with your strategic goals.

Steps

1. Define Key Performance Indicators (KPIs) that align with the strategic objectives.

2. Regularly track and analyse these KPIs to assess the performance of the TOM.

3. Gather feedback from stakeholders and employees to identify areas for further improvement.

4. Continuously refine and adjust the TOM to adapt to changing conditions and new opportunities.

“We are moving away from, if it works today, don’t break it to, just because it works today, it doesn’t mean it will work tomorrow." - Thomas Eikrem

Incorporating a Target Operating Model (TOM) is more than just a one-time project; it’s an ongoing commitment to aligning your operations with your strategic objectives. The key to long-term success lies in constantly refining and adapting your TOM to meet the changing needs of your business and the market.

Are you ready to maximise your organisation's potential and ensure sustainable success through strategic alignment? How will you lead your team to consistently achieve your goals and stay ahead of the curve?

Don’t treat this process as just another checklist item. Engage deeply with your team and stakeholders, stay flexible, and be prepared to adjust your model as you learn from the results. Strategic alignment isn't static, and your ability to pivot will keep your organisation ahead of the curve.