Turning Strategy into Action with TOM

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.

• Clarify long-term organisational priorities and desired outcomes

• Align departmental goals and individual responsibilities with the overarching strategy

• Regularly review and adjust objectives to stay responsive to market changes

Do your current initiatives and workflows clearly support your long-term strategic vision?

Example: A technology firm sets a five-year objective to lead in sustainable solutions, then aligns R&D, marketing, and operations around eco-friendly product development, ensuring every team contributes to the overall mission.

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 objective is to evaluate your organisation’s current operations, uncover inefficiencies or gaps and pinpoint opportunities for improvement, ensuring that processes, workflows, and resources are optimised to support strategic goals effectively.

• Map key processes and interactions across departments to reveal operational dependencies

• Identify gaps, inefficiencies, and redundancies that hinder value creation

• Prioritise improvements that strengthen alignment between operations and strategic objectives

Which areas of your operating model most limit your ability to deliver on strategy and purpose?

Example: A manufacturing company audits its production and supply chain processes, uncovers bottlenecks between procurement and assembly and implements workflow adjustments that reduce lead times and improve product delivery.

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.

Define the key components of the TOM

• Processes: Outline streamlined and efficient workflows.

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

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

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

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

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

How well does your envisioned future state balance efficiency, capability and organisational culture to achieve your strategic goals?

Example: A retail bank designs a future-state model integrating a centralised digital banking platform, streamlined loan approval workflows, a cross-functional team structure and updated governance protocols, improving customer experience and accelerating service delivery.

"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.

• Assess current capabilities against strategic objectives to identify gaps

• Prioritise opportunities based on impact, feasibility, and alignment with long-term goals

• Develop a clear, actionable roadmap that communicates both milestones and strategic intent

Which gaps, if addressed first, would create the most meaningful progress towards your goals?

Example: A software company maps existing features against customer needs, discovers missing functionality in its mobile app and develops a phased roadmap to launch updates that enhance user engagement and retention. 

5. Engage Stakeholders

You should focus on building strong relationships with the people who matter most. Consistent and genuine communication lays the foundation for trust and mutual understanding.

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.

• Identify key stakeholders and understand their priorities and concerns

• Engage early and maintain consistent, transparent communication throughout the process

• Involve stakeholders in decision-making to secure buy-in and foster collaboration

Are you actively engaging the right stakeholders at the right time to influence outcomes effectively?

Example: A healthcare provider involves clinicians and administrative staff in designing a new patient management system, gathering input from the start, which leads to smoother implementation and higher adoption rates.

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.

• Break down the roadmap into actionable projects or initiatives.

• Assign clear ownership and accountability for each project.

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

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

How prepared is your organisation to manage both the technical and human aspects of this transition?

Example: A manufacturing firm phases in a new operating model, sets up a cross-functional governance team and provides training sessions for staff, resulting in minimal disruption and faster realisation of efficiency gains.

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.

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

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

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

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

Are you consistently evaluating your operating model to ensure it adapts to changing conditions and delivers value?

Example: A logistics company monitors delivery times and customer satisfaction, identifies bottlenecks and revises routes and staffing, resulting in faster deliveries and improved client feedback.

https://www.youtube.com/watch?v=AS_mqFWEkDA

The CEO Agenda: Designing the Operating Model | Marcia Blenko (Advisory Partner @ Bain & Company)

Sample Case: UK Private Bank

A leading UK private bank faced the challenge of aligning investment management operations with evolving strategic priorities in a competitive financial market. To address this, leadership redesigned the Target Operating Model, aiming to consolidate functions, improve client service delivery, enhance efficiency and reduce operational costs across all business units.

To implement the TOM, the bank centralised key investment management operations into a single UK hub. This restructuring clarified roles, reduced operational fragmentation, strengthened governance and embedded strategic objectives into daily workflows. The approach ensured that efficiency, service excellence and accountability became intrinsic to the bank’s operational delivery and decision-making processes.

Alongside structural changes, the bank developed comprehensive documentation, trained employees and embedded processes into standard operations. The TOM implementation delivered £3.2 million in annual savings, exceeded budget goals and finished three months early. Strategic alignment improved cross-functional coherence, enhanced decision-making clarity, reduced operational risk and strengthened organisational resilience.

Key takeaway: The bank did not simply restructure for cost reduction. By implementing a Target Operating Model aligned with strategic goals, it strengthened operational coherence, accelerated execution and delivered measurable efficiency gains indicating stronger organisational alignment with strategy.

“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.