According to the McKinsey report, as many as 70 per cent of all transformations fail to make it to the execution phase or are derailed during implementation. This is because the transition from strategy to execution is never straightforward. It is a web of decisions, dependencies, and requirements. A strategy should therefore not only answer the question of where the company wants to go. It should also formulate, in small steps, how this is to be achieved.
The Target Operating Model (TOM) defines all the elements needed to translate a formulated strategy or initiative into the operational business of an organisation and to achieve the desired target state. The TOM bridges the gap between strategic vision and day-to-day operations. Just as an update brings a computer’s operating system up to date, the TOM updates a company’s operating model.
The IBM iX Target Operating Model is a modern framework that combines the most common elements needed to successfully implement a formulated strategy or initiative. It is designed to help organisations bring their operating model up to date.
A TOM creates a common understanding of the future state of an organisation and helps to understand that digital transformation cannot be limited to the introduction of specific technologies or the digitisation of the customer interface, but is rather about the adaptation of the individual elements of the operating system. No interface or tool can save the implementation of a strategy if an organisation’s internal processes, activities, governance, and measures are not aligned with the desired state. The TOM sets the stage for updating the operating model by creating transparency and awareness, while focusing on the value to be delivered – be it customer or employee experience. There is no universal TOM that will fit all organisations. The strategic context, the size of the company and the maturity of the individual business units will determine how a TOM is created.
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