The traps of Target Operating Models

If you’re in a large or complex organisation, there’s a reasonable chance your Target Operating Model (TOM) is wrong. 

Not because TOMs are an inherently bad idea, but because the culture and methodologies used to create them are highly susceptible to false certainty.

False certainty is comforting. It may give you a warm and fuzzy feeling to have decided what your organisation is going to look like in a year, two years, ten years. It means you can crack on with a plan to make it happen. But it may be a long time before you find out you have been going in the wrong direction.

What is a TOM?

Target Operating Models (TOMs) are an attempt to describe the way your organisation will work in the future. TOMs are intended to show how an organisation will achieve its mission and vision, and typically include a breakdown of:

  • Teams and organisational structure
  • Capabilities
  • Governance
  • Processes
  • Technologies

The purpose of a TOM is to achieve that highly sought after quality: alignment. The theory goes, if you describe a model of the desired future in a way that is simple, clear and compelling, then this model will slowly become a reality. Teams and individuals can refer to the TOM when they make decisions, eventually aligning everything in the organisation to this model .

The tricky thing is, whatever your organisation comes up with, your TOM is likely to be nothing more than a best guess. If it’s the wrong guess, then the organisation may well be aligned, but it will be aligned towards the wrong thing. TOMs are guesswork because they do not account for the unpredictability of organisational change and the impact of external events - certainly not over timescales of many months or years. The aspiration of TOMs is helpful, the false certainty they provide can be counter-productive.

Organisations must also be aware that TOMs are a commercial product with risky incentives. Consultancies which sell you a TOM can be motivated to drive up complexity so the end product feels weighty and valuable to the buyer. Consultancies will also want you to feel confident about the TOM, leaning towards false certainty. Perhaps most dangerous of all, it’s possible to buy a one-size-fits-all TOM which assumes that the answer is a template. These templates are based on the idea that ‘best practice’ is formulaic, and easily packaged and sold. Unfortunately, you can’t simply copy and paste culture change.

Improving your Target Operating Model approach

Putting aside the marketing and the culture surrounding TOMs, a pragmatic TOM is possible, and many organisations will already have invested time and money in developing one.

So here are some suggestions for how to improve your organisation’s TOM:

  • Prioritise outcomes over operating model. The outcomes your organisation is trying to achieve should always take precedence over your TOM. Your TOM should be adapted to ensure you stand the best chance of achieving those outcomes.

  • Hold your TOM lightly. To mitigate the false certainty that comes with TOMs, hold them lightly. Assume they’ll change, assume they’re guesswork, and communicate this so people don’t fear the boxes and lines. Admit it early when you discover the model needs to change.

  • Reduce the detail as you become bolder. The bolder the change you want to achieve, the more risk there is in detail. Detail will create comfort in a falsely certain future, which can backfire when the future turns out to look very different. Detail can also encourage command and control behaviour as the detailed model is treated as a fixed plan.

  • Reduce the detail, as you get further into the future. In information or software rich organisations, long term change is very hard to predict. Detail about long term plans is wasteful, and the further into the future you go, the less likely it is to be accurate.

  • Make your TOM adaptable. Assume the TOM will change, and create strategies through which this can happen, and systems to communicate change.

  • Vary your TOM’s style of communication. Many TOMs are a diagram with lines and boxes, alongside supporting reference documentation. While this communication style will work well for some in your organisation, for many it may be confusing. It is common to see anxious or angry reactions to TOMs due to misinterpretations of its intent. This can be mitigated by varying the style of communication e.g. visual, verbal, written.
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Why have a Target Operating Model at all?

Given the risks of TOMs, it is possible, and perhaps advisable to not have one at all. I’ve worked with many thriving public and private organisations who either don’t have one, or don’t talk about having one.

However, organisations still need to be good at alignment. In the absence of one unifying approach provided by a TOM, this can be done through a range of complementary approaches.

Here are a few suggestions:

  • Constantly communicate intent. Leaders should be consistently emphasising what the organisation is trying to achieve, and helping teams to identify when their experiences do not align with this.

  • Choose moments to create momentum for change, and get everyone on board. Change ebbs and flows, choose the moments when you want to make substantial change, and get everyone behind it. Spot when there is natural momentum in your workforce to build upon.

  • Choose a dominant concept. Your dominant concept is what you most commonly fund and build teams around; examples are projects, services and functions. The more dominant - and less dominant - concepts of an organisation will shape what they do, and how they do it, and the organisation must align itself around those which are the most dominant. Currently, we’re seeing many organisations change their dominant concept from projects or functions to services.

  • Visualise and describe the current model in different ways. Show people models of how things work: hierarchies, governance flows, information flows etc. Be creative, and choose different approaches (e.g. visual, verbal, written) suited to different people. It is surprising how much misalignment there is about how things work in the present, let alone in the future.

  • Visualise and describe future models in different ways. This is the closest approach to using a traditional TOM, and acknowledges the value in describing future models. However, avoid the trap of trying to create one-model-to-rule-them-all: use varying timescales showing now, next and later. As above, use variety in your communication style - using more than boxes and lines.

  • Work in the open to break down silos. Encourage leaders and teams - everyone from decision makers to practitioners - to make most of the work they do transparent, as this helps build trust and contribute to your organisation’s alignment. Weeknotes are a perfect example of this.

  • Encouraging continuous change. Avoid building up pressure that requires seismic change: allow team structures, processes and information flows to continuously adapt

The list covers some - but by no means all - of the strategies for aligning your organisation. What this shows is that whether you have a Target Operating Model or not, it is only one tool amongst many which can help you achieve alignment.

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