Operating in a world that is becoming increasingly complex and fast-paced, business leaders often find themselves grappling with a crucial challenge: How can they effectively streamline their organizational structures and processes to remain competitive, while ensuring alignment with their strategic goals? The answer lies in designing an efficient, sustainable, and adaptable target operating model, commonly referred to as a design target operating model.
A design target operating model, in strategic management parlance, is essentially a blueprint for how resources are organized and operated to achieve a firm’s strategic goals. It provides a comprehensive visualization of a company’s future state by mapping resources and outlining the business processes required to deliver value to stakeholders.
Designing a design target operating model requires a holistic understanding of the business enterprise and a forward-thinking approach. It is not just about tinkering with the existing structure and hoping for a different outcome. Rather, it is about visualizing the ‘big picture’ and aligning the various components of the organization towards a common strategic goal.
The first territory to traverse in designing a design target operating model is undoubtedly understanding the organization’s strategy. This strategy forms the bedrock upon which the new model is drawn upon; it serves as the guiding star that aligns the entire design process. For example, if the strategy is to become the market leader in sustainability, the design target operating model would have to be designed in a way that promotes and fosters sustainable practices across all business operations.
Next, the existing operating model should be critically assessed. This involves an immersive deep dive into the current structures, processes, systems, and people. Leaders must ask probing questions to understand what works and what doesn’t, and locate the gaps and bottlenecks that obstruct growth and progress. The results of this assessment equip the design team with a clear picture of the current state and the necessary insights to reinvent and realign the operating model.
A crucial step in designing a design target operating model is to map out the ‘customer journeys’ and ’employee journeys’. This involves creating a comprehensive map of different touchpoints and interactions that customers and employees have with the organization. Understanding these journeys can help identify opportunities for improvement, innovation, and value addition. It can also foster an overarching vision for customer satisfaction and employee engagement, which are significant drivers of sustainable success.
The next part is to draft the new organizational structure and underlying business processes to meet the set strategic goals. The defined structure should ensure that resources, roles, and relationships are in place to deliver value most efficiently and effectively. Moreover, the processes should be designed keeping scalability and flexibility in mind—enough to withstand environmental shocks and address unforeseen challenges.
Once the ‘skeleton’ of the design target operating model is ready, leaders need to select and implement the appropriate technology that enhances overall efficiency and productivity. Technology is a powerful enabler that can aid in streamlining processes, improving data management, enhancing communication, and fostering innovation.
Finally, an oft-overlooked aspect, but one that forms the heart of the design target operating model, is its people. Moving from the current state to the desired future state necessitates managing change effectively. Leaders must bring their people on board with clear communication, training, and constant reassurances about the necessity for change and the benefits it will bring.
Designing a design target operating model is a multidimensional task that goes beyond the realms of structures, systems, and processes. Successful transformation lies in a well-designed design target operating model that places equal importance on strategy, technology, customers, employees, and culture—ensuring a harmonious blend of these aspects for the future success of any organization.
While charting a course for the future may seem daunting, it is not an impossible task. Given the increasing dynamism of markets and the unrelenting pace of change, having a design target operating model not only provides a roadmap to navigate the future effectively but also prepares businesses to be nimble and resilient in the face of uncertainties. After all, a well-orchestrated organization is half the work done in the journey to success.
