Introduction: What a Target Operating Model Really Is

1.3 The 8 Core Design Dimensions of a TOM

While each company and industry has its own nuances, most robust TOM designs share a common backbone. A practical way to structure your thinking is around eight core design dimensions:

1. Customer & Service Proposition
2. End-to-End Processes & Journeys
3. Organization & Governance
4. People, Skills, and Culture
5. Technology, Data, and Analytics
6. Sourcing, Partnerships, and Location Footprint
7. Performance Management, Metrics, and Incentives
8. Risk, Controls, and Compliance

You do not need eight separate workstreams, but you do need to ensure your design choices are coherent across all eight.

1. Customer & Service Proposition

 Even though this is close to “strategy territory,” you cannot design an operating model without being precise about who you are serving and what you are promising them. This dimension clarifies:

• Priority customer segments and channels.
• The service levels and experiences you commit to (e.g., response times, customization, self-service).
• How much variation you will tolerate across regions, segments, and products.

These choices drive operational requirements. For instance, a promise of “same-day resolution for priority clients” implies specific staffing levels, escalation paths, and technology enablement.

2. End-to-End Processes & Journeys

 This is the operational backbone of the TOM: how value actually flows. Here, you define:

• The main end-to-end value streams (e.g., “Acquire customer”, “Deliver order”, “Resolve issue”).
• Owners for each journey or value stream.
• Standardized process patterns and where local variation is allowed.

The goal is to simplify and rationalize your operating flows so that most work runs through a small number of well-owned, well-designed journeys, rather than a proliferation of local one-offs.

3. Organization & Governance

 This dimension covers the formal structure and the decision architecture. It is not only about boxes and lines; it is about who is accountable for what, and how they work together.

Typical topics include:

• Macro-structure: how to organize by product, segment, geography, function, or platform.
• Role of shared services, platforms, and central versus local units.
• Decision rights and governance forums: who decides, who advises, who executes.

If your strategy requires more horizontal collaboration (e.g., integrated solutions, end-to-end journeys), this is where you encode that into real roles and forums, not just slogans.

4. People, Skills, and Culture

 A TOM is only as good as the people and capabilities that operate it. This dimension defines:

• Critical roles and skills for the target state (e.g., product owners, data engineers, risk specialists, customer success managers).
• How many people you need in which roles and locations.
• The cultural shifts required (e.g., from “local autonomy at all costs” to “global standards first”; from “opinion-driven” to “data-driven”).

You should emerge with a capability roadmap: what to build, what to hire, what to redeploy, and what to phase out.

5. Technology, Data, and Analytics

 Here you define how technology and data will enable and accelerate the operating model, rather than simply automating today’s fragmentation.

Key questions:

• What are the core platforms needed (e.g., ERP, CRM, workflow, data platforms)?
• How will they connect (integration patterns, APIs, data hubs)?
• Who owns data domains and data quality?
• What priority analytics use cases will shape how you work (e.g., next-best-action, predictive maintenance, risk scoring)?

A good TOM keeps the technology view at the right altitude: clear enough to guide major investments and dependencies, but not so detailed that it becomes a technical architecture document.

6. Sourcing, Partnerships, and Location Footprint

 This dimension determines where work is done and by whom:

• Which activities are core and must remain in-house.
• Which can be centralized into shared services or centers of excellence.
• Which can be outsourced or done with strategic partners.
• Where to locate teams (onshore, nearshore, offshore; hubs vs satellites).

The goal is to align cost, risk, talent availability, and proximity to customers and stakeholders. Many of the large economic impacts of a TOM come from getting this configuration right.

7. Performance Management, Metrics, and Incentives

 If you do not change what you measure and reward, your TOM will remain theoretical.

This dimension covers:

• Enterprise-level KPIs that reflect your strategy (e.g., growth, ROIC, NPS, risk losses, cost-to-serve).
• End-to-end and functional metrics that support the TOM (e.g., journey lead times, first-time-right, automation rates, digital adoption).
• Performance review rhythms and management routines.
• Incentive structures that encourage collaboration and end-to-end outcomes, not just silo performance.

You are designing the nervous system that keeps the operating model aligned and adaptable.

8. Risk, Controls, and Compliance

 Finally, the TOM must embed a practical, effective risk and control framework into the way work gets done.

Typical design decisions include:

• How risk ownership is allocated (e.g., first/second/third line of defense).
• How key controls are built into processes and systems.
• How regulatory changes are translated into operational updates.
• How incidents, breaches, and near-misses are detected, escalated, and learned from.

The goal is to move from a world where risk is “checked at the end” to a world where the operating model itself is designed to be safe and compliant by default.