Rewiring the Target Operating Model: Why TOMs Fail and How to Fix Them
In consulting circles, Target Operating Model (TOM) has become one of the most overused — and misunderstood — phrases in transformation. It’s often treated as a static document or a slide deck artefact, rather than what it’s meant to be: a living design of how an organisation operates, delivers value, and adapts to change.
The truth is, most TOMs fail. They fail quietly — not because the concept is flawed, but because the execution is superficial. A well-crafted TOM should be the single most powerful tool for aligning people, processes, technology, and culture behind a common purpose. Yet too often, it ends up as a consultancy deliverable filed away after a steering group sign-off.
Let’s unpack why that happens — and what it takes to get it right.
1. The Illusion of Structure
Many organisations confuse a TOM with an organisational chart or a process map. While structure and process are components, they don’t define how value flows. A true TOM describes how an organisation delivers its strategy — through people, governance, capabilities, and enabling systems.
If your TOM focuses only on hierarchy, you’ll achieve reorganisation, not transformation.
2. Designing Around Outcomes, Not Functions
The most effective operating models start with customer outcomes. They work backwards from “what experience or service do we want to deliver?” rather than “what departments do we have?”
In utilities, for instance, a TOM built around “reduce settlement disputes” will look very different from one designed around “optimise wholesale billing.” The difference is subtle but powerful — one is reactive and transactional, the other is proactive and value-driven.
Start every TOM design conversation with three questions:
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What outcomes matter most to our customers and regulators?
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What capabilities do we need to achieve them?
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What technology and data will enable those capabilities sustainably?
3. Embedding Data and Digital in the Design
In the digital era, an operating model that ignores data is already obsolete. Data flows define how an organisation works just as much as reporting lines.
For example, a retailer in the non-household (NHH) water market cannot design an efficient TOM without embedding data reconciliation, validation, and insight generation as operational capabilities. The same is true in telecoms, healthcare, or local government — the way you manage and interpret data shapes every decision.
A modern TOM must be data-enabled and software-aware, mapping the flow of information as deliberately as the flow of work.
4. Governance That Enables, Not Suffocates
Governance in many organisations becomes a control mechanism rather than a value enabler. Endless boards, checkpoints, and assurance gates often slow decisions and frustrate delivery teams.
High-performing TOMs define clear accountabilities with intelligent autonomy — giving teams permission to act within defined parameters. Think guardrails, not gates.
Good governance accelerates change; bad governance kills it quietly.
5. Culture and Capability – The Human Core
Even the most technically sound operating model will crumble if the culture doesn’t support it. Consultants love to talk about “people, process, technology,” but the order matters. People come first — because they shape the behaviours that sustain everything else.
When defining your TOM, ask:
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Do we have the skills and confidence to operate differently?
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What behaviours need to change to make this sustainable?
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How will leaders reinforce those behaviours daily?
Transformation doesn’t fail in design — it fails in adoption. Culture is the binding force that makes the model live.
6. Making the TOM a Living System
A TOM isn’t a one-off exercise. It should evolve as your organisation learns.
The most successful clients I’ve worked with treat their TOM as a living artefact, reviewed quarterly and refined as new technologies, regulations, and customer demands emerge.
Link TOM evolution to strategic review cycles and operational data dashboards. When the business changes, the operating model should too.
7. The Consultant’s Role: Architect and Challenger
As consultants, our job isn’t just to map what’s there — it’s to challenge what should be. A good consultant bridges the strategic vision and operational practicality. We don’t impose frameworks; we co-design working models that clients can own and sustain.
A strong TOM engagement should leave the client team saying, “This is ours — and we know how to keep it alive.”
8. The Checklist: Is Your TOM Fit for Purpose?
Here’s a quick diagnostic for leaders assessing their current operating model:
✅ Does it clearly link to the organisation’s strategic outcomes?
âś… Does it describe how value flows across departments, not just within them?
âś… Is data management explicitly designed into it?
âś… Does governance accelerate, not block, decision-making?
âś… Are people empowered and capable of working within it?
âś… Is it reviewed and refined regularly?
If you answered “no” to any of these, your TOM isn’t failing — it’s waiting to be rewired.
Final Thought
A Target Operating Model isn’t a template or a deliverable. It’s a mindset — a way of thinking about how your organisation delivers value every day. When designed and lived properly, it becomes the foundation for every strategic decision, every technology investment, and every cultural shift.
It’s time to stop treating TOMs as static diagrams — and start using them as the organisational nervous system they’re meant to be.
