Target operating model: the bridge between design and execution

More and more companies recognise the need to improve and actively manage customer experiences. The organisations that succeed understand the experiences their customers want, and the best operational set up to deliver them. In other words, they are adept at both designing customer journeys and defining the mechanics which will bring them to life.

A ‘target operating model’ (TOM) is the tool often used to do this job. A TOM is a high level representation of the best way for a company to be organised to deliver its strategy and in this context, the desired customer experiences. A TOM describes what experiences an organisation aims to deliver and how it will operate to deliver them efficiently and effectively. It’s a blueprint showing how channels, people, processes and technology hang together to support the intended customer journeys.

Creating a TOM doesn’t need to be complicated. Here are four simple steps you can take:

1. DEVELOP DESIGN PRINCIPLES

Design principles are high level statements about how an organisation should operate. They describe the priorities of the business and customers, including the experiences they wish to have. The principles should align with broader strategic objectives, and they should be informed by high quality customer insight. Work with your leadership team to develop a set of principles and use them to guide the development of your TOM and make intentional design decisions along the way. The more you refer to your design principles, the less you leave to chance.

2. MAP THE TARGET CUSTOMER JOURNEYS

Customer journey maps are diagrams showing the experiences that customers have with an organisation. They show the steps customers go through when engaging with a company and how each step makes them feel. Start by mapping the steps your customers currently go through and highlight any ‘pain points’, then map the steps they would ideally go through and consciously ‘design out’ those pain points. Repeat this exercise for different customer segments and involve as many people in the process as possible. Then go and validate your maps directly with customers. You’ll end up with a set of diagrams which accurately describe the experiences your customers ideally want to have with your organisation.

3. DEFINE THE CAPABILITIES REQUIRED

Put simply, a capability is the power or ability to do something. It’s useful to draw up a list of the capabilities required to deliver your target customer journeys. Do this by walking through each journey map and asking the question “what does my organisation need to be able to do to deliver this step?”. For instance, for a customer to purchase items, an organisation needs to be able to take payments, or for a customer to submit data, a company must be able to collect and manage data. For each capability, describe the current and future state in terms of channels, people, processes and technology. For instance, payments currently may only be taken in-store at staffed checkouts, but in the future, they may be taken online, in-store at self-service checkouts, over the phone and so on. This will obviously require a different operational set up, and the aim is to describe what that looks like. Don’t just consider the front-end activities; think about what happens behind the scenes too.

4. ARTICULATE THE CHANGES NEEDED

Compare and contrast the current and future states of each capability and define the gap between them. This will help you draw out what needs to change to realise the target customer journeys. You won’t always be able to jump directly from the current to the future state; you may need to introduce some interim stages and deliver changes incrementally. Once you’ve identified all the changes you need to make, prioritise them and plot them on a ‘change roadmap’, which should give you the basis of your transformation plan.

If you take the above steps, you should end up with a comprehensive picture of how your target customer journeys and operations tie together. You’ll have redesigned your organisation ‘from the outside in’, and you’ll be on the path to becoming more customer focused. More work will be needed to figure out the finer details of the changes and find ways to measure their impact, but you’ll have taken a huge leap in the right direction.