Improve business experience and performance

The Target Operating Model (TOM) is an aspirational representation of how an organization should operate in the future to achieve its strategic goals. Unlike the current operating model, which reflects the existing structure, the TOM focuses on optimizing processes, people, technology, and systems to create effective alignment between business strategy and operations. This concept becomes crucial in a changing business environment, where adaptation and agility are key to maintaining a competitive advantage. This essay explores when it is necessary to implement a new TOM, its strategic relevance for improving customer experience, and its impact on business performance.

An organization's ability to adapt and anticipate new market demands is critical to its success. In this context, the Target Operating Model (TOM) emerges as an essential tool to align operations with long-term strategic goals. Unlike a traditional operating model, which reflects how an organization functions in its current state, the TOM is an aspirational vision of how a company should operate in the future to maximize its efficiency, agility, and responsiveness.

The TOM becomes a key enabler in sectors where digital transformation, customer personalization, and resource optimization are critical to maintaining competitiveness. Beyond simple process improvements, a well-designed TOM allows organizations to structure their operations to deliver a better customer experience, reduce operational costs, and generate a positive impact on financial results. However, implementing a new TOM is not a simple process and requires a rigorous evaluation of when it is necessary to update or redesign the operating model to meet current challenges.

This essay addresses when it is necessary to implement a new TOM, considering both the internal and external factors driving this decision. It will explore the key indicators that signal the need for change, as well as the tools and methodologies that help define and optimize the TOM. Additionally, it will examine the impact of an optimized operating model on customer experience and business performance, with a focus on the technological and market trends shaping the future of business operations.


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The Importance of a TOM Aligned with Business Strategy

One of the most critical elements for the effectiveness of a TOM is its alignment with business strategy. A misaligned TOM can lead to inefficiencies, operational difficulties, and a disconnect between strategic goals and day-to-day operations. As companies grow, expand into new markets, or transform their services, the need arises to adjust their operating model to reflect these changes.

For example, when a company decides to expand through digitalization, it must adapt its TOM to support new platforms, digital management tools, and a more flexible approach. If an organization plans to diversify its offerings or enter international markets, it must design a TOM that supports those goals, adjusting operational processes, technology, and staff skills to deliver faster, more efficient, and personalized services.

Therefore, when companies experience growth or significant shifts in their strategic direction, such as mergers, acquisitions, or international expansions, it is essential to redesign the TOM to ensure it is aligned with the new priorities.

Key Indicators for Implementing a New TOM

In a dynamic business environment, adaptability is a critical factor for success. One of the most relevant aspects of ensuring efficient operations aligned with strategic goals is the Operating Model (TOM). This model defines the structure, processes, and capabilities that an organization needs to fulfill its mission and achieve its vision. However, as the market and technology evolve, there comes a point where the existing TOM may become obsolete or ineffective.

Recognizing when it is necessary to implement a new TOM is a challenge for many organizations, as it is not always obvious. Nevertheless, there are key indicators that can serve as warning signs. These indicators help leaders identify areas that require operational transformation to maintain competitiveness and efficiency. From changes in customer demand to technological innovations, companies must be attentive to the signals that suggest the need to rethink their operating model.


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The key indicators that suggest the need to implement a new TOM may vary depending on the industry and business context. However, some common signs include:

• Decline in customer satisfaction: A consistent drop in customer satisfaction scores, such as the Net Promoter Score (NPS), may indicate that current processes are not providing an adequate experience.
• Uncontrolled growth: Rapid business expansion without a robust operating model can lead to disorganization, creating issues such as longer response times or inefficiencies in product or service delivery.
• Failures in digital transformation: The inability to adopt new technologies or adapt to a changing digital environment is a sign that the current operating model is not flexible enough.
• Increasing operational costs: A lack of efficiency and process optimization can lead to rising costs, affecting profitability and the ability to compete in the market.

Tools and Methods for Defining and Optimizing a TOM

The implementation of a new TOM requires a data-driven approach. Process mining tools are essential for analyzing how processes are executed in practice and detecting inefficiencies or bottlenecks. Through the analysis of event logs from systems like ERP or CRM, companies can gain a clear view of deviations from ideal processes.

The TOM acts as the master plan that guides how a company structures its operations, manages its resources, and aligns its processes to meet its strategic objectives. However, creating and optimizing an effective TOM requires a methodical approach and the use of specialized tools that ensure all key aspects of the business are properly integrated and aligned.

The definition of a TOM begins with an in-depth analysis of the company’s current state and the environment in which it operates. This includes assessing the organizational structure, available technology, existing processes, and the team’s capabilities. From there, the ideal operating model that will allow the company to achieve its long-term goals can be determined. To achieve this, various tools and methodologies are employed, such as process mapping, gap analysis, technology assessments, and more, which facilitate a comprehensive understanding of the business and its areas for improvement.

Once the TOM has been defined, the focus shifts to continuous optimization. At this stage, companies must be flexible and adapt to market, technology, and customer expectation changes. Methods such as continuous improvement, process automation, and data analytics become crucial for adjusting the TOM and keeping it relevant over time.

The use of predictive analytics and machine learning also enables organizations not only to fix current problems but to anticipate future challenges. For example, financial organizations can use these analytics to improve the speed of loan approvals or identify customer behavior trends, enabling a more agile response to market demands.

Process automation through RPA (Robotic Process Automation) is another critical tool that allows companies to enhance efficiency by reducing human intervention in repetitive tasks. This frees up resources to focus on more strategic and customer-oriented activities, which in turn improves the customer experience and optimizes operational performance.

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Impact of the TOM on Customer Experience

A well-designed TOM has a direct impact on customer experience (CX), which has become a key competitive differentiator. An optimized operating model not only facilitates internal efficiency but also enhances an organization’s ability to meet or even exceed customer expectations. The touchpoints along the customer journey are influenced by the TOM, from the speed of service delivery to the effective resolution of issues.

In sectors like telecommunications or retail, where response speed and personalization are critical, a customer-centric TOM enables the delivery of consistent omnichannel experiences. This means that customers receive uniform and personalized service, whether online, in-store, or via a mobile app. Companies that have successfully implemented a customer-focused TOM, such as Amazon or Starbucks, have demonstrated that these strategies drive long-term satisfaction, loyalty, and retention.


When Is It Necessary to Implement a New TOM?

Organizations often adjust their strategy in response to market changes, internal growth, or to remain competitive in an ever-evolving business environment. A strategic shift may include expansion into new geographic markets, diversification of products or services, a reorientation towards a more customer-centric approach, or the adoption of a sustainability strategy. These strategic changes require the company to realign its organizational structure, internal processes, and resource allocation, often demanding the implementation of a new TOM. If the current operating model is not designed to support new strategic priorities, inefficiencies, growth barriers, or misalignment between strategic objectives and operational capabilities are likely to arise. For example, during a merger or acquisition, the TOM often needs to be redesigned to effectively integrate the cultures, systems, and processes of the merged entities, ensuring cohesive and profitable operations.

Here are some key situations where a new TOM may be necessary:

• Digital transformations: that require a complete reconfiguration of processes.
• Geographic expansion: demanding new approaches to supply chain management, product delivery, or compliance with local regulations.
• Changes in customer expectations: where current processes no longer meet modern standards for personalization and speed.
• New regulations: that impact operations and require adaptation of the operating model to comply with specific requirements.

Organizations that do not update their TOM in response to these changes risk becoming ineffective and losing competitiveness. Implementing a new TOM ensures that the company is equipped to handle technological advancements, process improvements, and changing customer demands.

In summary, implementing a new TOM is necessary when the current operating model is no longer able to sustain the business's strategy and demands effectively, whether due to internal, external, or technological changes.

Impact of the TOM on Business Performance

The impact of an effective TOM can be seen in various key areas of the business, such as productivity, service quality, and innovation, ultimately improving the overall performance of the organization. When the TOM is properly implemented, internal processes flow more efficiently, eliminating redundancies and minimizing bottlenecks. This allows companies to respond more quickly to market demands and optimize resource utilization, leading to increased competitiveness. Additionally, a well-structured operating model aligns all departments and teams around the same strategic objectives, facilitating more effective collaboration and greater coherence in decision-making. This not only improves operational execution but also enhances organizational agility to adapt to external or internal changes.

On the other hand, a poorly designed TOM or one that does not adjust to the changing needs of the company can have the opposite effect, generating inefficiencies, additional costs, and a loss of competitiveness. For this reason, companies must regularly evaluate and adjust their TOM to ensure it remains aligned with their strategic goals and market conditions. In this article, we will analyze in detail how a well-implemented TOM can transform business performance, providing concrete examples of how it impacts areas like productivity, innovation, and customer satisfaction.

Moreover, a TOM that incorporates advanced technology, such as artificial intelligence and automation, enables companies to improve decision-making and execute more efficient and profitable processes. Organizations that do not embrace this transformation risk falling behind more agile competitors who do.

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Future Trends for 2024

As companies move into 2024, trends in advanced automation, predictive analytics, and customer personalization are expected to continue driving TOM development. The increased adoption of AI-based technologies will allow for greater optimization and scalability of operations, while hyper-personalization will enable organizations to deliver increasingly sophisticated customer experiences.

Additionally, the focus on operational sustainability and regulatory compliance will become increasingly integrated into TOMs, particularly in sectors such as manufacturing, telecommunications, and banking. Companies that manage to incorporate sustainable practices into their operations will not only see benefits in terms of cost and efficiency but also in brand perception and customer loyalty.

Conclusion

Implementing a new Target Operating Model (TOM) is not just a matter of modernization but a strategic imperative to ensure efficiency, agility, and competitiveness in a dynamic business environment. A well-designed TOM allows organizations to align their operations with changing customer needs and business strategy, improving both the customer experience and business performance.

Companies that implement a customer-centric TOM, driven by data analysis and powered by advanced technologies, will be better positioned to adapt to market transformations, drive customer loyalty, and ensure long-term success.

The implementation of a new TOM should not be seen as an isolated project or a simple process upgrade. In reality, it is a strategic element that can transform a company’s ability to respond to market demands, improve the customer experience, and strengthen its competitive position. An effective TOM provides the operational foundation needed to support growth, innovation, and business agility, becoming a central pillar for long-term success.

Organizations that prioritize the alignment of their TOM with business strategies are better prepared to face modern market challenges. By integrating advanced technologies such as automation, artificial intelligence, and predictive analytics, companies not only optimize their operations but also create more personalized and efficient customer experiences. This approach not only meets customer expectations but exceeds them, generating loyalty and differentiation in an increasingly competitive environment.

As technological trends and customer expectations evolve, it is crucial for organizations to constantly review their operating model to ensure it remains relevant and effective. Digital transformation, operational sustainability, and customer personalization are key areas where the TOM will play a crucial role in the coming years. Companies that anticipate these changes and adjust their TOM accordingly will be better positioned to capitalize on market opportunities and minimize risks.

In summary, the TOM not only defines how an organization operates but also determines its ability to adapt and thrive in a dynamic business world. Implementing a new TOM at the right time can be the difference between success and stagnation. Therefore, it is essential for organizations to continuously evaluate their operating model and make the necessary decisions to maintain their relevance and competitiveness over the long term. 

Documentary references

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4. Rosemann, M., & vom Brocke, J. (2015). Handbook on Business Process Management. Springer.
5. Gulati, R. (2019). Deep Purpose: The Heart and Soul of High-Performance Companies. Penguin Books.
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