From Vision to Value: Build Your TOM

When Netflix moved from CDs to streaming, it didn’t just change operations it dramatically changed its value model. Its Target Operating Model (TOM) was mapped holistically to deliver value to customers across every touchpoint. 

Different than an operating model that focuses on the way a business functions today, TOMs represent the future-state vision – what the company wants to be. A strong TOM includes understanding the people, processes, technology, governance, organization structure, and data flows within the organization.  

Another way of thinking about a TOM is "If strategy is a roadmap, and implementation is a journey, you could think of the TOM as a combination of infrastructure and itinerary – a good TOM can make the difference between a direct flight or a risky overland trek."

How do you design a TOM that is realistic, achievable, and commercially viable?  

Let data lead the decisions. This process may involve scrutinizing client journeys, reviewing cost analysis across the business or a deep dive into the supply chain. Advanced technology should be built into the operating model to drive faster decisions, predictive insights, and adaptive execution.

When designing a TOM, a clear understanding of the outcomes the business wants to achieve is crucial. The model must support both business strategy and customer value. One way to ensure clarity around the desired outcomes is to ask specific questions, framed in the right way, such as 'What does this process need to achieve?' as opposed to 'How should this process run?'

It is important to be specific when defining these outcomes and highlight specific variables that should or should not be subject to change. For example, 'We need to achieve cost savings of x across the manufacturing process, without compromising on material quality or extending timescales' as opposed to 'We need to cut costs in our manufacturing process.'

For start-ups and small businesses, TOMs tend to be built on shorter timelines and with more flexibility to cater to the rapid change these companies commonly undergo. Agility in the TOM benefits larger businesses as well because it helps leaders respond to market changes and widespread disruption, take advantage of emerging trends, and respond to customer demand.

There’s nothing wrong with an ambitious TOM if it is truly the right path for a business to take. Not only should the plan clearly set out what needs to be achieved in each phase, but it should also ensure each phase creates a viable operating model.  

A TOM created based on outcomes should naturally include KPIs to help the business measure success and make any adjustments. TOMs will evolve as the business needs change.  

Being realistic when setting timelines means the business will be able to plan its resources, budgets, and growth better – preventing a situation where activities are rushed.  

All the best conceived strategies fail without bringing employees on board early. They are more likely to support and survive transformations if they understand how it impacts them and how they can impact the business.  

High-performing organizations treat their operating model as a living blueprint, not a static chart. A TOM is where strategy meets execution – aligning leadership, people, and technology. Leaders who invest in flexible, data-driven TOMs create resilience, unlock speed, and keep their edge when others stall. Is yours ready for what’s next?