A target operating model can sound like something only large consulting firms talk about. In practice, it is a clear description of how an organisation should work so its strategy can be delivered.
Your strategy describes what you want to achieve. Your operating model describes how people, processes, decisions, information and tools make that outcome possible.
If a team is busy but progress remains slow, decisions take too long or priorities repeatedly clash, the problem may not be the strategy. It may be the operating model.
When do you need a target operating model?
You do not need one for every change. It becomes useful when:
- Teams work hard but pull in different directions.
- Projects repeatedly slow down or become stuck.
- Responsibilities overlap or remain unclear.
- Decisions require too many handovers.
- New tools or initiatives fail to become normal practice.
These are often symptoms of a structural problem rather than a performance problem.
Start with the outcome
One common mistake is starting with a tool, organisation chart or fashionable framework. A useful target operating model begins with a simpler question: what must the organisation become able to do?
The design must follow the strategy, not the other way around.
How to create a target operating model
1. Understand how work happens today
Study the real work, not only the documented process. Trace how priorities are set, where decisions wait, which handovers create delay and where teams duplicate effort.
The difference between the official process and daily reality is often where the most valuable evidence appears.
2. Define what good looks like
Describe the target state in practical terms:
- What must become faster?
- What needs clearer ownership?
- Which decisions should move closer to the work?
- Which recurring activity should stop?
- What should leaders be able to see?
This is direction, not detailed design.
3. Design the core building blocks
Most operating models need clarity across five connected areas:
- Processes: how work flows end to end.
- Ownership: who is accountable for outcomes.
- Governance: how priorities and decisions are handled.
- Information and tools: what enables the work.
- Measures: how the organisation sees whether the model is working.
The goal is coherence, not complexity.
4. Align people, not only boxes
A perfect diagram can still fail. People need to understand what changes for them, which decisions they own and how they collaborate with other teams.
Clear decision rights and interfaces are usually more valuable than a highly detailed organisation chart.
5. Make the model real
An operating model is not the document. It is what people repeatedly do.
Implementation may include weekly reviews, new prioritisation routines, standard reporting, clarified ownership and regular checks on adoption. The design should change when evidence shows that part of it does not work as intended.
What a good operating model looks like
It should be explainable. People should be able to understand how work flows, who owns the important decisions and how performance is reviewed without reading fifty slides.
You do not need a perfect target operating model. You need one that is clear, proportionate and used.
Learn more about operational excellence and change management or read the case study on creating a structured operating rhythm.