How Organizations Redesign the Way They Operate for the Digital Age
Digital transformation is not about adopting new technologies it is about changing how an organization operates. Many initiatives fail because companies digitize existing problems instead of redesigning their operating logic. This is where the Target Operating Model (TOM) becomes a critical foundation for successful digital transformation.
What Is a Target Operating Model (TOM)?
A Target Operating Model defines how an organization should operate in the future to achieve its strategic goals. It describes the desired state of:
Processes
People and roles
Technology and systems
Governance and decision-making
Data and information flows
In the context of digital transformation, the TOM acts as a blueprint that aligns business strategy with digital capabilities.
In simple terms:
Strategy defines where you want to go.
The Target Operating Model defines how you will get there.
Why Target Operating Model Matters in Digital Transformation
Many organizations jump directly to technology implementation—ERP systems, cloud platforms, automation tools—without redefining how the business should operate.
This leads to:
Misaligned systems
Poor user adoption
Fragmented data
Limited ROI
A well-designed TOM ensures that digital investments support a redesigned way of working, not outdated structures.
Key Components of a Digital Target Operating Model
1. Business Processes
Digital TOM starts by redefining processes end-to-end:
From siloed workflows to cross-functional flows
From manual steps to automated execution
From reactive operations to proactive, data-driven actions
The goal is simplification before digitization.
2. Organization & People
A digital operating model requires new roles and capabilities:
Product owners instead of functional managers
Cross-functional teams instead of isolated departments
Digital skills embedded across the organization
TOM clarifies who does what, how teams collaborate, and how accountability is structured.
3. Technology & Platforms
Technology in a TOM is an enabler—not the driver:
Integrated platforms instead of disconnected tools
Modular systems that evolve with the business
Cloud-based and scalable architectures
The focus shifts from individual systems to platform-based operations.
4. Data & Information
A digital TOM treats data as a strategic asset:
Single source of truth
Real-time data availability
Embedded analytics in daily operations
This enables faster decisions and continuous performance monitoring.
5. Governance & Decision-Making
Digital organizations operate with:
Clear ownership of products and processes
Faster decision cycles
Outcome-based performance measurement
The TOM defines how decisions are made, escalated, and measured.
Target Operating Model vs Current Operating Model
| Aspect | Current Operating Model | Target Operating Model |
|---|---|---|
| Structure | Functional silos | Cross-functional teams |
| Processes | Manual, fragmented | Digital, automated |
| Technology | Standalone systems | Integrated platforms |
| Decision-making | Hierarchical | Data-driven |
| Agility | Low | High |
Digital transformation bridges the gap between these two states.
How TOM Guides Digital Transformation Initiatives
A Target Operating Model helps organizations:
Prioritize digital initiatives based on business impact
Avoid tool-driven transformation
Align IT, operations, and leadership
Create a shared vision across stakeholders
Instead of asking “What system should we implement?”, organizations ask:
“What operating model do we want, and what technology enables it?”
Common Mistakes When Defining a Digital TOM
Designing TOM after selecting technology
Overengineering future models that ignore reality
Ignoring culture and change management
Treating TOM as documentation, not execution
A successful TOM is practical, adaptable, and executable.
Implementing Target Operating Model in Practice
Effective implementation follows these steps:
Assess the current operating model
Define digital ambitions and strategic objectives
Design the future-state TOM
Identify gaps and transformation initiatives
Execute in phases with continuous feedback
TOM is not a one-time deliverable—it evolves as the business evolves.
The Role of TOM in Long-Term Digital Success
Organizations that succeed in digital transformation do not chase trends. They:
Redesign how they operate
Align people, processes, and platforms
Use technology to reinforce the operating model
The Target Operating Model becomes the anchor that keeps transformation focused, scalable, and sustainable.
Final Thoughts
Digital transformation without a Target Operating Model is directionless.
Technology without an operating model creates complexity, not value.
A well-defined Target Operating Model in Digital Transformation ensures that every system, process, and decision supports a clear, future-ready way of working turning digital ambition into operational reality.
