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Designing the Target Operating Model for Business Agility

Target operating models must support both emergent and predictable operations

Achieve business agility with an updated target operating model and a little know-how

Developing the capability to adapt requires more than traditional top-down command and control leadership because it relies on people thinking and acting at all levels of the organisation. The challenges include:

  • how to empower people to make their own decisions without losing control over what matters;
  • how to ensure strategic priorities prevail over local and short-term demands;
  • how to respond quickly within a fixed hierarchical structure. 

The answer is a target operating model that supports the need to control both predictable and emergent value ways of working simultaneously.

It's not an Agile TOM, nor a traditional TOM. It's a combination that balances the unique value-adding activities of the organisation.

Updated Target Operating Model Features

CUSTOMER-FIRST 

A Target Operating Model differentiates customers from other stakeholders. This is not as obvious as it sounds as there is often confusion about the roles of internal customers, users, enablers, providers, and regulators. 

CLARIFY THE DELIVERY VALUE STREAM

Drawing the value stream clarifies how the organisation does what it does, what the inputs and steps are, and reveals where customer feedback mechanisms  and other controls should be operating.

UPDATE THE EXISTING OPERATING MODEL

Implementation is a matter of moving towards the target operating model, guided by the value stream mapping. Sometimes, restoring a feedback mechanism is the only lever needed to transform failing performance. In other cases, devising a decision-making rule can unblock the recurring delays that are a consequence of hierarchy.
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Digital age vs machine model TOMs

Digital age and technology-savvy firms developed out of collaboration and experimentation, which has given them an unfair advantage in fast-changing and highly regulated markets. In terms of the science of management, they recognise that value often emerges spontaneously, rather than assuming that value is always predictable and can be planned for.

Plan-driven control is appropriate for most activities, but fails horribly when applied to emergent tasks such as new product development, understanding requirements, and designing solutions. Design thinking, Agile ways of working, or research methodologies are needed in those situations but - and here's where most TOMs fail - they have to co-operate with plan-driven methods.

That is what the Taoist symbol of yin-yang represents; shifting forces that compete and oppose each other, yet combine to make something greater than either part. 

Complex and adaptive management

Russ Lewis' book describes a simple model that reveals the parts of organisations that are normally hidden, but actually determine its performance.

It is one of the few books about Agile that was actually written for managers.

from back cover of target operating model for business agility book

Improve decision-making, flexibility, and resilience by updating organisational structure and governance

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