The Difference Between Target Operating Model and Organisational design

3 mins read

Target operating model (TOM) and organizational design are two important concepts that play a crucial role in the success of an organization. While they may seem similar at first glance, there are key differences between the two that are important to understand.

Firstly, a target operating model refers to the way in which an organization is structured and operates to achieve its strategic objectives. It outlines the key capabilities, processes, technologies, and resources that an organization needs to succeed. In contrast, organizational design involves the arrangement of roles, responsibilities, and relationships within an organization to ensure that it functions effectively and efficiently. While both TOM and organizational design are concerned with how an organization operates, TOM focuses on the overall structure and strategy, while organizational design is more about the day-to-day operation and management.

Secondly, TOM is typically developed at a high level and is often used to align an organization’s activities with its strategic goals. It provides a roadmap for how the organization will achieve its objectives and can help to identify areas for improvement. Organizational design, on the other hand, is more concerned with the detailed implementation of the TOM. It involves defining roles and responsibilities, establishing reporting relationships, and designing processes and workflows to ensure that the organization runs smoothly and efficiently.

Another key difference between TOM and organizational design is the level of flexibility they offer. TOM is often seen as more fixed and long-term, as it is designed to meet the organization’s strategic objectives over an extended period of time. Organizational design, on the other hand, can be more fluid and adaptable to changing circumstances. It allows for adjustments to be made to the structure and processes of the organization as needed to respond to new challenges or opportunities.

In conclusion, while both target operating model and organizational design are important concepts in the successful operation of an organization, they serve different purposes and have distinct characteristics. TOM provides a high-level blueprint for how an organization will achieve its strategic objectives, while organizational design focuses on the detailed implementation of this plan to ensure that the organization operates effectively and efficiently. Understanding the differences between these two concepts is essential for organizations to achieve their goals and thrive in a competitive business environment.

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