I have been wrestling with the issue of how to get started on the design of a target operating model. My thoughts are as follows:

1. Start with the strategy
2. Convert the strategy into promises/offers for each stakeholder and consider which promises will be “difficult” to achieve. Try to understand what makes the promise difficult to achieve, and, therefore, what the organisation will need to do particularly well in order to overcome the difficulty. Convert these thoughts into design principles.
4. Lay out the main work streams or value chains or operating steps thinking about where the organisation will have special capabilities. Convert these thoughts into design principles.
5. Create a “rough sketch” design – ideally on one page
6. Convert that design into an organisation model showing the main parts of the “operating work” and the “support work”
7. List and draft a design for the critical management processes that cut across the organisational boxes of the organisation model
– important decision processes (about what will be done – i.e. decision and planning processes)
– performance management processes (target setting, accountability, monitoring progress and adjusting)
– people decisions
– processes for changing the operating model (often confused with decision and planning processes)
8. Consider the “events” that create interactions with stakeholders, with special attention to those that are difficult (see 2 above). Identify and draft the processes that are needed to make the events successful. Focus on those processes that require reactions from more than one “box” in the organisation model. Those that only involve one box can be designed by the leader of that box (e.g. agreeing a price with a customer – by sales).
9. Work through the detailed design of each process using PILOS (Process/equipment, Information technology, Locations/properties, People, Suppliers)
– equipment/technology needed (consider technology developments such as digitization and mobility)
– locations and property needed
– people needed
– information systems needed
– suppliers needed
10. Finalise process architecture and process owners, technology plans, property plans, people plans, information system plans and supplier plans.

Of course this implies a linear approach working from strategy to detail. In practice it is a more iterative approach where some work on detail is done to inform steps 5 and 6.

An observation. This flow does not include a “capability map” (see thoughts about capability maps). .