What’s the difference between Target Operating Model and Service Design?

Who really knows what people mean when they talk about  Target Operating Model and Service Design?  

We hear corporate terms like this every day, but labels can mean different things to different people. Ultimately both address problems or opportunities and create workable and beneficial solutions. So which is right for your organisation?

Problem or Opportunity

For me, improving or redesigning your Target Operating Model (TOM) can take on different forms. It needs to be customised to your organisation type, customer needs, internal capability, budget, and much more.  

You may desire the all-encompassing, traditional view that the name Target Operating Model quite rightly represents.

Let’s start with a blank canvas – leave no stone unturned!

But current capability levels or budget constraints, may limit you to more localised transformation activities to begin with. 

If you are not in a position to craft a brand new Target Operating Model, that shouldn’t deter you from delivering on your organisation’s goals. That blank canvas can absolutely still be developed by taking a more targeted approach. This is where a smaller Service Design may be more suitable.  

By investing in solving a particular problem with a specific service or developing an opportunity with a new or existing product, you can start to layer improvements and benefits into your organisation.  

Ultimately, Service Design has a place in transforming your organisation, both as a standalone activity and as part of a broader drive to improve your Target Operating Model. 

Focus on operations

There are so many reasons to want to get your operations working smoothly to deliver your business model, not least to make sure you are meeting and exceeding your customer’s expectations because without them you have nothing.   

Whilst trying to maintain the day-today business there is always a need to problem-solve and innovate. The PEX 2022 Report shows the top three drivers for operational excellence in business transformation are:   

• 59% agreed it was a way to improve productivity and efficiency  
• 58% agreed it was mission-critical strategy to help the organisation to drive growth, manage turnaround and deliver strategic objectives 
• 56% agreed it was a way to improve customer satisfaction through better quality and efficiency 

Fundamentally, whatever your incentive is, it’s most important that you fully commit to understanding the opportunity or the problem you are trying to solve for your organisation. Unbelievably this is still the most common mistake that organisations make.

Change

Usually, the solution to a problem or opportunity is some sort of change. Often we hear that people are hesitant, resistant or even frightened of change. Whilst change can be intimidating it can also be exciting – we all love the shiny, new technology adorned with all the bells and whistles that you could ever wish for.  

But repeatedly organisations are implementing solutions without fully understanding the impact of change on their customers, staff, budget or existing supplier relationships. The results of this are all too common and will often mean that you will not realise most or any of the expected benefits. 

Five stages of approach

When I’m engaged with a client the approach I take is simple yet powerful – providing outputs harnessed from data, evidence and the experiences of your employees and customers. I proactively work through five stages on any size of problem or opportunity:  

• Discovery 
• Insights/Analysis 
• Scenario Modelling/Options 
• Business Case 
• Delivery 

I’ll be covering these stages in more depth in a blog series right here.  

Build momentum

Whatever your ambitions, please never feel like you don’t have enough time to do anything significant, or that a small idea is not a big enough change to make any difference. Sometimes even the smallest amount of change can free up other resources and realise improvements that then create a ripple effect. You can then build on the momentum and create more change, and more efficiencies that lead to increased customer satisfaction and financial benefits. 

If you want to know more about how to create your Target Operating Model or Service Design or even Service Redesign, then there is more to come from me.

My goal is to help you get a clearer picture of the why, what and how, and to guide and direct you to a model that delivers your strategy.