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Strategy To Action

The Right Target Operating Model Serves As A Bridge Between Strategy & Effective Execution

Michael Porter previously stated…

“The essence of strategy is in the activities – choosing to perform activities differently or to perform different activities than rivals. Otherwise, a strategy is nothing more than a marketing slogan that will not withstand competition.”

Similarly; Dr Lawrence Hrebriniak, a highly respected professor on strategy implementation at the Wharton Business School likewise said…

“Execution is a process. It is not the result of a single decision or action. It is the result of a series of integrated decisions or actions over time.”

In this context of strategy execution; activities, integrated decisions and actions are all delivered through projects. When translating vision and strategy into meaningful implementation (aka strategy to action), we need to make the explicit connection between ‘strategic intent’ and ‘project delivery’ – with the Target Operating Model serving as the ideal delivery mechanism.

Building A Target Operating Model (TOM) For The Digital World

At AllChange, we take the view that the purpose of a TOM is to enable an organisation to travel from the current state to an envisaged future state as effectively, efficiently and smoothly as possible. To achieve this, it is our experience that the below questions need to be answered with a resounding ‘yes’.

Does your TOM…

  • Do everything it needs to-do to help you create value?
  • Incorporate how you do business now and in the future?
  • Help you respond to the real events surrounding you?
  • Reflect how your people operate in the real world?

A central principle of Cybernetics – the science of systems – is that you first need to model (or map) a whole system accurately in order to control it. This principle applies to TOM design with the above questions originating from this source thinking.

For an organisation to function, many hundreds of design decisions need to be made. These decisions, the detailed TOM decisions, are better made if there is a high-level overarching ‘Visual TOM’ available to guide and align people and teams behind the new direction.

The three main objectives of developing a TOM and pursuing its cost-effective and successful realisation (that we focus on) are listed below:

  1. To transform an organisation’s current operating state; i.e. how it works now, that is described by its current-state operating model – to a future operating state, as described by its target-state operating model;
  2. To develop an organisation’s change capability so that it can react and adapt to change effectively and efficiently, without detriment to customers, quality of service, profitability, security and competitiveness; and
  3. To develop an organisation’s strategic planning capability so its TOM (informing strategic, project and business plans) can be regularly reviewed to ensure they continue to be aligned and support the organisation’s strategy and direction.

TOM Storyboarding Workshop (Slide Show)

Visual TOM Process Overview

The below image illustrates the AllChange approach to TOM design and build. The TOM development process follow’s three phases of activity all focused on explicitly connecting strategic intent to front-line delivery. Phase One activity focuses on producing clear directional terms of reference that organisation, business, technical and project design teams can unpack and use.

Additional concepts, that we consider key to successful TOM design:

  • Before setting off on your journey of change, it is advisable to clearly understand where you are heading and to gain a consensus leadership view on what future success ‘looks’ and ‘feels’ like – articulated in clear outcome terms;
  • If the TOM is not universally understood, with a shared meaningful understanding ‘why’ you need a TOM and ‘how’ you plan to use it, it will not help you get where you need to go; and
  • Put simply, a TOM is a mechanism built to help an organisation successfully travel from the current state to an envisaged future state. To extend this to a ‘Bus’ metaphor; built well, it will successfully navigate challenging terrain and environments while keeping as many passengers on board as possible. This means that targeted engagement is a key factor in delivering a successful TOM outcome.

Phase One: Produce A Visual TOM

Overview Of The Visual Architecture & Collaborative Methodology

In order to collaboratively produce a (single) shared model of the organisation that is universally understood, we use a visual design approach that we call ‘Blueprint Concept Board’. This enables us to:

  • Collaboratively walk through the operating model visualisation process, so that everyone is clear what we are all working towards;
  • Clarify what an operating model ‘is’ and ‘does’;
  • Clarify why taking anecosystem design and ‘user journey/experience’ approach is required (for the digital world);
  • Clarify the detailed critical path steps required to deliver a fit-for-purpose ‘agile’ target operating model; and
  • Commence the process of modelling the future organisation in an extremely collaborative way.

Phase Two: Produce Organisation & Technical Blueprints

To ensure the operating model is built with responsiveness baked into the design – the architecture is visualised in ‘physical’, ‘structural’ and ‘intellectual’ form. Taking this deconstructive approach makes the TOM development process far more manageable.

By this point (Phase Two), design teams have clear guidance readily available to inform the detailed design decisions. This guidance is backed by all the leadership with everyone building towards the future together.

The Architecture

The TOM mimics a network with three kinds of interconnected structure that act similar to communication/redistribution nodes (see below image):

  • The Parent Organisation (aka Mothership) is designed to facilitate extensive control of the whole network. The Mothership structure is hierarchical with a focus on disseminating and supporting the on-time completion of strategies that support the whole network purpose (aka mission, vision and strategic imperatives) – delivering the clearly defined outcomes that fulfil the collective organisations reason for being.
  • The Sub-organisation (aka Advance Base) is designed to align with the Mothership strategic intent while facilitating localised control on the Advance Base and associated Enterprise Cells downstream. The Advance Base is hierarchical but with a distinctive Identity that focuses on disseminating and supporting the on-time completion of strategies that align with the Mothership direction and Advance Base individual identity – delivering the clearly defined outcomes that align with the Mothership and fulfil the Advance Base reason for being.
  • The Enterprise Cell (aka Satellite) is designed to come together and disband as required. The Satellite structure is distinctly network oriented with ‘founders’ acting as the central guiding force. The Satellite structure mimics how successful new venture enterprises operate during their start-up phase. Activity is opportunity seeking and guided by a vision that the team buy into. Much of the work that demands innovation, agility, difficult change or strategic initiatives executed quickly are-shifted to the Satellite part of the network. Teams are typically made up of an outcast crew of intrepid explorers, resourceful free thinkers and progressive minds – people that are prepared to back their ideas, take courageous leaps of faith – and with a collective single-minded discipline that is wired to deliver value at pace.

Phase Three: Produce The Project Plans & Build

During iterative development of the TOM – to ensure ‘thinking’ connects with ‘doing’ – a project ‘war-room’ is set-up to ensure that project teams and other key stakeholders are working on the same page (see below image).

How To Connect Strategy To Action

To facilitate exploratory dialogue across the organisation and ensure the target operating model thinking connects with the organisations day-to-day, we advise the setting-up of a purpose-built centralised visual project meeting space to promote exploratory thinking, collaboration, knowledge-transfer and teamwork.

“The combined use of story and picture removes abstract, technical jargon and management-speak – ensuring everyone is clear, with all thinking and activity joined-up.”

With the aim of developing business ready outcomes, carefully targeted stakeholders are involved in the design debate. A premium is placed on visual thinking as the prime mechanism to engage technical and non-technical stakeholders in the solution design. The combined use of story and picture removes abstract, technical jargon and management-speak – ensuring everyone is clear, with all thinking and activity joined-up.

TOM Governance & Connecting Strategic Intent To Delivery

To ensure oversight and consistent best practice is applied, a common approach to governance, communications and team ways-of-work needs to be agreed. This includes ensuring the right controls are in place – as well as producing TOM guidance and instructional materials that are both accessible and user-friendly. For example, to avoid teams going native, we ensure that all TOM design documents include relevant strategic messaging alongside an instructional how-to guide and glossary at the front of every document.

Additional tools that we use to bridge strategy to action include:

  • Strategic Narrative production of a corporate story wired to engage the organisation as well as inform design, build and delivery of the journey of change. This is also a key mechanism that gains a mandated leadership consensus on the future direction; and
  • Strategy Framework produced to explicitly connect strategic intent to project delivery. This ensures intent is front-and-centre to all follow-through.

Alongside the above tools, there is a need to provide focused oversight to ensure decision-making aligns to the business direction.

To ensure the appropriate oversight is in place with all transformation activity joined-up and aligned with strategic intent, we advise that a special ‘Linking Role’ is put in place. This role typically takes on a TOM Director or Manager title with the responsibility of providing focused support to both the Executive Sponsor and Programme Director, ensuring all design, planning and delivery is fully aligned to the vision and strategic intent. The adjacent governance model illustrates how this approach can work (see below image).

Using Visual Thinking For TOM Design & Build

The use of visual thinking is an effective way to resolve complexity and confusion in groups that arise from inadequate or conflicting mental models. This is crucial when the models involve our ideas of how work gets done, how teams co-operate, how decisions are made, how people organise and learn.

Much of our understanding of systems and how things work together is represented through visual imagery – this capability is extremely valuable when collaboratively designing and building a Visual TOM. A large amount of time in meetings is spent working out these differences. Using visual thinking techniques accelerate the process of getting the upfront design thinking right, and in a highly collaborative, inclusive and efficient way.

Use Common Terms Of Reference, Definitions & Language

When there are varying interpretations or words lack meaning (i.e. are too abstract or ambiguous) this can create confusion and misunderstanding. In a TOM development context, this lack of shared understanding can lead to significant risk due to decisions, potentially, being based on biased inaccurate thinking. Conversely, when people and teams are working on the same page with a clear understanding of the language used, the task in hand and their role (i.e. where they fit), this leads to profoundly positive action.

Closing Thought

As previously mentioned, many hundreds of design decisions need to be made to make an organisation function. These decisions, the detailed TOM decisions are better made when there is a Visual TOM available. Because organisations are dynamic multifaceted systems the TOM should incorporate multi-dimensional information that accurately models how it works – and in an interconnected whole-system way.

The Visual TOM should incorporate the change levers (aka capabilities, initiatives, activities) that are needed to build the future – connected to clear outcomes – so everyone understands ‘what’ they are building towards and ‘how’ (see level 3 of the above Blueprint Concept Board). This information will inform roadmap production for the various teams.

Whether you are in the middle of your TOM transformation or about to commence your journey of change, the best advice that we can share is to remind you that organisations are fundamentally about people. And the best question to encourage you to ask, before you take that first step, is:

“How do we go about creating a target operating model that incorporates how we do business now and in the future – that most important of all reflects how our people operate in the real world?”

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Ian Ure
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Ian is a Senior Strategic Change & Innovation Advisor focused on translating strategy into meaningful execution.
Ian specializes in helping leaders operate differently by thinking and executing different. This includes helping people and teams to make sense of complex change by leveraging creative thinking techniques that produce meaning and clarity of understanding. Techniques such as design and systems thinking, strategic narrative and visual language (aka visual thinking).

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