So, many organisations work on Target Operating Models, but are they really? Because what we see most often is not a Target Operating Model being implemented, but rather a reorganisation or a restructure.
It’s Org Design work. And that’s not a bad thing that can yield really valuable benefits to your organisation. But it’s not a new Operating Model. What’s the difference? Let me give you an example. Let’s say that you’re a bank and that you process mortgages and mortgage applications. If you decide that you want to break up your mortgage operations and put some of the application processing people in with retail Field Sales unit, and you want to take the say the underwriting people and put them with the risk function, and put some of the work with the contact centres and put some of the work in a back-office admin environment.
That’s a reorganisation, it is not a new Operating Model. Let’s take the same example. Let’s say that you currently process mortgage applications in pieces. So a mortgage application comes through. And this team over here, they validate your ID, and then. goes this team validate your payslips. and then this team will validate your income and expenditure. and then this team looks after the conveyancing, and then this team looks after underwriting. And it goes through the whole chain and then this team, they do quality checking and assurance. And then finally you have a mortgage application at the end. And you decide that actually, a better way to process this would be to have an application come in and have it worked as far as it can be worked by one person.
So they do all of those things. They do the checking, they do the verification, they do the send off the conveyancing instructions, they perhaps even do the underwriting, they do an end-to-end as far as they can. And. when another bit comes in from the customer, they do that as well.
That will be a change to how you operate your model of mortgage application processing. And invariably, it’ll come with a reorg, you’ll probably need to redesign how your structure works to support that new way of working. You might also need to examine your technology and how you use that today because it might be a bit different. Your design might currently be supporting that fragmented approach and your new technology or your change to technology might need to accommodate that into end sort of case working, which by the way, wouldn’t be a bad idea.
So that’s the difference between an Operating Model piece of work and an Org Design piece of work. So sometimes, more often than not a new Operating Model will mean in your design, but the reverse is not true. So let’s stop talking about Target Operating Model Design unless you are actually going to change the way your organisation operates. And there are huge benefits to doing that. But it is not a fast, short piece of work.