Plain-English pillar guide
A clear guide for mid-market and non-profit leaders who need to understand how their organisation actually works, and where it needs to go. What an operating model is, what a TOM includes, how it differs from an org chart, and when you need one.
An operating model describes how an organisation delivers its purpose day to day. It captures the structure, processes, people, technology, data, and governance that together turn strategy into output.
If your strategy is the destination, your operating model is the engine that gets you there. A well-designed engine runs efficiently and reliably. A poorly designed one burns fuel, breaks down, and frustrates everyone on board.
Every organisation already has an operating model, whether it has been designed deliberately or has simply accumulated over time. The question is whether it is fit for purpose.
A target operating model is a documented description of how your organisation needs to work in the future to deliver its strategy. It is the blueprint you design before you begin the work of change.
The word “target” is important. A TOM is not a description of today. It is a definition of the intended future state. It gives leaders, teams, and technology partners a shared picture of what “done” looks like before anyone starts moving people, systems, or processes.
TOMs are used across sectors: manufacturing businesses redesigning supply chains, financial services firms responding to regulation, charities restructuring after a merger, and technology functions modernising after years of organic growth. The concept is broadly applicable, not reserved for large corporates or IT departments.
A TOM covers six interconnected components. The weight given to each depends on the scope of the change.
Strategy and purpose: the outcomes the model is designed to deliver, and the strategic intent behind the redesign.
Structure and governance: how the organisation is divided, who is accountable for what, and how decisions get made.
Processes: the end-to-end workflows that produce services, products, or outcomes, including which are performed in-house and which are outsourced.
People and capability: the roles, skills, and culture required to operate the new model.
Technology and data: the systems, tools, and information flows that support the processes and people.
Performance and measurement: the KPIs, service levels, and reporting mechanisms that tell you whether the model is working.
A TOM that only addresses one of these components is incomplete. Restructuring teams without redesigning processes, or investing in technology without addressing capability, rarely delivers the intended result.
The org chart is one small part of the operating model. It shows reporting lines and team boundaries. It does not show how work flows between those teams, what systems people rely on, how decisions get escalated, or where handoffs break down.
Leaders who redesign the org chart without addressing the underlying operating model frequently find that the same problems resurface in a different shape. The boxes change but the dysfunction remains.
A target operating model goes deeper. It asks not just “who reports to whom” but “how does work actually get done, and how should it get done differently?”
| Dimension | Org structure | Operating model |
|---|---|---|
| What it shows | Reporting lines and team boundaries | How work flows, decisions are made, and value is delivered |
| Scope | People and hierarchy | People, process, technology, data, and governance together |
| Change trigger | Leadership restructures or headcount changes | Strategy shifts, mergers, scaling, or persistent dysfunction |
| Output | An org chart | A blueprint for how the organisation works end to end |
| Risk if ignored | Teams are reorganised but problems persist | Investment in change delivers less than expected |
Every organisation operates in two modes simultaneously.
Run: the day-to-day delivery of existing services, products, and operations.
Change: the projects, programmes, and initiatives designed to improve or transform the organisation.
A common failure in operating model design is building a model optimised entirely for “run” with no capacity for “change”, or vice versa. High-growth businesses sometimes do the opposite. They invest heavily in transformation while the core operation slowly deteriorates.
A well-designed TOM explicitly addresses both modes. It defines how much capacity the organisation will dedicate to running its current state, how much to improving it, and how those two demands will be balanced and governed.
There is rarely a single moment of clarity. More often, the signals accumulate until they are impossible to ignore. Common indicators that your current operating model is no longer fit for purpose include the following.
Strategy has changed but the structure has not: a new direction or acquisition has not been followed by a coherent redesign of how the organisation works.
Accountability gaps: important outcomes have no clear owner, or multiple teams think they own the same thing.
Process fragmentation: similar work is done differently in different parts of the business, creating inconsistency and waste.
Technology investment is not delivering: systems are in place but adoption is low, workarounds are widespread, or data quality is poor.
Scaling pain: growth is adding cost and complexity faster than it is adding capability or revenue.
Mergers or restructures have left a patchwork: teams, processes, and systems from different organisations sit side by side without coherent integration.
Regulatory or compliance pressure: new requirements demand clearer accountability and more robust controls than the current model provides.
If three or more of these apply, a structured review of your operating model is a sound investment, not a cost.
Technology functions have their own version of this challenge. An IT operating model defines how the technology team is structured, how it delivers services to the business, how it manages risk and vendors, how it governs investment, and how it plans for the future.
Many mid-market and non-profit organisations have inherited an IT function that was built reactively: people hired in response to problems, tools acquired without a roadmap, and governance added as an afterthought. The result is a function that is busy but not effective, and that struggles to earn the confidence of the board or the organisation it serves.
Starkhorn’s free IT Operating Model Scorecard gives technology leaders and their boards a structured view of current-state maturity across the key dimensions of an IT operating model. It takes around fifteen minutes and produces a prioritised picture of where the gaps are.
Effective TOM work requires a clear sponsor at board or executive level, a lead who can hold the design together across workstreams, and genuine involvement from the people who do the work today.
For mid-market organisations and charities, the lead is often an interim or fractional executive rather than a permanent hire. The work is bounded in scope and time, the skills required are specific, and the independence of an external lead helps navigate the political sensitivities that TOM work almost always surfaces.
Starkhorn’s operating model engagements follow the Embed-to-Independence method: Discover, Diagnose, Deliver, Sustain. The aim is not to create dependency on external support but to leave the organisation with a model it owns and can operate without ongoing consultancy.
A good TOM is simple enough to communicate and specific enough to act on. It starts with outcomes rather than structure, engages broadly but decides clearly, tests assumptions before committing, builds in the transition from current to target state, and defines success and how it will be measured before the work begins.
What is the difference between an operating model and a business model?
A business model describes how an organisation creates and captures value: who the customers are, what the proposition is, and how revenue or funding is generated. An operating model describes how the organisation delivers that proposition: the internal machinery of structure, process, people, and technology. The business model answers “what do we do and why”. The operating model answers “how do we do it”.
How long does a target operating model redesign take?
For a single function such as IT or finance, a well-scoped TOM design takes between six and twelve weeks to complete the diagnostic and produce a credible blueprint. Implementation of the new model, including process redesign, technology change, and capability development, runs over six to eighteen months, depending on scope and complexity. Larger cross-organisational redesigns take longer at both stages.
Does a target operating model apply to non-profits and charities?
Yes, fully. Charities and non-profits face the same operating model challenges as commercial organisations: fragmented processes, accountability gaps, technology that has not kept pace with growth, and the need to do more with constrained resources. TOM work in the charity sector often also addresses the relationship between funded programmes and central functions, and the governance requirements of regulators such as the Charity Commission.
Can a small organisation benefit from a TOM, or is it only for large businesses?
The terminology can sound large-scale, but the underlying discipline applies at any size. An organisation with 150 staff and £40m turnover that has grown quickly, merged with another charity, or is about to embark on a digital transformation has exactly the same need to be clear about how it will operate in future. The depth and formality of the documentation should be proportionate to the scale of the change, not the size of the organisation.
What is the IT Operating Model Scorecard?
The IT Operating Model Scorecard is a free assessment tool from Starkhorn that helps technology leaders and boards evaluate the maturity of the IT function across the key dimensions of an operating model: governance, service delivery, people and capability, vendor management, risk, and strategic alignment. It takes around fifteen minutes and produces a prioritised view of where the gaps are. It is available free, with no registration required.
When should we bring in external support for TOM work?
External support adds most value when the redesign crosses organisational boundaries, when internal politics risk distorting the diagnosis, when the required skills are not available in-house on a sustained basis, or when the organisation needs to move quickly without diverting permanent leadership from day-to-day responsibilities. An interim or fractional executive with TOM experience can lead the work end to end and leave the organisation with a model it fully owns. Daniel Jacobs brings 20+ years in technology and security, 15+ of them in leadership roles to this work, including interim CIO and CISO roles at scale.
Not sure where your operating model stands today?
A target operating model is a clear description of how an organisation should run in future to deliver its strategy. It defines the processes, people, technology, information, locations and suppliers needed, and how they fit together. It is a blueprint for the desired future state, not a record of how the business operates today.
| Dimension | Current operating model | Target operating model |
|---|---|---|
| Time frame | How the organisation runs today | How it should run in future to deliver strategy |
| Purpose | Describes the existing baseline and its constraints | Sets the destination and the design to reach it |
| Use | Reveals gaps, duplication and pain points | Guides change, investment and the roadmap |
| Scope | Process, organisation, technology, information, location, suppliers as they are now | The same six layers, redesigned and aligned |
| Outcome | A clear picture of the starting point | A blueprint everyone can build towards |
A target operating model is a clear description of how an organisation should run in future to deliver its strategy. It defines the processes, people, technology, information, locations and suppliers needed, and how they fit together. It is a blueprint for the future state, not a record of how the business operates today.
The six layers of a target operating model are process, organisation, technology, information, location and suppliers. Process covers how work flows. Organisation covers roles and structure. Technology covers systems. Information covers data and reporting. Location covers where work happens. Suppliers cover external partners. Together these layers describe the whole operating design.
The McKinsey 7S framework is a way to view a target operating model through seven elements: strategy, structure, systems, shared values, skills, style and staff. It groups these into hard elements (strategy, structure, systems) and soft elements (the rest), and stresses that all seven must align for the operating model to work.
A target operating model framework is the structured set of layers used to design and describe the future operating state. Common frameworks include the six layer model (process, organisation, technology, information, location, suppliers) and the McKinsey 7S model. The framework gives a consistent, repeatable way to capture every dimension of how the organisation will run.
A simple operating model example: a UK mid-market firm centralises finance and HR into shared services, moves core systems to cloud platforms, defines clear process owners, consolidates data into one reporting layer, keeps two regional sites and outsources IT support to a managed provider. That set of choices, described together, is the operating model.
To create a target operating model, start from the business strategy, then define the future state across each layer: process, organisation, technology, information, location and suppliers. Compare it with the current operating model to find gaps, prioritise the changes, sequence them into a roadmap, then govern delivery so the design is embedded rather than left as a document.
In business, a target operating model translates strategy into operational reality. It answers a practical question: if this is where we want to go, how must we be organised to get there? It aligns processes, people, technology, data, locations and suppliers so that day to day operations actively support the strategic goals, rather than working against them.
In the public sector and NHS, a target operating model describes how a body will deliver services to citizens or patients in future. It covers care or service pathways, workforce design, digital systems, data sharing, estate and outsourced partners. The emphasis is on outcomes, accountability and value for public money rather than commercial profit.