Organizational design and target operating model

By Cyrus Asgarian, Viktoriya Bondarets and Frederick Van Gysegem

We optimize operating models to create high-performing organizations

Related expertise

Selecting the right target operating model (TOM) is a fundamental part of every CxO’s role. Yet 90 percent of executives say they fail to execute their strategies and more than half doubt their structures enable them to outperform the competition. For many companies, it may be time to realign their TOM.

The trigger for redesigning the TOM typically comes from emerging best-in-class trends or internal events. External trends include relocating decision-making power and setting the right focus for each layer of leadership; rethinking HR processes or performance culture; embracing AI and innovation to transform existing business or build new business; or creating platforms that break functional silos. Internal drivers include launching a new strategy, preparing for growth, addressing margin and performance pressure or preparing for a transaction such as a merger or sale.

Viktoriya Bondarets

Senior Partner

Kyiv Office, Eastern Europe

Many firms have experienced these shifts without adjusting their operating model. Symptoms of a lack of action on this front include excessive customer interfaces, fragmented portfolios, scattered footprints and limited insights from company data. At the same time, we see many inefficient organizations struggling with rising complexity. This makes steering more difficult for management and leaves customers, suppliers, employees and shareholders with an unclear picture of the organization. Moreover, companies carry significant costs in the form of excess sites or duplicated hierarchy levels, which degrade customer journeys, reduce profitability and frustrate employees.

Empower teams and improve performance

Designing a future operating model today goes far beyond the question of centralization versus decentralization. The operating model must be purpose-driven, platform-based, fast-paced, customer-focused and AI-enabled, creating a cohesive system that drives strategy implementation and serves all stakeholders.

For employees, customers and suppliers, the operating model clarifies the role each part of the organization plays in delivering on-time, on-cost and on-quality outcomes while fulfilling the company’s strategy and purpose. A well-designed operating model creates an integrated system that empowers teams so they are aligned, capable, effective, adaptable, efficient and inspired. This enables them to go the extra mile and execute strategy with speed and purpose.

How we help companies refine their organization

Our approach to creating target operating models follows four steps:

Design the top-down blueprint and set targets
Validate the blueprint and targets bottom-up
Develop an implementation and communication plan for all stakeholders
Drive the organizational transformation and ensure ongoing monitoring

Within this framework, we consider all operating model dimensions, including purpose and culture, processes, governance, systems and technology, people and talent, and structure and dimensioning. No one-size-fits-all solution exists, however; each model must be tailored, coherent and rooted in the company’s strategy rather than its legacy. With this in mind, we ensure that every TOM is co-designed and tested with the employees.

The operating model is a core driver of value. It enables a company to deliver on its purpose, navigate a changing business environment, hit its KPIs and – most importantly – translate strategy into measurable performance.

Success stories

Increasing profitability for a globally active aircraft interior supplier

Situation: A tier-1 aerospace interiors supplier faced deteriorating market conditions and an inefficient structure comprising four independent business units. The client sought a more integrated setup and a streamlined product offering for OEMs, targeting ten percent profitability.

Solution: We redesigned and implemented a cross-functional TOM and integrated sustainable efficiency measures to reshape the workforce structure.

Impact: The client achieved ten percent profitability per year through the company-wide efficiency program.

Building a future-proof organization for a European textile service provider

Situation: Changing market dynamics, a shift in management and siloed departments highlighted the need for a new organizational setup. The client asked us to build a future-proof organization, strengthen cross-divisional collaboration and support timely implementation.

Solution: We analyzed functions and spans of control and conducted interviews with key stakeholders to understand the organizational challenges. We then designed the new structure, developed an implementation roadmap and set up a transformation office.

Impact: The client gained transparency on its 5,400 employees and a clearer governance structure. It also received a detailed target picture to the n-2 level along with roadmaps and project charters for approximately 20 transformation projects, including responsibilities, KPIs and milestones.

Functional TOM transformation for a multinational pharmaceutical firm

Situation: After a period of significant growth, the mandate and value contribution of the HR function had become unclear. The client wanted to redefine its HR strategy in line with the overarching corporate strategy.

Solution: We assessed business requirements and the implications of an HR redesign. Using industry and function benchmarks, we developed a detailed TOM for the HR function and supported implementation and stakeholder communication.

Impact: The client achieved a future-proof HR setup with reduced headcount and greater impact through the newly implemented HR strategy.

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