|1st June 2022||Charlotte Armstrong|
In almost any other industry, a Target Operating Model (TOM) is specifically designed around the areas of maximum value to the business. In the commercial world this is easy to quantify. A company that specialises in mobile communications ensures its operating model is designed to support effective manufacture and sales of its products, and the maintenance of a service which customers are happy to keep buying. The entire operation is geared up to support that core objective, from the back office financial processes through to the marketing and branding efforts. And nothing matters more than the bottom line.
This differs in a university.
Whilst there are subtle differences across each institution, the fundamental purpose of most is to deliver teaching, research and knowledge transfer. The ‘product portfolio’ at a university is substantially made up of academic discipline areas. We strive to offer an outstanding student experience, for example by providing feedback to students quickly and effectively; we strive to deliver impactful research. The core value of a university, therefore, lies in the academic domain. As such, the target operating model at a university should, theoretically, be designed to maximise those academic areas of strength.
And yet we typically see two different problems with this:
- Firstly, the academic model itself is by some distance the biggest driver of inefficiency in professional services. Whether it’s the sheer number of unique programmes – or combinations thereof – and the knock-on impact of this on timetabling and space utilisation, or whether it’s the multiple different service levels demanded by multiple different academic units, the size and complexity of the academic model makes it all but impossible to deliver a professional services model that is optimised for everyone and everything. It can’t be done – and recognising this fact is an important starting point.
- The second problem is that those who are most able to design and implement a target operating model – and who usually most understand the significant competitive advantage in doing so – are often told that that the academic realm must remain ‘out of scope’ and that they should focus purely on professional services. A new operating model for the academic business is easily put into the ‘too hard’ box.
Why? The answer is complex and multi-faceted, as well as unique to the different types of institutions in the sector. Although we stray here into something akin to a philosophical debate, we think one of the core elements at play is academic culture – the beliefs and behaviours exhibited within and across Schools, Faculties and Colleges – which is founded on the power of knowledge and its evolution over many years, hard wired into how courses are created and adapted, and the interplay of subject mastery and studentship. Parallels can be found in other sectors such as healthcare, with the dynamic between the wisdom and experience of clinical service and the patient as the recipient and benefactor. Embracing the possibility of change to the academic model requires courage and tenacity, and the willingness to challenge the status quo. And it also requires recognition that the ‘status quo’ is actually one of the UK’s most obvious and sustained strengths, with our higher education system a genuine global powerhouse through almost any lens you care to view it through.
The end result of this dichotomy, though, is that the area in which the biggest positive impact on strategic ambitions can be made is excluded from the TOM process, whilst the changes made to the professional services domain are often valuable – but not as valuable as they could be if there was a more coherent ‘customer’ around which to model their provision. This often plays out in a university’s professional services organising itself around internal processes, to a greater or lesser degree of success. This is a limiting approach because it can exacerbate the (understandable) instinct to focus on efficiency instead of the more challenging (but worthwhile) pursuit of genuine service design, i.e. truly understanding and servicing the needs of ‘customers’ and designing provision around this ambition.
Benefits and Impact
One of the reasons we advocate for reviewing and re-designing Target Operating Models is that they deliver real results if they’re implemented fully. One institution which used a TOM framework to address the first-year student experience saw student satisfaction levels jump from 85% up to 96%. When we ran the diagnostic stage of our TOM design for a small university earlier this year, it highlighted the potential to make savings of up to £5m without any notable impact on strategy delivery. Those savings opportunities tend to increase exponentially with larger institutions.
If we move away from cost and satisfaction metrics, the TOM design process has also helped universities prioritise more effectively. One Vice-Chancellor commented on the sheer breadth of activity his university was involved in by saying that they were “great midwives but terrible undertakers”. By using the TOM process to refocus on the relative strategic impact of a university’s many investments, parameters can be developed to help a university decide which activity could be reduced or stood down. These parameters can then also be used to determine future priorities and to stop the problem of activities constantly starting but then never being stopped, irrespective of their performance or contribution.
One of the things we’re really keen on is making sure that TOMs don’t just fix the problems universities have today but that their very design ensures universities are also fit for the future. The tensions in the future higher education landscape are becoming clearer by the week. Universities need to be asking themselves bigger questions about how they are performing and intend to adapt to the world in front of us. For instance, do they want to be a leader or a follower when it comes to AI, machine-learning, robotic process automation? Should they be pushing to abandon the academic year and encourage self-paced, deeply personalised learning journeys? Are there opportunities to form alliances with other institutions to create economies of scale? What do changing generational expectations of a university experience mean for the way they organise themselves?
These are big questions, but they do require an institutional position. If there is one, a good TOM can be designed around these bigger picture considerations and act as a true enabler of the strategy rather than simply being a mechanism to increase the effectiveness of the model that already exists.
Where to start if you want to learn more
Fundamentally, we disagree with off-the-shelf approaches to TOM design. There are, however, some general components to a high-quality design process which we’d always recommend.
- Reflect on Readiness
Are the leadership team genuinely ready to make courageous moves and bold decisions that will serve the students at the university long after their tenure has concluded? What is the collective appetite to embrace new ways of working? To what extent are people managers prepared and equipped to help others navigate through the TOM process and its resultant shifts in ways of working? Is the HR department adequately resourced with genuine organisation design skills to enable it to be an effective partner to the business?
- Assess and Understand
What are your university’s existing capabilities? What systems support them? What’s the process landscape? Where are the perceived gaps? Deep-dive into all available data and trends, create stakeholder-based personas, establish needs/must-haves, consider relevant benchmarks. This will undoubtably highlight gaps in your own knowledge and data. How well do you understand how you are currently performing? What MI do you have readily available and what are your students and staff thinking and saying? How will you capture all of this so that you can prove the merits of your TOM once implemented?
- Consult and Challenge
Invest in a comprehensive understanding of your stakeholders. Who has high levels of both interest and influence? How will you engage them effectively? Develop evidence-based design principles, ensuring that they aren’t so vague that can be interpreted in multiple different ways. Be clear and transparent about why those design principles are the correct ones, using both data visuals and narrative to show the rationale. Create and test the case for change, workshop possible future states, encourage your university community to throw rocks at ideas and to identify and verify capability gaps.
- Verify and Develop
Create your TOM using blueprints, so that you’ve mapped your entire system accurately. Assess the options you have against the design principles you’ve developed, consider your business cases, financial savings opportunities, assess your institutional appetite and practicality. Consider conducting a ‘pre-mortem’ and imagine everything that could go wrong, working backwards from every possible scenario to mitigate it.
- Collaborate and Optimise
Approve TOM and commence execution of the change agenda across components of people, process and systems (potentially estates, depending on what is in-scope). Even at the most basic level, initial execution will likely involve user journey mapping, rapid improvement events, role re-profiling, redesigned career development pathways. Handover to BAU, monitor performance improvements against your original baseline.
SUMS has a team of consultants who are expert in the field of organisation design and in the development and execution of target operating models. They combine deep sector knowledge with senior level experience from outside of the sector gained from working in global commercial consultancies, within retail, commerce and other complex sectors such as the NHS.
Our blended consulting teams help ensure that SUMS retains its USP as a not-for-profit consultancy that truly understands the nuances of the higher education sector, whilst also allowing us to identify the latest knowledge and innovation from outside the sector and across the globe and deploy it to the benefit of our clients.
We are always happy to discuss approaches to TOM design, and to guide your thinking, free of charge. Please contact David Becker, Managing Consultant, at email@example.com if you would like to learn more.