What is a target operating model?

A target operating model is a plan used by a business that details the way management would like the business to operate. A target operating model is typically used to show board members and shareholders the next steps the business plans to take.

A target operating model is typically divided into time periods showing the expected company actions, changes expected in the economy and technological changes expected during that time period. The model can be adjusted to accommodate unforeseen changes. A targeted operating model allows businesses to get products to the market faster and provides a transparent operating model to investors.