On importance of consumer context in Target Operating Model design

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Continuing the discussion on the 5 key contexts of Strategic Business Architecture, this article looks at the importance of taking into account consumer dynamics in responsive Target Operating Model design. Understanding of final consumers will help create the target model (including one for a global enterprise) that has necessary responsiveness and relevance, while also ensuring that enough flexibility remains to encompass any local cultural variation.

Regardless of a B2B or a B2C focus, mastery of final consumer context ensures responsiveness and relevance of the Target Operating Model through appropriate organisational design, clear interconnected processes that prioritise service elements, and appropriate technology and data support.

The corresponding analysis and implementation flows are logical. Consumer trends and behaviours (which include brand/quality/image perceptions, lifestyle preferences, choice options) drive corporate strategy (vision, mission, objectives) and its business model (value proposition, revenue and productivity strategies), which are then reflected in the Target Operating Model through capability organisation, processes, governance, infrastructure and similar.

In the past, the argument prevailed that consumer trends and behaviours were different across the globe, and therefore different Target Operating Models were necessary for each geographic market.

The experience and time have showed that this is not so. In my experience of living and working in Russia, France, UK and Israel differences between the geographic markets were not significant enough to warrant a different operating model in each country. Rather, it is differences of needs and expectations of consumer groups – a global consumer typology if you like – that could be driving variations at an enterprise segment level, but even then not pronounced enough to warrant a completely distinct Target Operating Model. For example, working with hospitals focusing on medical tourists coming to Israel showed that they most highly valued treatment success, speed of access and hospital comfort regardless of their national identity. On visiting hospitals across the globe in Thailand and India, I observed that medical tourists there tended to value the same or similar service attributes.

That said, while there is a clear productivity advantage in keeping the Target Operating Model globally uniform, care must be taken to ensure its flexibility in localised delivery of services. This means that regional or country business units must be encouraged to review service proposition and/or design and allowed to modify or omit certain elements to address potential concerns of local consumers, be they of cultural, historic or religious origin.

The Spanish fashion retailer Zara is the case in point. While Zara is well known for its extremely efficient operating model, it has also committed some of the most insensitive blunders of the recent years – selling ‘swastika handbags’ in the UK in 2007, and ‘concentration camp shirts’  in Israel in 2014. To produce, distribute, withdraw and destroy these unfortunate designs must have been expensive (not to mention the negative publicity for the brand) and could have been avoided through a more flexible target operating model design allowing for a more inclusive review of planned collections.

Would Strategic Business Architecture approach prevent the above missteps? Possibly the first (depending on flexibility of the initial ‘time-to-produce’ constraint) and almost certainly the second one due to ‘lessons learnt’ redesign of stage-gate approvals.

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Does this article resonate with you? I would like to hear what you think – you are welcome to leave a comment or send me a message from my Contact page.

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