Overview

 The TOM is the framework or blueprint of an organisation’s proposed ‘To Be’ state - it does not exist yet. It starts with a blank sheet of paper and a clear strategic vision.

The TOM design illustrates how the organisation will deliver value to customers via its product or service. It is often split into three core components - Process, Technology and People.

Insurance companies vary enormously in their maturity levels and for all sorts of reasons many do not have a documented Operating Model. 

So for many firms, it may simply be a case of documenting it for the first time.

However, more commonly, firms design a new TOM due to a specific transformative event like a merger, divestment or a change of strategic direction brought about by a new CEO.

A completely cross-functional stakeholder group should be involved in the (re)redesign of an Operating Model.

Unfortunately, many firms believe the potential change will scare people, particularly if many employees' first thought is that their job is at risk.

It is not a good idea to play down an activity like this but a robust Change Management approach will mitigate the risks.

In light of updated business processes, legacy tools and systems may no longer be fit for purpose. This step is deliberately placed AFTER the process review to avoid the risk of designing processes around existing technology.

This may lead to further considerations about the use of in-house solutions versus partnering with third parties, though most likely it will be a combination of the two. Unfortunately many firms believe a new platform will solve a multitude of problems on its own.  (We've all been there).

Firms must ensure that the data and analytics required to make decisions, report on the health of the business and satisfy the regulator are enabled and automated, hence why conversations about data typically fall into this area.

Firms generally review their Operating Models because something has changed such as M&A activity, a divestment or a strategic review. Therefore, the processes employees follow to carry out their day-to-day activity will likely change. 

This is the starting point of TOM design - defining and documenting the processes required to deliver customer value, whilst fulfilling regulatory obligations. This is what should determine delivery - not the available technology.

 However, not all organisations need a full process redesign - a review of their priority processes will suffice. For example, processes involving regulatory compliance or which involve customer interaction should be evaluated.

 The documented and agreed business processes and technology roadmap are the spring board to the most important of the three components - People. 

This refers to the structure, composition and location of teams, role types and responsibilities, as well as the knowledge and expertise required to deliver on a day-to-day basis.

That's why the People section is the final piece of the jigsaw. Many firms skip to this part but it's virtually impossible to initiate this work before the other two elements are well evolved. That said, a cross-functional team should be involved in the TOM (re)design from the start to ensure a joined-up approach and successful outcome.

Note - This often referred to as Organisational Design (OD). Click below to find out more about Kanso Design, an OD consultancy.

 Some organisations include corporate Governance under the People section, others treat it as stand-alone. 

Either way, it is an extremely important area for any regulated industry. Firms need to be clear about their Governance structure - the Boards and Committees that enable formal decision-making and drive individual accountability. 

This in turn facilitates transparency and enables scrutiny from internal bodies such as Internal Audit and external bodies like Auditors and Regulators.