Are Target Operating Models strategic compasses?

The short answer is they usually are, because every organisation needs a road-map of where they are going. Target operating models can be complex documents with illustrative details including project management structures, special tools, implementation procedures and management metrics. They can also be simple statements, as for example Winston Churchill?s promise that ?we shall fight them on the beaches, on the landing grounds and in the fields? which gave Britain the strategic direction it needed.

Many initiatives unfortunately fail because managers are ?too busy? to bottom on what their target operating model should say, or simply don’t believe in paperwork. As a result, promising initiatives may blunder off course or die a slow death without them really noticing. We cannot manage what we cannot measure, which is where the management metrics fit in. One of my favourite quotes is ?if you don’t know where you are going any road will get you there? which is what the Cheshire Cat said to Alice in Wonderland when she got lost.

The author blundered through life without a plan because there was no one else with his particular brand of imagination. The current business climate is different because everybody is trying to ramp up, and investors want to know exactly what is going to happen to their money and by when. Hence a target operating model can be indispensable throughout a change or product cycle.

The benefits of having a measurable operations / technology plan can produce powerfully tangible results if the organisation follows through on it. Built-in metrics with milestones are powerful tool for management, and, when they map through to the company financial plan almost irreplaceable as cash-flow forecasters.

Other benefits may include:

  • Shorter times to market and greater agility when launching new ideas
  • Reduced investor risk through a predictable process that’s readily monitored
  • A stable operating environment where there is consensus on direction
  • Greater likelihood of delivering on time and leading to repeat orders
  • A more cost-effective process, with less risk of loss of quality and money

Although it dates back a few years the Wills UK and Ireland Retail model still provides an excellent benchmark of a target operating plan that worked. The strategic goals were exceptionally clear, and they brought in a proven project manager to help them drive the program forward.

We have delivered advanced business management services to many of our clients, and believe you will find our personalised approach time-efficient and effective too.

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Spend more to reduce costs?

It is becoming increasingly important to not to analyse energy consumption for all utility types, be it electricity, gas, water, heat, renewables, oil etc. The bottom line is both operational efficiency and utility costs monitoring. In the long run, these are management strategies designed to drive energy costs downwards as a continuous improvement cycle and as a measure of reducing carbon emissions.

It is also getting increasingly easier for organisations reduce energy use and achieve this goal using technology without having to “remember” to do it yourself. Organisations can never go wrong by investing in energy management software. There are varied software options to choose from depending on the organisational objective.
Some of the energy management objectives that organisations may need to meet are:

? Establishing baseline energy use

? Carrying out Energy audits

? Monitoring and measuring energy performance against the energy policies of an organisation and objectives

? Achieving energy certification
Energy management software?s come in handy when an organization wishes to achieve either of the above objectives.

Use of energy management software?s also assists organisations in measurement and verification of energy consumption as well as Monitoring and Targeting. Measurement and verification is where a company quantifies energy consumption beforehand (baseline energy use) and after energy consumption measurements are implemented in order to verify and report on the level of savings actually achieved.

Organisations that wish to verify the energy savings achieved by building retrofits can use energy management software?s. This is an important objective for companies that wish to either satisfy internal financial accounting and reporting requirements, or to meet the terms of third-party contracts for project implementation and management. Monitoring and targeting is also made easier by use of software. This is critical as a management technique, regardless of whether an organisation has specific facility retrofits in order to keep operations efficient and to monitor utility costs.
Overall, an investment in energy management software, is worthwhile in the achievement of management strategies designed to drive energy costs downwards as a continuous improvement cycle.

2015 ESOS Guidelines Chapter 1 ? Who Qualifies

The base criteria are any UK undertaking that employs more than 250 people and/or has a turnover in excess of ?50 million and/or has a balance sheet total greater than ?43 million. There is little point in attempting to separate off high polluting areas. If one corporate group qualifies for ESOS, then all the others are obligated to take part too. The sterling equivalents of ?38,937,777 and ?33,486,489 were set on 31 December 2014 and apply to the first compliance period.

Representatives of Overseas Entities

UK registered branches of foreign entities are treated as if fully UK owned. They also have to sign up if any overseas corporate element meets the threshold no matter where in the world. The deciding factor is common ownership throughout the ESOS system. ecoVaro appreciates this. We have seen European companies dumping pollution in under-regulated countries for far too long.

Generic Undertakings that Could Comply

The common factor is energy consumption and the organisation’s type of work is irrelevant. The Environmental Agency has provided the following generic checklist of undertakings that could qualify:

Limited Companies Public Companies Trusts
Partnerships Private Equity Companies Limited Liability Partnerships
Unincorporated Associations Not-for-Profit Bodies Universities (Per Funding)

Organisations Close to Thresholds

Organisations that come close to, but do not quite meet the qualification threshold should cast their minds back to previous accounting periods, because ESOS considers current and previous years. The exact wording in the regulations states:

?Where, in any accounting period, an undertaking is a large undertaking (or a small or medium undertaking, as the case may be), it retains that status until it falls within the definition of a small or medium undertaking (or a large undertaking, as the case may be) for two consecutive accounting periods.?

Considering the ?50,000 penalty for not completing an assessment or making a false or misleading statement, it makes good sense for close misses to comply.

Joint Ventures and Participative Undertakings

If one element of a UK group qualifies for ESOS, then the others must follow suit with the highest one carrying responsibility. Franchisees are independent undertakings although they may collectively agree to participate. If trusts receive energy from a third party that must do an ESOS, then so must they. Private equity firms and private finance initiatives receive the same treatment as other enterprises. De-aggregations must be in writing following which separated ESOS accountability applies.

Are Target Operating Models strategic compasses?

The short answer is they usually are, because every organisation needs a road-map of where they are going. Target operating models can be complex documents with illustrative details including project management structures, special tools, implementation procedures and management metrics. They can also be simple statements, as for example Winston Churchill?s promise that ?we shall fight them on the beaches, on the landing grounds and in the fields? which gave Britain the strategic direction it needed.

Many initiatives unfortunately fail because managers are ?too busy? to bottom on what their target operating model should say, or simply don’t believe in paperwork. As a result, promising initiatives may blunder off course or die a slow death without them really noticing. We cannot manage what we cannot measure, which is where the management metrics fit in. One of my favourite quotes is ?if you don’t know where you are going any road will get you there? which is what the Cheshire Cat said to Alice in Wonderland when she got lost.

The author blundered through life without a plan because there was no one else with his particular brand of imagination. The current business climate is different because everybody is trying to ramp up, and investors want to know exactly what is going to happen to their money and by when. Hence a target operating model can be indispensable throughout a change or product cycle.

The benefits of having a measurable operations / technology plan can produce powerfully tangible results if the organisation follows through on it. Built-in metrics with milestones are powerful tool for management, and, when they map through to the company financial plan almost irreplaceable as cash-flow forecasters.

Other benefits may include:

  • Shorter times to market and greater agility when launching new ideas
  • Reduced investor risk through a predictable process that’s readily monitored
  • A stable operating environment where there is consensus on direction
  • Greater likelihood of delivering on time and leading to repeat orders
  • A more cost-effective process, with less risk of loss of quality and money

Although it dates back a few years the Wills UK and Ireland Retail model still provides an excellent benchmark of a target operating plan that worked. The strategic goals were exceptionally clear, and they brought in a proven project manager to help them drive the program forward.

We have delivered advanced business management services to many of our clients, and believe you will find our personalised approach time-efficient and effective too.

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