Carve-outs are complex beasts. Everyone knows that. But too often, teams approach them with a mindset that guarantees delays, confusion, and fatigue: they start from the bottom up.That means parsing every line item in the budget, reviewing hundreds of contracts, mapping every legacy system, untangling shared services, and interrogating every spreadsheet. The idea is to “understand everything first, then design the future.”
Sounds reasonable, right?
It isn’t.
The Detail Trap: A Costly Illusion of Control
The problem with this bottom-up approach is that it creates large amount of effort, but not progress. Teams spend weeks — even months — untangling legacy detail that may not even matter in the new world. By the time they start making strategic decisions, momentum has been lost and the team is exhausted.
Meanwhile:
- Critical Day 1 decisions get delayed
- Talent gets distracted and anxious
- Value creation gets deferred
- Integration teams start improvising, badly
And worst of all? You end up rebuilding a slightly worse version of the original business — rather than carving out something deliberately better.
The Antidote: Start with the Target Operating Model – the VISION
Instead of crawling through the detail, start with designing the future.
A Target Operating Model (TOM) is your North Star. It describes — in practical, operational terms — how the carved-out business should work once it stands on its own.
That means defining:
- The key capabilities the business needs to keep, build, or drop
- The systems and tools that will enable scale without drag
- The functions that should be centralised vs decentralised
- The shape of the new org chart — and where leadership needs to evolve
- What success looks like in 6, 12, and 24 months
With this model in place, you now have a filter. Every decision — from tech choices to service agreements to resourcing — can be assessed against the TOM. If it doesn’t support the future state, why carry it forward?
How It Accelerates Everything
When you lead with a TOM, three things happen:
- You move faster
You avoid paralysis by analysis. You don’t need to justify every past decision — just the ones that matter going forward. - You avoid accidental rebuilds
Instead of copying legacy systems out of habit, you make intentional choices based on where you’re going. - You align your teams
Everyone from execs to ops to tech understands what they’re building toward — and why.
You go from reactive to intentional. From legacy-bound to future-built.
A Real Example: The 6-Month Delay That Was Avoidable
We worked with a carve-out where the buyer spent nearly six months trying to untangle every application dependency, contract clause, and shared service model — before even deciding what the carved-out entity should be.
When they finally stepped back to define a Target Operating Model, the fog lifted. Within three weeks, they:
- Cut the migration scope by 40%
- Dropped two legacy platforms entirely
- Re-allocated resources based on future need, not past usage
It wasn’t magic. It was just clarity — helping the team operate from a clear vision.
What’s in a Good Target Operating Model?
It doesn’t need to be a 200-slide deck. At minimum, your TOM should address:
- Strategic Intent
Why does this carve-out exist, and what is it supposed to become? - Business Capabilities
What do we need to deliver — and how? - Technology Stack Vision
What systems will run the business? Build vs buy? What gets sunset? - Organisational Design
Who does what, and how is leadership structured? - Key Success Metrics
What does “working” look like in the short and long term?
Get those five things clear and visible, and you’ll save months of churn.
The Bottom Line
In a carve-out, the temptation to “start with the detail” is strong. It feels responsible. It feels thorough.
But in reality, it’s like trying to build a new house by reverse-engineering every brick from the old one.
Start with the blueprint. Build from there.
A well-defined Target Operating Model won’t just speed things up — it will make sure you’re building something worth speeding toward.
