Digital Transformation for Chiefs and Owners. Volume 1. Immersion. Dzhimsher Chelidze

ecosystems are one of the most complex and powerful business models. A striking example is Apple. If you’re in the ecosystem, it’s gonna be hard to get out. Try switching from Android to iOS or back – this is not the easiest task for the ordinary person. However, inside the ecosystem you are comfortable, you get used to «single purse».

      – Ownership Access Model/Sharing Model

      This is the so-called «sharing economy». Such a system allows you to pay for a product, service or offer for a certain amount of time without obtaining real property rights. This can be a car rental (for example, Yandex Drive, Delimobile), apartment rental (for example, Airbnb) or even industrial machinery. An example of the latter is «Kamaz». As part of their digital transformation strategy, they launch short-term truck rental services. And this was made possible by the widespread use of digital technology.

      This business model is one of the most revolutionary when one considers its impact on ownership and the resulting revenues. The car could suddenly become a source of income instead of just generating costs.

      – Experience model

      Adding experience to products that would not have been possible without digital technology. One example is Tesla, which has brought the automotive industry a whole new digital experience by adding digital services and even a digital ecosystem to its cars, which are now the main engine for their business model.

      – Service Model

      Here we talk about the fact that the user pays not for the product, but for the service. For example, the fertilizer producer does not supply the customer with fertilizer, but combines expertise and resources, providing services for the treatment of the area and increase of the crop.

      He’s got big data that he’s learning to develop more efficient fertilizers, he’s got cheaper technology (economies of scale), more advanced logistics, and so on.

      Or, for example, buying industrial equipment, you do not fill your head with questions of its maintenance. The manufacturer collects the data, analyzes it and organizes the service itself.

      Preparing for digital transformation and digitization

      Before you implement any changes, you need to understand what is now? What is your starting point? On this depends the whole further strategy.

      The conscious construction of digital transformation involves, in one form or another, the following three steps:

      1) definition of the «basic» situation, starting point;

      2) target level definition (where do we want to go?);

      3) planning actions to reach the target level.

      In principle, as will be seen below, there is nothing new here, all this is combined with the basic methods of change implementation.

      Digital maturity is the ability to use digital tools to achieve key performance, or more precisely, to shape a better value proposition for customers.

      Among the various ways to measure the level of digital maturity I can distinguish the RANHiGS technique. It includes seven assessment areas and describes their maturity levels.

      – Digital culture

      The level of organizational culture supporting the processes of continuous improvement and innovation, change management.

      – Frames

      Compliance of personnel with competencies necessary for successful work in the digital economy.

      – Processes

      Application of process management practices: process optimization methods, lean production, design thinking. Process analysis, monitoring and continuous updating.

      – Digital Products

      Analysis of existing products and activities with them. The product is a solution to the user’s need, carrying value for the latter.

      – Models

      Use of information models in the organization, their constant updating, validity and inclusion in processes.

      – Data

      Access to the necessary data in real time with the necessary level of security. Completeness and quality of data for decision making.

      – Infrastructure and tools

      Access to modern digital infrastructure and ensure operation on all types of devices.

      My focus in my work is more on:

      – industry and company performance versus competitors;

      – the use of modern technologies and work with data;

      – working with operational processes, including their optimization;

      – approach to project management and implementation of changes, creation of products;

      – human Resources and current organizational development.

      An example of my approach can be seen in the second book in the chapter on digitalization strategy.

      Organizational changes in digitalization

      For example, in my practice there was a case when the company changed its organizational structure three times. Smart plans came from Moscow, orders were issued, posts were renamed. However, did something change in the work on the ground? No!

      Just the paper was one step further from life. Well, some were «optimized».

      What kind of changes should digitalization and digital transformation lead to?

      – Transition from complex hierarchical structures, that is, transition to 3—4 levels of management – from the general director to the master of the site.

      – Review of policies, structure of units, number of staff and complexity of procedures.

      That did not imply a reduction in staff, but a redeployment of staff to improve efficiency.

      People must be sure of tomorrow. Only then will they accept the changes and be willing to share ideas.

      – New roles, functions and needs for new competencies and skills emerge.

      Currently, there are no employees who have all the necessary skills. And there are not even requirements for new roles. It is necessary to consider this.

      – Change of organizational. culture – new approaches to personnel management, new system of values, withdrawal from management from the position of force and punishment, fines.

      Transformational change will require more skilled human resources that are highly mobile and do not adopt outdated management models.

      Here you will have to combine softness and discipline, to be able to fairly punish and manage employees depending on their level of «maturity». In my opinion, this is one of the key issues. We cannot go into anarchy or, on the contrary, into dictatorship. Which means you have to learn from the CEOs.

      Skills are needed to manage staff using both financial and non-financial motivation. The use of financial motivation alone is very inefficient, has short-term effects and leads to stratification within the company.

      Additionally, most importantly, you can’t change culture without changing the first people. If the Chief Engineer can’t use the IT system, but charges everything to 1—2 engineers and asks to print help – it’s just fiction and money in junk.

      If you implement a complex asset management system to verify the execution of the budget, and all «opponents» just punish, then the approach to planning repairs from this will not change, but the turnover of personnel you provided.

      In addition, it is necessary to actively work with external innovations, launch a large number of pilot projects. Why? Because it tells you that you’re willing to take risks and experience experiences, even negative