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

management must be actively involved in the change process. Many projects do not achieve their objectives at the level of middle and technical management. People are busy with their linear activities and do not know how to manage projects. As a result, we get combined resistance. Breaking this cycle is difficult, but necessary.

      At least 30% of the people engaged in innovation have to undergo special training. This helps to form a common vision of where the organization is going, as well as to avoid conflicts and thoughts from the category «again something was invented above, now they will move and let’s go back».

      Possible models of digitization and transformation

      It is possible to digitize one of four models.

      – Informal model

      Someone at the company is doing the numbers for some reason. For example, the department of repair or maintenance began to implement digital tools and did it successfully. The downside is that the model does not cover the whole organization and the full potential of technology, but for many companies it becomes the starting point.

      – Centralized model

      The head of the organization or board of directors understands that digital technology and digitalization are very important for the company. They hire the CDTO, assign it a large unit, empower it – and it digitalizes the company.

      The vast majority of companies in Russia are at this stage with an IT or Transformation Director at the head.

      The advantage is that you can coordinate the movement and work of the whole organization.

      Minus is the speed. The bigger the company, the more regulations, rules, restrictions, the more communication you need to conduct inside the company to launch a pilot project. After all, there is also resistance, as many leaders do not need this digitalization. As a result, companies invest in technology, and business customers simply ignore new tools, they impose them.

      I participated in the project on this model and I can say that if the curator at the head of such a project does not have the necessary competencies, it can bury the whole project. Of course, in the reports everything will be shown beautifully – we can report like nowhere else. However, if you go down to the level of those who work «in the fields», you will understand how much money is wasted. The project in which I was involved, with a total budget of more than 1 billion rubles became my personal pain, forcing to learn from the mistakes of the curator. Additionally, communication with colleagues on the floor shows that such a model often only increases the time frame and budgets.

      – Distributed model

      Each division has its own digital office, which determines its own solutions and services.

      In this case, the CDTO functionality is crushed and embedded into the existing structure so that these small offices start transforming their units from within. Then each division has its own «small» head or leader in numbers, and the big director of the number becomes unnecessary and leaves the company, because all can develop their own competencies. It’s a new culture.

      Plus is the speed of deployment and how fast the changes are coming.

      Minus – duplication of costs. Often such teams begin to push elbows, in terms of the cost of the whole organization they are not very effective, constantly «invent bicycles», and they always have something to optimize.

      – Hybrid model

      It’s that all small digital offices need a focal point. His task is to build uniform rules of work, development, to form processes and tools, to develop a common strategy, so that local offices already use his knowledge. It becomes a methodological centre and coordinates all the centres so that they work towards a common goal and are synchronized with the strategy.

      As an analogy you can take the company Google, which develops its «market place». Developers do not create apps from scratch, and use many proprietary ready-made applications from Google. For example, if you want to use maps in your app, you take ready-made maps from Google.

      If you want to do local digitization, you need to understand the level of organizational development of your company. If you have a centralized organizational environment with a large digital block, you can assume that there will be problems with speed. If you have a distributed environment, there will be a problem with duplication and unnecessary costs to develop your products.

      Always keep your structure in mind – this will protect you from irrelevant actions.

      Risks

      The introduction of any changes is risky, and digitalization and digital transformation projects are no exception. With dozens of projects of different sizes behind me, I can confidently say that risk management is a key element.

      What risks do we have?

      – Information security

      New information systems, huge volumes of data require protection from losses and «hacking», as well as from incorrect operations. New levels of security are needed. New requirements for personal data protection are emerging. However, it should be remembered that if you start to ban everything that is not allowed, your people will look for workarounds, thus increasing the risks. Then it looks like you’re protecting everything, and the data is still compromised. And the key here – the ability to evaluate what is really valuable, and what you need only or becomes obsolete at the moment of appearance.

      – Resistance to change and company culture

      In the process of transforming your business, you will inevitably encounter staff resistance to innovation and in a favourable scenario you will lose 10—15% of employees.

      There are many reasons for this. A special chapter will be devoted to working with resistance. It is worth noting the issue of culture, because culture has a strategy for breakfast. If you don’t know how to work with change and teamwork, nothing good can come of it.

      – Terms

      When implemented correctly, when changes are introduced from the top, from top, and supported by ordinary employees, digital transformation takes 2.5—3 years. In large companies this period may extend to 4—5 years.

      Even the first results will be visible only after 9—12 months, but most managers lay 6—9 months for the entire transformation. For this period, you will have time to implement only 1—2 projects on digitalization or automation.

      – Non-streamlined processes

      This is one of the key elements of digital transformation. You can go the classic way – first automate what you have, and then reengineer processes. However, automation without prior optimization is not feasible. You will spend a lot of time and resources, but in the end, you will create a very heavy and clumsy system. Optimization is the most important step in the transition from manual labor to automated labor.

      – Unstructured data

      If you can’t structure data, transform it into useful information, then everything else is meaningless.

      – Staff competencies

      Digital technologies place a new level of demands on the knowledge and competencies of both the people adopting these technologies and the users. Large-scale measures are needed to educate and retrain, motivate and overcome resistance to innovation.

      At the same time, research of one of the federal projects showed that in Russia only 26% of people have advanced digital skills. According to DICE, in Europe, this figure reaches 57%.

      – Costs and people overburdened

      Digital transformation is a high-cost initiative without guarantees of success.

      According to research, only 20% of the changes are implemented successfully. Others fail for various reasons, including because of its redundancy. If there are 250 changes per person per year, you can hardly expect a positive result.

      – Technology