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The business world today is digital and pushes companies toward digitalization. The question on their agenda is no longer “should companies digitalize or not?” but “how should they digitalize effectively?” which is an important step for any company’s development.
Digital transformation of an organization is some kind of metamorphosis that fundamentally changes the way it works and influences its working processes, communication channels, implementation systems, organizational structure and culture. Twenty years of experience in working with clients in the consulting field made us see that you can actually infuse new life into a company with the help of digital technologies. This is why, our goal is to share our accumulated experience with others so that companies can cope with the digital challenges of the modern world, strengthen and find their own place on the modern business map.
Digital technologies are vast, while the benefits coming from them are diverse. The digital revolution connects individuals, processes and technologies in a new way and enables companies and their consumers to speak in a common language.
Digital transformation means much more than a new way to tackle problems – companies gain new values and standards through it. Digital metamorphosis implies the transformation of the company as a whole organism instead of an innovation to any separate unit or part. Based on our experience, this metamorphosis starts with a change of mindset which is later transformed into a completely new business model. Digital transformation takes place not in a specific timeframe, but presents a continuous process of development which urges companies to never stop asking questions and to be ready to meet new challenges.
We believe that the digital world is an integral part of our future. This is why our team helps companies to connect creativity and technology in order to turn digital opportunities into a digital reality.
Digital metamorphosis of the company is based on six stages:
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We believe that the future is created by technologies that humans harness. In the digital world, companies need individuals with a digital mindset who are able to see the power of technologies and capabilities in business. Any idea, technology or innovation is wasted without the relevant readiness, mindset, improved skills or pursuit of innovativeness.
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Digital diagnostics empower us to assess the factual conditions of clients and their position in the digital era. With the help of opportunities and challenges identified at this stage we do an analysis to define the following steps. |
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Modern companies operate in a digital world, and their strategy should be able to ensure operation accordingly. Formation of an action strategy in the digital world at this stage may urge companies to change their business model. |
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After the formation of a digital strategy, the organization as one whole organism is being prepared for the digital transformation which includes modification of organizational structure, behavior and culture. |
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Opportunities and challenges of the digital world require digital skills. Thus, employees are one of the most crucial elements of the digital metamorphosis. The following stage is dedicated to the development and improvement of employees’ digital skills. |
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The result of a digital mindset, strategy, organizational culture and the culmination of employees’ digital skills unite around one common goal which reflects on the digitalization of the organization. |
Our team assesses a company’s condition, where it is at any given moment and to which direction it wants to move toward/develop. During this process, we also observe a company’s technologies, data systems and driving force – individuals. By incorporating this complex approach, we study the organizational culture, leadership forms and management methods. This process helps us to study the company in an in-depth manner as well as factors related to it. After assessing the internal ecosystem of the company, we connect the external factors – we evaluate the company’s positioning and identify industry trends.
After studying the company, ACT’s team helps it to create new opportunities so that the company can embrace the challenges of the digital era more enthusiastically.
We believe that the successful digitalization of an organization depends on a powerful, targeted strategy that enables companies to understand the digital world better. Based on this, we help clients gain digital advantages which can be achieved with the help of proper digital initiatives and through establishing required processes, platforms and cultures. More specifically, we empower companies to create a digital strategy roadmap which includes the following stages:
We deeply believe that one of the integral and crucial elements for overcoming any crisis and maximally utilizing opportunities is a team of employees. Our consultants help companies improve or create organizational environment which will facilitate inspiration, creativity and generation of new ideas. We believe that it’s man-harnessed digital technologies that define company’s success in this new, digital era. Thus, we assist our clients to recruit their human resources, improve qualification to acquire digital skills and form organizational culture. More specifically, we work on the following:
We deeply believe that one of the most integral and crucial elements for overcoming any crisis and utilizing opportunities is a team of employees. Our consultants help companies improve or create organizational environments which will facilitate inspiration, creativity and a generation of new ideas.
We believe that it is man-harnessed digital technologies that define a company’s success in this new, digital era. Thus, we assist our clients to recruit their human resources, and improve their qualifications to acquire digital skills and form an organizational culture. More specifically, we work on the following:
Our approach suggests tackling specific tasks by means of digital methods as well empowering organizations to implement digital transformation. Our consultants assist companies to gain a deeper understanding of their capacities and to utilize the potential they have to create a business of the future.
Research and Consulting Company ACT has launched a video column #ANEWNORM, where the current issues of modern days are discussed. For instance, why are changes inevitable today and how can you turn a transformation process into a guarantee of success for you and your company? In just five minutes, Tinatin Rukhadze, ACT's Vision Lead will talk to you about it.
Problems cannot be solved by the same level of thinking that created them.
აინშტაინი
Backsliding occurs when there is no progress. Stability does not equal the absence of change, it is only the result of sustainable development. In the digital age, the world is changing at an astonishing rate, and businesses are left with two choices: to either glide on the waves of change like surfers or to disappear under them.
The pandemic has accelerated the cascade of change even more – it changed people, their emotions, social life, and priorities. As a result, the business ecosystem and the rules of the game have also changed, including different industry perspectives, demand for products and services, consumer behavior and preferences, product/service selection criteria, supply channels, brand communication content and style: to put it concisely, everything has changed.
As a result, it is hard to come across a business that does not require a business model or organizational transformation in order to survive or, conversely, to seize new opportunities. The success of a business today is directly related to how timely it acknowledges the need for transformation and how well it manages this very process.
There are multiple signs that indicate the need for transformation in a company's business model or organizational setting. 6 unmistakable symptoms are as follows:
Let us be more specific: if you have not enjoyed the results of your business or the situation in the company for a long time, but despite various attempts, you are unable to change the unwanted status quo, know that the company is in a desperate need of transformation.
Recognizing and acknowledging the need for transformation is a necessary but insufficient condition for the success of a business. It is important for the company’s management team to understand that transformation is so much more than a change of individual parts; rather, the transformation has to be complete.
Analyzing several cases of failure reveals that most companies make a fatal mistake at this very point: they are trying to localize the problem, solve it effectively with minimal costs, or seize the opportunity with minimal resources and outdated approaches. Behind this, of course, are rational motives such as saving time, cost-effectiveness, following a path that has been taken before, the ambition to find the quickest solutions, and more.
However, this approach is ultimately very costly for the company due to it being impossible to achieve large transformational outcomes with small changes. As a result, the company will have wasted its resources or even worse: with the unsuccessful attempts, the company’s management team becomes frustrated, ultimately leading to the shaking of trust and sowing nihilism among the employees when it comes to the company’s management and its future in general.
We have been observing the process of business transformation in ACT for 19 years both in and outside of Georgia. We have accumulated experience and have created a unique model of organizational transformation and management, which we call “the Power of Three”. According to the philosophy of PWR3, the success of any kind of transformation depends on the unity, balance and permanence of these three forces: the power of creativity, the power of order and the power of change.
In the organizational context, we consider three main driving forces of company development and success: (1) vision – (creativity), (2) culture – (order) and (3) execution – (change).
According to our approach, the transformation of a company begins with the renewal of its vision. The second stage of change is the formation of an organizational culture relevant to this new vision, while the third stage of change regards the transformation of organizational systems, processes, and the mobilization of resources needed to achieve new vision and goals.
Our model offers the organization leadership to think and make decisions consistent with regards to these three dimensions: vision, culture, execution. We believe that the decisions bringing the best results are the ones that: 1) serve the company’s vision and main goals, whilst 2) aligning with the company’s values and taking into account the interests of its employees, and 3) the company has to have tangible resources needed for the execution. In other words, PWR3 is not only a model for the transformation of the organization, but also for its effective management, helping the management of the company make consistent and effective decisions, which, in turn, contributes to the sustainable development of the company.
THE POWER OF THREE®’s unique philosophy, model and working principles enables ACT to play a special role in transforming its customers. As a result of PWR3®, the signs of transformation in the organization are clear and visible:
PWR3 is the power of change that, on the one hand, helps organizations become more resilient in the face of new challenges and, on the other hand, boosts their creativity and openness towards opportunities. We believe that along with a sense of the uniqueness of the mission, it is these qualities that make good companies into extraordinary ones.
Crisis caused by new Coronavirus accelerated pace of digital transformation even more and forced businesses to include remote work and development of e-commerce into the “agenda”. The other side of the market – consumers remained without digital influence. E-commerce became a replacement or filler of physical shopping for them and presumably, these changes will make deep roots in their behavior and will continue in post-pandemic period as well. However, background of these processes is even more interesting – did every business mange to timely and properly respond to digital challenges, what do international statistics say and what is the vision – did the pandemic landscape of retail trade give businesses time and resources to adapt?
International trends – are businesses ready for digitalization?
It’s been a long time since change in consumer behavior and their readiness to engage in e-commerce processes became one of the main focus of studies conducted by international organizations. For example, United Nations Conference on Trade and Development (UNICTAD) annually measures B2C e-commerce index, which combines levels of internet consumption by individuals, share of protected internet servers and data on owning accounts in financial institutions. Similarly, International Tele-communication Union (ITU) offers information and communication technologies (ITC) development index [1], which is also oriented on online shopping behaviors of consumers and channels utilized in this process. This list also includes statistical data gathered by Organization of Economic Cooperation and Development (OECD).
If we have a look at e-commerce report called “E-commerce during the COVID-19 pandemic” conducted by OECD in October of 2020, we will clearly see that online commerce is very quickly developing. According to the report, retail sales (orders) made through e-mail and internet in EU member countries increased by 30% in April of 2020 compared to the previous year. Trends are similar in USA, where e-commerce orders increase by 14%-16% (see chart N1). The said report also highlights dynamic development of e-commerce in Europe, Northern America and Asia-Oceania regions in the first half of 2020.
[1] The ICT Development Index (IDI)
Source: OECD, E-commerce during the COVID-19 pandemic, 2020, October. Calculations are based on EUROSTAT statistics.
UNICTAD report “COVID-19 and E-commerce” published in summer of 2020 shows quite an interesting picture, incorporating experience of 257 companies from 23 less developed countries [1]. Some of the identified trends truly deserve our attention:
[1] These countries mostly cover Africa and Asia – Pacific Oceania regions.
Source: UNICTAD, COVID-19 and its impact on e-commerce of businesses, 2020
ACT’s role – experience from even broader geographic area
The 2020 pandemic and economic crisis enabled ACT through cooperation with different countries and international organizations (EBRD, World Bank, UNDP, USAID) in various projects to contribute globally in increasing sustainability of business sector and identifying pandemic channels affecting them. The said projects enabled us to study e-commerce development issues in focus regions (Caucasus, Western Balkans, South-East Europe, Central Asia and South and East Mediterranean) and do a research on the impact of the pandemic on businesses. As expected, business operating in focus regions shows different types of readiness for digitalization (chart 3). However, regardless of such different results, it is important to mention the overall attitude inquired respondents had in common – small and medium-size businesses have a desire to involve in e-commerce but they hesitate because of lack or complete absence of information and digital tools.
Source: ACT Research, 345 SMEs inquired in Caucasus, 827 SMEs inquired in the Western Balkan region
Our team had a chance to additionally study challenges of small and medium business operating in Central Asia, South-East Europe and SEMED countries during the pandemic within the scopes of the EBRD-sponsored project “Impact of COVID-19 on small and medium businesses”. As a part of the given study, we asked respondents representing small and medium-size businesses what percentage share of the company’s sales switched to online platforms after the pandemic started. Overall picture is also very interesting, as declared by the majority of small and medium businesses from the listed regions, sales did not switch to online shopping at all, while only a very small part of companies managed full digitalization. Businesses operating in South-East Europe (chart 4) appeared to be the most prepared for such transformations, this can be explained by the fact that logistic services were already well-developed and organized in this region and already established practice of e-commerce.
Source: ACT Research, 570 SMEs inquired in SEMED, 598 SMEs inquired in Central Asia and 184 SME inquired in South-East European region
Unplanned changes with long-term results
The new Coronavirus pandemic turned digital development into inevitable reality. When searching for answers, we clearly saw that this seemingly simple way is actually quite complex process and to pass this road, only “desire to digitalize” is not enough. Businesses had to cope with all the problems which already accompanied the process of switching to a new platform: absence of relevant experience, lack of resources or infrastructure. Even though supporting business became main migraine for every government, the majority (more than 50%) of businesses participating in different studies unanimously admit that unfortunately, their government, when working on development of priority sectors, left this part behind and online commerce still remains as unsolved issue.
It’s a fact – digitalization has not entered our lives just temporarily. These are more unplanned changes which will bring prolonged, long-term results.
