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Featured Insights
09.02.2024

In the year 2024, businesses are encountering significant transformative changes. Geopolitical instability and climate change have created an immediate demand for businesses to achieve self-sufficiency and foster resilience. Simultaneously, technological advancements, particularly in the realm of artificial intelligence (AI), hold the potential to revolutionize every facet of our lives. Nurturing a business during this crucial juncture necessitates striking a careful balance between upholding sustainability, harnessing digital technology, and maximizing human potential.

The purpose of this article is to assist business managers in effectively managing these challenges and, furthermore, to offer them a guiding vision for successfully navigating and expanding their businesses within this intricate landscape.


Business Sustainability - Challenges and Opportunities

Sustainability becomes a strategic imperative for businesses in 2024. Resistance to change and environmental challenges, increased competitiveness, stable and long-term development are not only business needs but also the basic requirements of consumers and investors.

Below, we discuss important factors that will influence the formation of the business environment in Georgia in 2024 and, accordingly, the sustainability of business. One of the priorities for business managers should be to prepare to respond effectively to these anticipated challenges and opportunities.

Geopolitical Factors

Georgia is located in a complex geopolitical landscape in which regional reorganizations are taking place. In light of the Russian-Ukrainian war, there is growing concern for the stability of our country and the security of our borders. No less of a risk factor is the growing likelihood of conflicts in the Middle East. These factors may have a negative impact on trade, tourism, investment, and commodity prices. Therefore, businesses should be careful about geopolitical risks and develop action plans in emergency (crisis) situations. It should also be noted here that there is a need to tighten cybersecurity measures because security today extends not only beyond physical borders.

We cannot ignore the local political context – in particular, the 2024 parliamentary elections. Elections are always associated with political conflicts and growing uncertainty. This, on the one hand, leads to lower consumer and purchasing sentiment, and on the other hand, to increased investor caution. Consequently, businesses will need to mobilize more resources to communicate with both customers and investors.

Economic Factors

Among economic factors, one of the most important positive factors for our country is obtaining the status of a candidate country for the European Union. Positive expectations for the country's economic growth in 2024 are associated with this event. According to the World Bank[1], the country's economic growth is expected to be 4.8%, and inflation is expected to be within 2.5%. Economic growth and consistently low inflation are important prerequisites for business sustainability.

Georgia's free trade agreements with several countries and ongoing negotiations with other countries regarding access to foreign markets also present significant business opportunities. However, it should be noted that first the pandemic, then the war in Ukraine, conflicts in the Middle East, and the global economic slowdown caused significant disruptions in the supply chain (e.g. delays, funnel effect). This factor may hurt Georgian exports. Accordingly, diversification of export markets, strategic alliances, and the introduction of modern logistics technologies are becoming important strategies for business. Trade regulation is another issue that Georgian businesses should take into account. Navigating the complex web of sanctions against Russia and other potential restrictions poses a significant regulatory risk. Therefore, understanding and complying with the legal framework is critical. Here, we should not forget about EU trade rules, compliance with which will be one of the main challenges in the coming years.

Another important economic risk factor is dependence on Russian energy resources. Accordingly, it becomes important for Georgia to prioritize achieving energy independence through the development of renewable energy sources and deepening regional energy partnerships. Georgia's potential in hydropower and solar energy becomes even more important for energy independence and sustainability. This provides opportunities for private businesses to attract green investments and use green technologies.

Climate change, the environment, and security

Experience has shown that Georgia is vulnerable to the effects of climate change, such as floods and droughts. Accordingly, adaptation to climate change should be one of the country's priorities. On the other hand, businesses must ensure their security and resilience by ensuring climate risks and investing in climate change adaptation.

In 2024, food security and sustainable agriculture will be no less a priority for Georgia. Focusing on sustainable farming practices and local food production is becoming increasingly important, ensuring food security and reducing dependence on imports. From a business perspective, the attractiveness of agriculture and local food production will increase.

Technology and artificial intelligence (AI) at the service of business

Artificial intelligence (AI) is poised to disrupt industries like never before. It provides incredible results in terms of data processing and analysis, optimization, and automation of workflows. From personalized healthcare to smart cities, the possibilities of artificial intelligence are endless. However, as well as opportunities, this also creates the risk of occupational change, workforce movement, and increased inequality among employees. Businesses should, therefore, focus on reskilling and upskilling their workforce to ensure that everyone benefits from the technological leap. It should be noted here that the security of personal information and the ethical use of technology are particularly pressing issues, which require responsibility, transparency, ethical practices, and security measures regarding the use of technology.


The challenges and opportunities for technological development in Georgia in 2024 are as follows:

Integration of artificial intelligence (AI): The use of AI to automate tasks, analyze data, personalize user experiences, and streamline operations will increase. Thus, companies that are the first to embrace the power of AI will gain a competitive advantage.

• Data-driven decision-making: Integrating data analytics into organizational processes will enable businesses to make data-driven decisions at all levels. To take advantage of this opportunity, businesses must invest in developing relevant competencies within the organization. It will also be important to make changes to decision-making processes and systems.

• Cybersecurity: As mentioned above, increasing regional tensions increase the vulnerability of Georgian businesses to cyber-attacks. Investing in cybersecurity measures and increasing employee awareness is becoming critical.

• Cloud technologies: The attractiveness of cloud technologies will increase as they offer businesses scalability, flexibility, and cost-effective solutions.

• Digitalization and e-commerce: Dependence on online platforms and e-commerce is likely to continue to increase. Georgian businesses will have to adapt and invest in digital marketing and online business tools.

• Studying new technologies: The study of blockchain, metaverse, and other new technologies is becoming attractive due to the huge potential they have in terms of industry breakthroughs and new business opportunities. It is expected that we will see more startups in this direction.

• Potential as a technology hub: Georgia's low taxes, technological youth, and strategic location make it a potential IT and creative industry hub. Georgia has the potential to attract technology companies and stimulate innovation in sectors such as cybersecurity, financial technology, and artificial intelligence.



Human potential is the main capital of business



Artificial intelligence is more efficient than humans in analyzing data and performing repetitive tasks. However, it cannot replace the unique human qualities of creativity, empathy, and critical thinking. Overall, as the ability to use technology and artificial intelligence increases, so will the demand for human capital that can effectively interact with and use these technologies. Therefore, in 2024, it becomes important for businesses to develop these qualities and competencies in their employees. Companies that invest in employee well-being and development, encourage teamwork, and instill a culture of continuous learning will gain a competitive advantage. In the era of artificial intelligence, the true competitive advantage of a business will be its ability to adapt, innovate, and solve complex problems.

The main challenges and opportunities for business in Georgia in 2024 in the area of human capital are as follows Flexibility for hybrid and remote work: After the pandemic, many companies tried to return to traditional modes of operation. Some even implemented strict office-only policies. However, practice shows that this requirement is increasingly irrelevant today, and the flexibility of hybrid and remote work has become an important factor in attracting and retaining talent. Employees, especially the younger generation, are not ready to go back to the past and openly or quietly protest against it. Consequently, hybrid work models are expected to become the norm, forcing business leaders to think about new approaches and forms of communication for managing collaboration, engagement, and maintenance.

• Skills and upskilling: Technological developments have changed the education and skills paradigm. Today, education involves constant learning and development, mastering new competencies, and caring about increasing emotional intelligence. Hence, it is important for businesses to focus on creating a development-oriented work culture and invest in employee training and development.

• Prioritize employee well-being: Experience and research have shown that, despite high competence and extensive experience, people's performance suffers significantly when their mental or physical well-being is compromised. Therefore, creating a psychologically safe environment for employees, and prioritizing their physical and mental well-being, will be one of the most important business tasks. Accordingly, investment in training, mental health, personal development, and physical health programs will increase.

• Empathetic and people-oriented leadership: Gone are the days of charismatic, strict, "all-powerful," and "all-knowing" leaders. Today, the competence or ability to make decisions solely in the hands of a few poses the greatest threat to a business, as it loses flexibility and the ability to adapt quickly. Accordingly, maximizing human potential at all levels, providing maximum independence and autonomy to employees within their competence, as well as ensuring effective coordination between employees and teams, have become the main tasks of organizations today. Therefore, today's leaders must prioritize empathy, communication, and building trust with employees. Openness to feedback and developing a culture of teamwork will be key to business growth.2024 is not just an ordinary year - it is a turning point - a year of change. The choices a business makes now – at the intersection of sustainability, technological capabilities, and human potential – will determine its future. For business today, development means a paradigm shift, which forces it to reconsider its business model, development strategy, and leadership concept; becoming more ethical and responsible towards society and the environment, becoming faster, learning more to be able to take advantage of technology, and most importantly, becoming more people-oriented because it is human skills and potential that become increasingly important capital in the modern era. And if a business can cope with these transformative changes, it will not only survive but thrive and make significant positive changes in its environment.


Source: Forbes Georgia


[1] https://www.worldbank.org/en/publication/global-economic-prospects



09.02.2024

From the point of view of relationship psychology, our lives are largely determined by the style of our relationships with other people and how we want to see our place in a world that is constantly changing. The answer to these two questions determines to some extent the direction of our lives. There is no simple rational solution here. It is complex and is influenced by our upbringing, experience, childhood and, among other things, genetic factors.


The relationship matrix discussed in the article is based on the concept of the authors of “Humanistic Leadership Psychology” (Michel Paschen, Erich Diemeyer), where relationships are viewed from the point of view of two polarities. Specifically, we seek close relationships with other people and therefore strive for intimacy and involvement in relationships. Or we may want to separate ourselves from others and strive for individuality and autonomy. Thus, relationship-oriented individuals are open, team-oriented, and easily gain the trust of other team members, while autonomy-oriented individuals are individualistic, more competitive, and constantly strive to stand out from others.


Naturally, this orientation is expressed in different doses among individuals and can vary depending on the context. In some situations we may want closeness, and in others we may want separation. However, in individuals a leading orientation is often noticeable. This is especially noticeable during conflicts. If we observe the people around us and their relationship styles, we will undoubtedly discover the direction of a person's inner compass - individuality, difference and competition, or intimacy and inclusion. There are people who are characterized by the extremes of these two poles, so they are not able to distinguish themselves from others or do not know how to establish relationships.


These two orientations have their own fears. Relationship-oriented people fear loneliness and isolation. People are focused on autonomy - the fear of losing individuality and specialness. As strong as this fear is, so strong and visible is the energy that people expend trying to please and be accepted by others. With the fear of the other polarity, energy is spent on being the center of attention and emphasizing one's superiority whenever possible. These behavioral tendencies have a huge impact on our lives, including our leadership style.


To recognize a tendency in yourself, it is enough to ask the following questions: what is more important to me? Close, open, trusting relationships, common interests, equality with others, a sense of belonging, altruism or, more importantly, distinguishing oneself, achieving more, individuality and a life noticeably different from the lives of others.


The behavioral patterns that characterize both trends are presented in more detail below.


Relationship orientation


The main fear is loneliness and isolation.


When this orientation is strong:


Seeks intimacy with others;

Seeks tasks that are meaningful and help others;

He is open and sensitive to other people;

Emotionally attached to others and forgives other people's mistakes;

In relation to others he is inclined to altruism, communicates peacefully and modestly;

Prefers moral and humane behavior;

Suffering when he feels distance and rejection;

Tries to create a harmonious atmosphere in cooperation;

Doesn't criticize others.


Autonomy orientation:


The main fear is a lack of individuality and significance.


When this orientation is strong:


Seeks admiration and recognition in the eyes of others;

Particular importance is attached to unusualness and individuality;

Emphasizes the difference between them and others;

Extremely confident;

Avoids dependence on others;

Emotionally distant from others;

Treats others with criticism and skepticism;

Copes with conflicts without feeling significant personal burden;

In many situations, there is a feeling of competition with others.


The second fundamental question concerns our identity in a changing world. We can answer this question from two polarities. At one end of the continuum is creating a computational, predictive and manageable framework for yourself in a changing world. This pole is called the balance orientation. People with this orientation seek rules, regularity, predictability, and structure. The second polarity of the continuum is stimulation orientation. Such individuals want to fully experience the vicissitudes of the world. They look for novelty and change in everything; they are characterized by adventurism and curiosity.


Like the polarities of relationship orientation, these directions also have their own fears. Balance-oriented people fear uncertainty, spontaneity, and therefore freedom. This fear is addressed by creating an island of rules, control and predictability.


On the other hand, stimulation-oriented people have a fear of conforming to rules and being static. The worst thing that can happen in their life is to miss out on something important or great. Their fear is attachment, limitation and the impossibility of freedom and spontaneity.


If we look closely, we will find people around us who suffer from a lack of regularity in their lives, when unexpected events require them to be flexible, or when things don't go according to plan. Additionally, there are people around us who really worry about committing themselves to something or someone, be it a life partner, a lifestyle choice, or just a commitment. These people suffer when they have the impression that there is a closed door in their life that cannot be opened.


Focus on balance


The main fear is uncertainty and disorientation.


When this orientation is strong:


Striving for order and security;

Performs tasks conscientiously, thoroughly and tirelessly;

Looking for consistency;

Has established habits;

Is careful about risks;

Acts reliably and conscientiously;

Insists on compliance with rules and punishment for deviations from the rules;

Constantly controlling other people.


stimulus orientation


The main fear is obedience to rules and inviolability.


When this orientation is strong:


Avoids commitment and leaves many options open;

Copes with a variety of situations flexibly and spontaneously;

Leave the past behind and try something new;

Takes risks;

He approaches new topics and challenges with imagination and curiosity;

Ends relationships and starts new ones if it offers new experiences and adventures.


All orientations manifest themselves in each of us with different priorities and to varying degrees, and, naturally, this also applies to leadership relationships - leadership relationships, their different motivations and behavior patterns pass through these four orientations. Our dominant characteristics are most clearly felt in conflict. Therefore, it is especially important for leaders to understand the basic orientations and polarities in themselves, which in itself makes it easier to see and accept others, as well as prevent conflicts and manage them effectively.





17.11.2023

Believe in yourselves, dream big, and soar high because the truth is, for the potential of both men and women, the sky is the limit!



On November 8, a joint conference of the United Nations Association of Georgia (UNA) and the World Federation of United Nations Associations Partnership for Impact Tbilisi Conference: from Blueprints to Breakthroughs took place.


The conference included a panel discussion "The Role of Partnerships in Advancing Gender Equality", where attention was focused on the multifaceted aspects of gender equality and women's empowerment. Panelists emphasized the need for women's active participation in public life, which leads to more stable societies. Challenging conditioned beliefs about male superiority was encouraged, and opportunities and empowerment were advocated without judgment. The need to support women to break the glass ceiling was acknowledged, and the importance of empowering women in technology was highlighted. Overall, the panel emphasized the importance of collaboration and empowerment as essential tools for advancing gender equality.


Tinatin Rukhadze, the founder of ACT, business leader and management consultant, served as a keynote speaker on the panel. During her speech, titled "From Self-Doubt to Success: Empowering Women”, Tinatin Rukhadze addressed the prevalent challenges and barriers often experienced by women.


We're thrilled to share Tinatin Rukhadze’s inspiring speech, From Self-Doubt to Success: Empowering Women, in its entirety, unaltered and powerful, as she shares her journey and insights!


From Self-Doubt to Success: Empowering Women


Let me share my personal story, one that I hope will inspire you. I was fortunate to be raised by an incredibly strong woman, my grandmother, who played a leading role in our family. From a young age, I never perceived women as weak. This belief became the guiding principle of my life, and it led to remarkable journeys and accomplishments. Yet, to my surprise, one day I discovered that the most significant obstacle to my personal growth and the realization of my potential was tied to my own identity as a woman.


We founded our company, ACT, in 2002, and in the years that followed, we experienced rapid growth. By 2008, we became the largest research company in Georgia, and by 2014, we had expanded to include offices in Baku and Almaty. However, from 2014, our company's growth began to stagnate, and the old formula for success no longer yielded results. As the company's managing partner and visionary leader, I was deeply troubled by this. I continually asked myself, "What are we doing wrong? What changes are needed to reignite our growth?" But the answers remained elusive.


One day, I traveled to our Almaty Office for business. I chose to utilize the four long hours of the flight for a deep introspection. My thoughts were fixated on the same unresolved questions. "Why can't I generate new ideas? Why can't I find a solution?" I kept asking myself. After a series of "whys," my subconscious delivered a shocking response: "because you are a woman." I was taken aback by my own thoughts. How could I, an advocate for the strength and equality of women, harbor such limiting beliefs? I recalled instances where I had been told, "you have the brain of a man," "you think like a man," "you are brave like a man," and I realized that deep down, I had been conditioned to believe in the superiority of men. Despite "thinking like a man," I am not a man. So, I had unwittingly limited my own success, believing that, as a strong woman, I could never achieve as much as a man could.


The discovery and subsequent release of this limiting belief brought about radical changes in both my life and my business. With a new vision, we transformed ACT's business model and developed a consulting division. Today, the company is three times larger than it was in 2014, operating in 34 countries, and we believe there are no limits to our growth.


My journey and interactions with other women entrepreneurs have taught me three important lessons:


First: The most significant barrier to women's development is often their own limiting beliefs, which can be deeply ingrained and go unrecognized. These beliefs are often fostered by family, education, societal norms, and real-life inequalities. Common limiting beliefs include "I'm not good enough," "I don't deserve more success," "I can't do it," "I can't change," "It's not worth it," "I can't trust people," and "No one will help me."


The second major barrier is the fear of failure, the fear of societal condemnation (fear of being labeled as inadequate wives or mothers), and even the fear of success itself (fearing significant changes and societal disapproval for being seen as ambitious careerists).


Lastly, the third barrier is the lack of a supportive environment, be it in the form of people or systems that empower women, provide access to resources, or offer emotional support.


In closing, to empower women, I encourage you:

Don't say no; give us a chance.

Don't test us; share with us.

Don't judge us; empower us.


And, to all women, I would say: believe in yourselves, dream big, and soar high because the truth is, for the potential of both men and women, the sky is the limit!


13.11.2023


If the growth of your company is not proportional to the growth of the result, If synergy is not created in the team, they do not talk about their mistakes and do not share their experiences. Then your organization may have an silo mentality and the organization itself is an silo organization.


What does a Silo organization mean?


A silo organization refers to a situationally small organization, divided into small, mechanical groups, where employees create a subculture adapted to them and, in some cases, develop terminology, a colloquial language characteristic of the subculture.


A subculture can be formed by departments, organizational ranks, and/or even a few individuals within a department. The steps, changes and sentiments made in such subcultures are unknown to the other group.


The formation of mechanical subcultures, the same silo subculture, is a hindrance to the organization because it separates it from the overall purpose or mission of the organization. At the same time, they operate with their own micro-interests in mind, reducing efficiency and synergy at the organizational or departmental level.

 


Why does a silo mentality develop?


Silo organization - formed by the style of silo thinking, originating from the archaic past, tribal principles.


People still retain the impulses of tribal organization and tend to form a small subculture, have a sense of belonging to this subculture and enter into competition with another subculture, “resist” it, these impulses dictate interaction in small subcultures and other subcultures. - Competition with cultures[1].


When an organization lacks the opportunity for communication and quality connections at a cultural or system level, when the organizational culture is not based on respectful relationships, and when senior management rewards only results-oriented and competitive behavior, it reinforces the silo mentality. For example, the principle of competition between departments increases disunity and kills the desire to cooperate. Tolerance of such an environment by management causes significant damage to the culture of the organization and leads to increased silo thinking/mentality.

Interestingly, silo thinking/mentality can form unintentionally when one team, a department, tries to quickly improve efficiency but fails to consider the processes and activities of other teams.


Why is silo thinking harmful?



Silo thinking has a major impact on organizational performance and can take several forms:

 

Low employee motivation and high staff turnover

Most of the team that leaves a job within a year of starting feels isolated, lacking the ability to collaborate and lacking a sense of unity with the team or leader.


Inefficiency, increasing number of unsuccessful projects

Teams with a silo mentality often fail due to a lack of communication and reluctance to share expertise, and their project completion rate is low and/or slow.


Missed opportunity

Silo mentality perceives the environment from a narrow perspective. Such teams are less likely to accept and share the experiences and perspectives of a new team member. In such an organization, there may be a feeling of missed opportunities, which can be expressed in words and/or actions, for example: “I already tried this method and it didn’t work,” “I tried talking many times, but it didn’t work,” etc.


Lack of alternative way to solve the problem.

Due to lack of communication and silo mentality, companies and teams miss out on alternative ways to solve problems and achieve goals. They lose the opportunity to creatively analyze the current situation.



Changing the Silo Thinking


There are several ways to change silo mentality, all of which involve improving collaboration and communication.

Let's look at some possible steps to help you change your silo organization:


Understanding the mission and vision of the organization by the team

An important way to overcome silo mentality is to define a clear, vibrant, authentic mission and vision. An equally important step in defining the mission and vision is to involve senior management in the development process and explain the importance of the mission and vision to each team member, showing their role in achieving the larger goal.


Leader's role

Silo mentality can be changed through an engaged and engaged leader who encourages employees. Ask questions and create appropriate platforms for them.

To change silo mentality, it is important for a leader to be a role model, empathetic and open to employees' ideas and initiatives.


Changing components of organizational culture

Changing silo mentality is very difficult without rethinking and changing the organizational culture and values in the organization. The main principle is to discover values that are organic to the organization and at the same time define success, emphasize it and take into account it in every process or standard of the organization.

In building culture, it is important to replace negative or neutral connection (causing silos) with high quality connection (HQC) in the organization. Also informal leaders in the organization, the so-called Involvement of cultural intermediaries and their support in changing the thinking of subcultures. Emphasizing the importance of cultural intermediaries in shaping organizational systems and making them a core component of the system.


Mobile organizational structure

It is an organizational structure that facilitates the organization and ability of departments to work together. The best example of such an organizational structure is the flexible structure.

When reviewing the structure and changing it, it is important to identify challenges in the organization, successful and unsuccessful examples of communication and collaboration, and establish an inclusive framework that will help:

• Establishing clearly defined roles and responsibilities;

• creating collaboration platforms and simple processes to get work done quickly;

• clearly define the responsibilities and powers of the organization's middle managers and strengthen them;

• clearly establishing the management style in the organization and uniting people around a common goal.


Cross-functional teams (also called tiger teams)


This arrangement of teams is fully consistent with modern business standards and involves bringing together people from different departments, functions, skills and knowledge to implement one common project and/or goal. The composition of cross-functional teams can vary depending on the goals and objectives. There are two types of cross-functional teams (“tiger teams”). In one case, the team meets once when a big problem arises. An example of this is the principle of teamwork in crisis management. In the second case, the team is more permanent in nature - for example, where a person on the team has a role parallel to his day-to-day responsibilities in the organization, for example, in an organization, the person may be a financial manager and at the same time be a member of a cross-functional team formed to share experience, whose task is development of organizational development and exchange systems. In both cases, periodic rotation of team members is desirable.


Information flow 

To avoid organizational silos, it is very effective to use a common management platform that will share news/information across the organization and reflect the status of completed and/or ongoing projects. It is also important to have a communications scheme in the organization, which will detail the principle of managing information flows, as well as the type and frequency of information dissemination within the company.


[1] The book "Cultural Puzzle" by Mario Mos, Derek Newberry and Greg Urban.



07.11.2023

A majority of the population wants the country to gain candidate status for EU membership, although only half the country hopes this will happen this year.



Desire and hope


A final decision on granting Georgia EU candidate status is due in December, but before then the European Commission will publish its annual report on enlargement, and the decision will largely be based on these assessments. There is one day left before the report is published.


The research company ACT conducted a study of Georgia's attitude towards accepting EU candidate status.


The population survey was conducted throughout the country on October 20-31, 2023, with 809 respondents aged 18-65 living in Georgia interviewed by telephone, with an overall margin of error of 3.5%.


According to the survey, 9 out of 10 Georgian citizens (87%) want the country to receive candidate status for EU membership. According to the study, 92% of residents of Tbilisi and 85% of the regions want to obtain candidate status for EU membership.


Almost half of the population of Georgia - 45% believe that this year the country will receive candidate status for EU membership. In the regions they are optimistic - 47% believe that the country will receive EU membership status this year, while in the capital expectations are lower - only 4 out of 10 citizens expect candidate status for EU membership this year.



EU membership means a developed future for the country.


The benefits of the country's accession to the European Union are obvious to the population of Georgia. According to a study conducted by ACT last year (June 2022), for 90% of the country's population, EU membership means a developed future for Georgia.


Citizens surveyed associated membership with a means of protection against Russian military aggression (66%), 8 out of 10 citizens believed that granting candidate membership status would be a clear signal sent to Russia that Georgia is committed to a Western course.


That is why last year's results coincide with the main data of this year's study and show the unshakable will of the Georgian people to become a member of the European family. According to a study conducted in 2022, every second citizen expected to receive candidate status for EU membership. According to the survey, the top three reasons for not receiving status were: violation of human rights (27%), an unclear position towards Ukraine in the Russian-Ukrainian war (26%) and problems in the judicial system (26%). ).


83% of the population considered obtaining EU candidate status an important event and believed that Georgia was closer than ever to EU membership. Citizens believe that if Georgia does not receive candidate membership status in the near future, it will not have such a chance for a long time.


The choice of the people and the merit of the people


Last year's poll also showed who, in people's opinion, is responsible for not achieving EU candidate status - four out of 10 citizens (38%) believed that the responsibility lies with the Georgian government, and if the EU decides to give the country the status, 40% respondents believe that this will be the merit of the Georgian people.


On November 8, the European Commission will publish its annual report on enlargement, a finding that will form the basis for a decision scheduled for December. We already know what the majority of the country's population wants, but we do not know whether the expectations of optimistic citizens who believe that the glass is half full and the country is definitely on the threshold of Europe will be met.


18.09.2023


Changes in consumer needs and the business environment, as well as the rapid development of the digital environment, have revolutionized our economic and social activities in recent years. New forms of digital interaction and information exchange are challenging businesses and pushing them to embrace different digital solutions. The Covid-19 pandemic and associated economic uncertainty have brought this issue to the forefront, forcing many businesses to determine their current and future strategy on their own. To avoid value chain disruptions and meet ever-changing customer needs, companies are using digital technologies to create new digital services and business models, strengthening strategies and governance to support change. This complex combination of people, processes and technologies involved in constant change is what we can call digital transformation. Researchers agree that digital transformation is a holistic process of organizational change driven by digital technologies.


Over the decades, academics, managers and consultants have recognized that transforming organizations is difficult, and digital transformation is even more difficult, and have been trying to create different models for successful practice. They modeled the role of leaders who set a vision and unite employees around a shared vision, emphasized the importance of organizational culture in this process, demonstrated the negative impact of downward communication on digital transformation, and called on companies to listen to employees and involve them in change and create an environment conducive to the formation of new ideas. However, research shows that in most organizations, two out of three transformation initiatives fail. The more things change, the more things stay the same. ( “plus ça change, plus c'est la même chose” - Jean-baptiste alphonse karr)


In reality, most companies fail to follow established guidelines at some point in time. It is important for change managers to know how to manage change in a specific context. Understanding and analyzing different approaches to digital transformation is the best basis for managing the changes brought about by the digital context.

 

And yet, what is digital transformation?


The concept of digital transformation (DT) is formed by the merging of personal and corporate information technologies and includes the transformative effect of new digital technologies, such as social, mobile, analytical, cloud technologies and the Internet of things. Some researchers understand digital transformation as the integration of digital technologies and business processes into the digital economy [Liu et. al. 2011) in a relatively broad sense, DT is perceived as a driver of change in all contexts, especially in the business context, and influences the improvement of all aspects of business (Kraus et.al, 2021). More precisely, digital transformation involves three organizational aspects: improving the user experience and changing its life cycle; Optimization of business processes and changes in organizational structure, which ultimately leads to the creation of completely new business models (Benlian et al., 2016).


Digital transformation is seen as one of the most real challenges regardless of industry. Although organizations understand its fundamental importance, they still face a number of obstacles that make it difficult to initiate digital transformation, let alone reap the benefits of this transformation. (Schuchmann & Seufert, 2015)


The growing number of opportunities brought about by the development of information technology also forces companies to “systematically identify new business opportunities at an early stage” (Kiel et al., 2016, p. 675) and requires managers to adapt to one or more business models, or even creating a completely new business model. In a recent survey on digital transformation (McKinse, 2018), executives reported that their leaders are “more engaged in digital transformation than ever before,” but at the same time they said that “their companies must first solve a number of organizational problems before how digitalization can have a truly transformative impact on their business.” In this context, it can be assumed that digital transformation de facto affects all processes within the company, as it influences corporate strategies and leads to the revision and adaptation of existing business models (Linz et al., 2017). However, the extent to which digital technology adoption impacts corporate performance and can lead to innovative business models depends on the resources and capabilities available within the company, and it will take time for business models to become more context-sensitive than technology models. Therefore, it is interesting what stages a business goes through on the path to digital transformation and how these stages should be managed.


The stages of digital transformation provide companies with different opportunities at each stage. The first two stages - digitalization (also called modernization) and general business transformation - involve changing the existing business and forming it anew. And the final stage focuses on creating new business and creating more value by opening up new opportunities. (E. G. Popkova, Y. V. Ragulina, A. V. Bogoviz, 2019)


Based on various literature and research works, it can be said that organizations face difficulties in all three stages and if the company moves to the next stage without completing any of the stages, the failure rate will be even higher. 


The first step (digitalization) involves simplifying and digitizing existing business processes using so-called ERP systems. This could be a customer relationship management (CRM) application, supplier relationship management (SRM) software, or other applications to optimize supply chain processes; In terms of employee experience, this could be automating HR processes or providing employees with a self-service portal, etc.


Is implementing these digital programs enough to transform an organization? - of course not. But this step is a critical foundation for organizational strength and rapid return on investment. This allows businesses to make more complex investments in their digital transformation journey.


The second stage (transformation of the entire business) is an attempt to change the complex cross-functional value chain. Steps taken at this stage for employees can be flexible transformation, creating a culture of continuous learning and development, improving the quality of customer service, this can be done by moving the product to digital channels, creating an application with integrated payment methods, delivery systems etc.


Can we call this an attempt at transformation? - Yes. Adapting the traditional organizational structure to changes, introducing appropriate management models, and taking care of talent development are the most important elements for the success of digital transformation.


Business-wide transformations typically focus on improving existing operations. But when successful, they often open up new opportunities to create value, for example by opening new markets or finding efficient new ways of doing business. That's why business-wide transformation is functional and complex, and the experience and knowledge gained at this stage is critical for companies on the path to digital transformation.


The third step (creating a new business) involves taking advantage of new opportunities to create value and create additional revenue streams. In terms of user experience, this could be the creation of a new business model, such as from selling a product or service to a subscription-based business model. On the operations side, this could be the use of data and analytics to accurately predict the operational performance of products or systems.


“To improve is to change; to be perfect is to change often.” -Winston Churchill


If we rely on neuroscientists, it is important to consider how habits are formed and how our brains respond to changing habits. To do this, companies often use the 7C model (Fig. 1), which assumes:


Clarity

During the transformation process, everything must be certain. To reduce risks, the roles of managers and leaders must be clearly defined. The goals of digital transformation must also be clear. Unclear goals can add to existing anxiety because employees won't know whether they've achieved the goal or how to measure their progress toward it. This means that goals must be specific and measurable. For example, a task given to employees to improve productivity could be formulated as follows: “Write four reports in the next quarter.” This way, they will know exactly what they want to achieve and identify strategies to achieve that goal.


Continuity

For effective digital transformation, this process must be continuous. This means that the conversion does not stop once it has started. Companies should plan for the next changes and get feedback on previous changes.

Employees often need time to process new information because most of the information received is quickly forgotten by the human brain. If the information is reviewed after a few days, it is much easier to retain. Therefore, when introducing digital products into an organization, training must be conducted and continually evaluated to ensure it is effective and maximizes its benefits.


Certainty

Leaders need to convey the message that digital transformation is inevitable and that the company will continue to thrive. This feeling of security and confidence will reduce threat anxiety in the brain. Communication and a sense of security will keep employees engaged in the change process, increasing the chances of success.


Consistency

There are theories that say that forming a new habit takes time. Change happens more easily when done consistently and in small doses. Leaders may want to make big changes to the company, but if they are focused only on achieving the end goal from the beginning and do not begin to implement these changes in small steps, the change process can be very difficult and painful.


Cooperation

Because the brain is a social organ, people can find comfort in interacting with others. Leaders can empower employees to create more work-oriented teams. In addition, it is necessary to involve them in the digital transformation process. Employees are more adaptable if they feel like they are the decision makers.


Confidence

Many people may feel uncomfortable in a turbulent environment when a company changes. They may doubt their competence, their abilities, etc. This can lead to increased anxiety and depression. In contrast to these feelings, leaders must ensure that their employees' self-esteem increases. They need to show that employees themselves control the processes, make choices about what tactics to use to achieve the goal, etc.


Communication

Communication is key when it comes to transformation. Employees want to feel like they have a voice and that their voice is understood. When making changes, it is necessary to create platforms where employees will have the opportunity to share their opinions and be part of the changes as much as possible. Leaders must show empathy during stressful times and connect with employees on an emotional level. This communication can take the form of surveys, feedback sessions, or one-on-one conversations.

 


How should companies make the technological changes that differentiate successful digital transformation from the rest?



True transformation requires new ways of working, in which leadership plays a critical role as it involves moving from an existing operating model to a new one. Therefore, it is extremely important to have leaders who are well-versed in modern technology.


It is recognized that the top management of a company is responsible for the major strategic decisions of the organization. Senior management involvement in driving digital transformation and innovation management is an important part of corporate commitment to a company's strategic efforts and is positively correlated with the successful implementation of digital initiatives. Involving executives in transformation is critical because their specialized knowledge, skills, and experience are typically the greatest and most important organizational resources. Existing experience reveals the role of the executive, especially in conditions of high uncertainty.


One of the most important roles of chief executive officers (CEOs) is to mobilize employees to contribute to the company's strategic goals. In recent years, the concept of transformational leadership has become relevant, which promotes intellectual stimulation, creates idealized influence, inspires motivation and stimulates innovative growth. Transformational leaders manage to initiate reforms in the organization at a strategic level, inspire and guide people towards these changes. These leaders create organizational culture by placing greater emphasis on a shared vision, which leads to shared values between the company and its employees. In an organizational culture with such shared values, achieving a common goal is achieved much more effectively than in companies where there is no agreed-upon vision. Organizational development researchers argue that transformational leaders play a key role and have a significant impact on organizational culture and values. The role of leaders in bringing about change in their companies is essential, which means that without leadership there can be no change. They play a decisive role in accelerating or slowing down organizational change, so their tasks during a change management strategy can be formulated as follows:


Develop an organizational culture that encourages innovation at all levels. Creating an organizational climate that supports innovation and change is an important step forward for companies. Human capital, which is unique to every organization, needs to be encouraged. Management must address two broad issues. First, leaders need to understand the impact of their role behavior on digital transformation stakeholders. The second factor is the ability of leaders to cope with high levels of uncertainty while simultaneously stimulating innovation.


Digital transformation is impossible without thinking outside the box. Attention to creativity and divergent thinking has been especially focused in the 21st century, when the development of information technology has revolutionized our lives, work processes, communication, behavior, etc. Today, pragmatic and straightforward decisions are no longer valued as highly as they were during the development of manufacturing. According to research, as people reach adulthood, divergent thinking decreases, so people begin to think routinely and repeat what they have learned. Therefore, in the workplace, it is the responsibility of leaders to encourage the generation of original ideas and creative thinking. Since employees are given the freedom to innovate their tasks, it leads to both motivation and enthusiasm to work consistently and achieve innovative goals. The only serious problem with this process occurs when it is not supported by a strong value system in the organization that can guide activities in accordance with the overall goals of the organization.


Set short-term goals and celebrate small victories. Successful and sustainable digital transformation takes time, which means the distant prospect of an end goal may not motivate employees. Therefore, leaders must create an environment conducive to early success and visible improvement. Small achievements like these make many people feel enthusiastic and motivate them to do better.


Making transformation a personal goal. People are generally more enthusiastic about something when they think it was their idea than when they are assigned to do it. Therefore, if managers care more about a particular initiative, employees perceive it as their own. However, when employees understand how digital transformation improves their work processes, it becomes clear that their contribution to achieving the transformation goal increases.


Monitoring progress is not only beneficial for all stakeholders involved in a digital transformation project, but is also critical to strategy development. Key performance indicators and transformation management indicators highlight strategy weaknesses. By understanding what works and what doesn't, leaders can adjust the plan.


Too often, senior management forgets that they are not the only role models influencing employees; Informal leaders in organizations may have less influence on the energy levels of their colleagues if they are excited about the change agenda. Regardless of their official title and status, attracting such people increases the likelihood of change success by 3.8 times.

Here are steps companies can take during transformation to increase their chances of success:


  1. Rethinking the workplace. Successful digital transformation requires both digitally savvy leaders and the human capital to drive digital transformation change. Of course, companies will have to invest to develop radically different skills and abilities among employees or to hire new talent, but without this, change is impossible. One of the most important steps for organizations is to develop clear working capital strategies that will help identify the digital skills and capabilities they currently have and will need to achieve their future goals.
  2. Renewing the organization's culture. As digital transformation requires new ways of working, as well as changes to the overall culture of an organization, employees must be able to work differently and keep up with the faster pace of business. The introduction of digital tools and renewal processes, as well as the development of a flexible operating model, will facilitate these changes.
  3. Changing old ways of communication. Good communication has always been a key success factor in traditional change efforts, and it is no less important in digital transformation. In a digital context, companies must use more creative channels to enable new, faster ways of working and faster changes in thinking and behavior that digital transformation requires. One shift is a shift from traditional channels that support only one-way communication (such as company-wide email) to more interactive platforms (such as internal social media) that open the door to open dialogue within the organization.







References:

Liu, D.Y., Chen, S.W., Chou, T.C. (2011) Resource fit in digital transformation: lessons learned

from the CBC Bank global e-banking project. Manag. Decis. 49(10), 1728–1742

Kraus S., Jones P., Kailer R. , Weinmann A., Chaparro-Banegas N., and Roig-Tierno N. (2021) Digital Transformation: An Overview of the Current State of the Art of Research

Benlian T. H., A., Matt, C., Wiesböck, F. (2016) Options for formulating a digital transformation strategy. MIS Q. Exec. 15(2), 123–139

Schuchmann, D., Seufert, S. (2015) Corporate learning in times of digital transformation: a conceptual framework and service portfolio for the learning function in banking organizations. Int. J. Adv. Corp. Learn. (iJAC) 8(1), 31–39

Kiel, Daniel & Arnold, Christian & Collisi, Matthias & Voigt, Kai-Ingo. (2016). The Impact of the Industrial Internet of Things on Established Business Models.

Dr. Linz, Carsten & Müller-Stewens, Günter & Zimmermann, Alexander. (2017). Radical Business Model Transformation: Gaining the Competitive Edge in a Disruptive World.

https://www.mckinsey.com/~/media/mckinsey/business%20functions/people%20and%20organizational%20performance/our%20insights/successful%20transformations/december%202021%20losing%20from%20day%20one/losing-from-day-one-why-even-successful-transformations-fall-short-vf.pdf

https://www.mckinsey.com/capabilities/mckinsey-digital/our-insights/digital-transformation-on-the-ceo-agenda 




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