Changes in the business model and cultural transformation usually begin with a change in thinking. This happened at Ekol Ukraine: the education of its Commercial Director Oleksiy Severyn in the Executive MBA program at kmbs triggered a chain reaction. Over several years, the organization completely transformed its work logic, allowing it to grow by up to 25% per year in a stagnating market and become the most successful branch among 15 European Ekol branches. Oleksiy shared how this happened.

Vision and Product

Seven years ago, we were a classic outsourcing company that knew how to manage existing resources well. Our main client was a logistics company.

At kmbs, I studied how to form vision, mission, values, strategy, systems thinking, business system modeling, and much more. We not only implemented all this but also embedded it in our internal philosophy.

Gradually, we came to understand that we can create greater value, and not only for the logistics company. The boundaries of our system became wider. We no longer see ourselves only in the logistics business. Now we are a solutions provider, offering clients the opportunity to scale their business and grow steadily. We do this by providing logistics services.

Logistics is the core of our product, its "hard" part. But that's not all: we can provide solutions throughout the supply chain. We work from the manufacturer to the store shelf. By outsourcing part of the work to us as a single provider, the client can significantly increase business efficiency and competitive advantage.

Every product, traveling through the supply chain, goes through certain stages (transportation, customs clearance, warehousing, etc.). At the junctions between them, "islands of inefficiency" arise. If different contractors work at each stage, problems accumulate. A solution from a single provider allows you to eliminate "islands of inefficiency." Thus, the wider the boundaries of our product, the more valuable we are to the client.

We are also actively building an ecosystem. It already exists now, but it is not formalized, and we want to involve more players in it. They will help us "cover" those competencies that we do not possess and do not see the point in developing ourselves. For example, only 7-8% of deliveries are made with our own transport. The rest are performed by partners.

Challenges and Solutions

Our sector is living in times of resource scarcity. In our company, there are about 900 employees, we offer a salary higher than the market average, yet we keenly feel the shortage of people.

The second shortage is investments. Ukraine is not currently a priority direction for investment. This affects the logistics infrastructure: for example, there is a catastrophic shortage of warehouse space in Kyiv.

Another observation about our market: large players are getting bigger, while the weak are weakening. This applies to logistics providers, retail, and distributors. It would seem that the clients of smaller logistics companies should move to larger ones, but the lack of resources hinders this.

The result is that we see a high demand for our product, but we lack the resources to meet it: transport, people, premises. We have a vision, we understand the client and the product, but the external context limits us.

All this confirms our thesis that an ecosystem needs to be created. After all, partners will help solve the problem of a shortage of our own resources. We already have experience using partners' warehouses (including former competitors) for our clients' cargo. Here, our task is to effectively manage someone else's resource.

In the past, if a competitor was doing poorly, it was beneficial for the company. But now we are interested in our competitor-partners developing. Moreover, we are ready to train and develop them ourselves. After all, strengthening their product will enhance the value we create together.

In the ecosystem, competition may already be for partners. For example, several large companies, lacking vehicles, may compete for a transport owner. To solve this problem, you can offer him additional privileges: for example, share a fuel discount that we have. Cheaper fuel for the vehicle owner will mean increased profitability. You can jointly sign a contract with an insurance company (it will be beneficial for him), offer him help with tax document processing, assist in arranging leasing on convenient terms, etc. Some of these steps we have already implemented, and we are currently working on the rest.

Today, it is more important to properly manage relationships with partners than to own a large number of assets, because building and developing non-core competencies is long and expensive, and the context changes too quickly, and the component that determines business efficiency migrates. Therefore, the company needs people who will engage in partner development, and they are already starting to appear with us.

Resistance and Results

In building an ecosystem, there is a principle – to receive, you need to start giving. Many companies that could join the ecosystem are quite closed. You need to communicate with them, convey the benefits of working in the ecosystem.

You also need to work with colleagues within the company because not everyone understands why we need such a vision. Fortunately, our CEO and the core leadership team share a common view. Although not all our leaders studied at kmbs, I shared the knowledge I gained with them, and they see great value in the ecosystem approach. One of my roles in the company is also as a catalyst for transformational changes.

The best way to convince colleagues is through the first results when we launch a series of projects together with yesterday's competitors. For example, one stage of the logistics process is customs clearance of goods. The company has a department that handles this, but we understand that our qualification is insufficient for some clients.

For instance, one of our main clients has over 170 suppliers in Europe, but due to their business model, they buy small batches from them. Our responsibility in this cooperation is communication with all suppliers. Our client only places orders, and when a notification of readiness arrives, our work begins. We have to consolidate small batches in warehouses in Europe, deliver them to Ukraine, clear the goods on the way, and then bring them to the store. All this needs to be done as quickly as possible.

In the customs clearance part, we turned to former competitors (now partners) because we understood that this is their key competence. We conveyed to them the idea of the need to open up for a stronger joint offer for the client – and they agreed.

Interestingly, we expected resistance from the client, but there was none. Probably because we were able to show the value that cooperation with a competitor provides – a significant reduction in delivery times and an increase in the quality of document processing. This allows our client to receive goods earlier and, accordingly, sell them at full price longer before the sale season begins.

Creating an ecosystem is impossible without trust. If it is absent, there will be mutual suspicions, and partnership will not happen. Therefore, it is important to be imbued with trust from the start. This is exactly what happened with this former competitor.

Changes in Understanding the Client

In accordance with the change in vision, our client lineup also changed. Previously, the main client was a logistics company. Now we have divided this role into three components: first, a logistics company in the classical sense of the word, second, a supply chain architect (they have different role needs: the architect builds the system, while the logistics company works with an already finished structure), third, an operations director (this is a transitional position between the architect and the logistics company).

Now our main client is the one who sees logistics in the supply chain as a driver of scaling and development. Based on this definition, our client is the CEOs of companies (or the owner if they manage the business themselves), who are focused on strategic partnership and share our values. For example, they are open, because for us openness is a necessary condition for development. Our dialogue with them always begins with strategy.

We also realized that if we do not take into account all the roles in the client lineup, do not think through a value proposition for each of them, we will not be able to reach the main client – the CEO or owner. After all, to entrust us with part of their supply chain, they need to "mature": to look at their business differently, to see that their main competence is not logistics, but something else.

Therefore, a role like "innovator" appeared in our client lineup – the one who conveys the value of innovations within the company. These can be different people, for example, a logistics specialist, a financier, a commercial person, etc. The main thing is that this is someone who understands: the business model can develop through the implementation of innovations. And conveys this to the CEO.

The role need of the "innovator" is to be heard, this is how they realize themselves. These people think critically and unconventionally. Maybe they won't personally engage in the implementation of innovations, but they can push the business to go in this direction. Thanks to working with "innovators," we shortened the path to the main client.

By the way, the formulation of these roles was prompted by communication with my mentee within the kmbs mentoring program. Mentorship is always a two-way street, so insights happen not only for the mentee but also for the mentor.

Collaboration at Different Levels

Often, collaboration with us means a client restructuring their business model and changing their culture. For example, they had their own warehouse. This means the presence of a production culture, where subjectivity is low. This culture often conflicts with the culture of marketing and sales departments.

If the company outsources the warehouse logistics function to us, it can focus on forming a unified culture that aligns with the owner's values. It turns out that we not only help change our clients' business models but also participate in transforming their organizational culture.

Understanding this, we started having conversations with clients: asking what changes have occurred in their companies, how we influenced this. And we see confirmation of our hypotheses.

Transformation of Our Own Culture

Our culture has changed significantly over the past six years. Now we pay more attention to "soft" rather than "hard" things when selecting employees. We believe it is easier to train a person who matches our values than to try to change the essence of someone who is already a great specialist but doesn't fit in with us.

We have repeatedly encountered situations where a good specialist did not fit into our culture. For a long time, this was a dilemma for me, but now it is no longer. If we see a value mismatch, we do not hire the person.

We are not yet a holacracy, but it seems we are moving in this direction. Already, our management style is democratic-liberal. We do not force people to implement ideas; they must mature themselves. For example, I proposed creating a small corporate library with 25 books. And, together with our client, the publishing house "Nash Format," we did it. Employees read the books, but they don't bring new ones. Someone suggested appointing a person responsible for the library, but I am sure: it won't work for us. If a person does not live the idea, nothing good will come of it. It means the time for this initiative has not yet come.

We believe that the world has become more complex now. Breakthrough products emerge at the intersection of several disciplines. Strong companies appear by forming an organizational culture from several dimensions.

We have outlined three dimensions for ourselves. The first is strong process culture, procedurality, which ensures the efficiency of our processes at the core of the product. The second we call smart organization, thoughtfulness, which allows finding the best solutions. This mainly concerns the soft component of our product. And the third is the dimension of partnership and client-centricity.

There is an opinion that development is possible at the boundary between order and chaos. Chaos is not the antonym of order; it is an essence that contains all orders. Chaos is opportunities for development. This is how we see our culture; the main thing is to balance the three mentioned dimensions.

We are interested in mature people, subjects who want to realize themselves, coming to us. And our task will be to create appropriate conditions for them, to become a platform for their development. Interaction with mature individuals is more like coaching, mentoring, rather than total control and instructions. I think the management style "I know better than everyone" is already a thing of the past. Now facilitative leadership is relevant, where the role of the team is of primary importance.

Of course, this applies to the office, not warehouses – because there is their own culture, and holacratic logic would be destructive for it. Therefore, we coexist with such different cultural dimensions, and we maintain this balance. This allows us to convey value to the client, create a good product, and attract partners to the ecosystem.

Business and Meanings

For us, business is not only about money; first of all, it is about creating meanings. We want as many people in the company as possible to understand this. Therefore, we are now implementing an interesting project called "Cultural Code" together with another kmbs graduate, Andriy Melnyk. The essence of this project is to form the cultural code of the team and a common semantic core. The result of the project we see is the definition of key concepts that are close to us in terms of values, the formation of metaphors for these concepts, and stories that illustrate them. After all, the team may understand different contexts under one concept. For example, for some, a leader is a person who inspires, for others – a "red" commander.

Therefore, we will conduct a series of meetings where we will read business and philosophical texts, watch videos, reflect – to find our own metaphors and stories for these concepts, to form a common semantic core. We plan that 15 of our people who influence changes will participate in these discussions. And then they will be able to communicate more easily with the rest of the staff and convey to them the things that are important to us.

In fact, this is the formation of a "common language" that we will all speak. After all, the company is growing rapidly now, many new people are appearing. We do not want to have a large value gap and strive to ensure that "random" employees, whose values do not match ours, do not join us.

What's Next?

We are now forming the vision-2030. We are conducting a series of workshops, thinking about who we will be, where the boundaries of our system and supersystem are. We see ourselves as an omnichannel and technological platform of the supply chain, a key player in the national logistics ecosystem, an accelerator of the Ukrainian economy. This will happen through partnerships with domestic companies and the construction of a business ecosystem.

In the future, we plan to become an integrator of the supply chain and continue moving towards automation and digitalization. It is not yet economically profitable, but due to the lack of human resources, it may be very promising. We believe that automation can become a driver of exponential growth for us. Therefore, we are now engaged in digitalization and involving ecosystem partners in this process.

We also want to become a subject for the local community. Our office and flagship warehouse are located outside Kyiv, but we are registered in the capital, and we pay taxes to the Kyiv budget. It turns out that we do not give anything back to the community, although we have such a desire. We would like to help it develop because if more people live here, it will be easier for us to find employees.

We are now communicating with local mayors and choosing where to re-register the company. Our taxes can double the village's budget. But our task is to choose a settlement whose head has a great idea. The mayor must be our like-minded person and share our values. We do not just want to give money away, but we believe that business can be a driver of serious changes.

Personal Development

Although I went to kmbs for practical knowledge, I now understand that the greatest value for me was the "soft" component of the training, that is, the change in thinking. After all, it is what allows us to see a little more or notice what we did not notice before, start taking into account the external context and understand how we influence it, think about the meanings we create. I started thinking about all these things after kmbs, and I value them and the personal changes they caused even more than the business knowledge I gained.

During my studies, I came to understand many important things. One of them is that you need not only to join the meanings that someone creates but also to create meanings for others yourself.

This is exactly what is happening in my life now. I already have several mentees within the company for whom I act as a mentor.

My leadership style has also changed. After all, when your boundaries expand, you see more and understand: you can give people freedom, they will cope. And the stronger the people around us are, the greater the ambitions of the core group become, and, accordingly, the wider the boundaries of our system.

Oleksiy Severyn: "Today it is more important to properly manage relationships with partners than to own a large number of assets"