DIGITAL TRANSFORMATION STRATEGY DYNAMIC FOR UTILITY SMART GRIDS: SYSTEM DYNAMICS MODELLING IN UNTANGLING COMPLEXITY

This paper explores System Dynamics Modeling (SDM) as a tool for addressing the complexities of large-scale systems, focusing on the digital transformation (DT) of the electricity utility industry and the rise of smart grids. While DT is widely recognized for its strategic significance, current research lacks methodologies to help business strategists manage its complexity over time. This paper fills that gap by demonstrating how SDM offers a structured approach to strategy design and long-term planning. Smart grids, driven by technological innovation and shifting consumer needs, pose significant challenges for policymakers and utility managers. Their interconnected nature, characterized by feedback loops, creates a socio-technical system that requires careful management. However, SDM provides a beacon of hope, helping stakeholders navigate this complexity by allowing them to simulate system behaviors, test interventions, and design strategies to address key issues such as grid stability, energy management, and consumer engagement. This research introduces a system dynamics model for utility smart grids, breaking the system into twelve submodels. This decomposition method not only makes large-scale systems more manageable but also fosters a collaborative modeling approach. By simulating policy interventions, stakeholders gain critical insights to support informed decision-making in innovative grid development. This approach emphasizes the shared responsibility in managing large-scale systems, promoting a collaborative and inclusive process. The study highlights that SDM and decomposition techniques are both academic and practical tools for improving complex systems' strategic planning and policy design. The paper concludes by identifying future research opportunities in strategic modeling using SDM, particularly in longitudinal studies in utilities.