DX Talk

Adopt a startup process

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Adopt a startup process

Adopt a startup process. This fifth installment of the Digital Transformation Process: A Key Guide to Success explores how startup strategies like lean startup can be applied in large enterprises. It covers the challenges of adopting and executing lean startup, design thinking, and agile methodologies, as well as considerations for digital transformation (Industry 4.0, DT, DX, digital transformation) in large organizations.

Lean Startup: Key Strategies for Entrepreneurship

The concept of a “lean startup” was once much talked about in the enterprise market. Lean Startup is a management strategy created by startup entrepreneur Eric Ries based on his own experiences with successful and unsuccessful startups. It’s still considered a valid rapid execution approach and an agile methodology.

Startups with limited capital and resources can benefit from practicing Lean Startup by quickly gathering market feedback and quickly fixing identified problems rather than spending all their time and resources on a complete product. Lean startups release a minimum viable product (MVP) based on a product idea and business model hypothesis, gauge audience reaction, and either fix the problem or pivot. It’s a way for startup founders to keep trying new things while lowering their risk of failure.

Applying lean startups in large organizations

As business uncertainty increases and growth stagnates, even large companies are looking for ways to create innovative products and services, and lean startups are one of them. In the past, Six Sigma, Reengineering, and other IT systems have been popular, and creativity training has gained traction with methodologies such as Brainstorming and Triz. Then, as digital penetrated all industries, lean startup methodologies gained traction. Especially in the context of launching a new business, it was crucial to empower them with an entrepreneurial spirit.

Adopt a startup process
Adopt a startup process

Different methodologies for lean startups

Lean Startup isn’t the only methodology with a similar concept. IDEO, a design consulting firm, has proposed Design Thinking, which is similar to Lean Startup in that new ideas are rapidly vetted by multiple members and continuously evolved. In IT development, Agile is a popular alternative to the traditional waterfall methodology, where products are created, deployed, and validated quickly to find and fix problems. (Agile is a development transformation strategy, and lean is a management transformation strategy.)

The American professor Clayton M. Christensen’s concept of “disruptive innovation” also influenced the creation of these methodologies. Regardless of the methodology you choose, they all have one goal in mind. They’re all about doing things differently in response to an uncertain future. The key is to start small, get to market quickly, validate and evolve, and eventually innovate.

DXs should also consider using these methodologies to change their business models, launch new businesses, or digitize existing products and services to create new growth engines. However, the problem is that if you don’t have hands-on experience in applying these methodologies, you’ll end up going through the motions and missing the point.

Lean startup methodology adoption and execution challenges

Let’s say you’re running a DX with a lean startup methodology. Even if the business model hypothesis is well agreed upon, there may be disagreements or conflicts of interest between organizations about releasing a minimum functional product. From a startup perspective, there is no brand and the process of planning, designing, developing, and operating can only be done by a small number of people, so product validation and testing can be streamlined. It’s inevitably faster.

However, if you are not a startup, but a large company, and you own a very famous brand, the idea of releasing a minimum functional product that is not even a finished product in your eyes is not an easy decision. There are a lot of arguments against it, from the logic that it could undermine the existing brand value to the fact that customer complaints will inevitably increase the cost of handling after-sales service in the call center. Of course, all of these are true in a normal product launch process, but if you don’t understand that the essence of lean startup is ‘hypothesis testing’, then DX with this method will be a lost cause.

Beyond branding issues, there are also problems with the launch phase. From a traditional product launch perspective, a minimum viable product looks really bad. Naturally, it can’t even pass internal quality testing standards. And it’s constantly slowing down. This complexity is an inevitable part of the transition from manufacturing hardware to a disparate business like releasing software or services. Transitioning to digital is an activity that should take advantage of digital as a means to an end. The beauty of digital is that products and services are already in use by customers and can be easily modified through a process called patching. This is a difficult concept to grasp for companies centered around hardware or physical products.

Digital transformation in large enterprises and the application of lean startups

How would the quality department of a Korean car company understand that the software in a Tesla car is patched and upgraded once a week, improving the performance of the product? By their standards, they probably wouldn’t even be able to launch the car. Nowadays, there are so many advances in artificial intelligence that it’s hard to say what the right answer is for quality testing. The basic logic of A.I. is not that if you input A, you will get B. It is a kind of black box, and it will produce great results according to the learning model. Therefore, the question of how to verify quality in such cases is always an issue.

The importance of roles and responsibilities in the execution organization

In the end, there is no shortcut to solving these problems other than having the right mix of experienced external resources. It is imperative to have experienced people in the execution team and to ensure that members of the common or support organization have a high level of understanding with minimal training. If that is not possible, you may need to partner with an experienced professional organization to address these issues.

If you’re worried about diminishing the value of your existing brand with a minimalistic product, you may want to consider launching it under a separate brand or as a private service without the company name. There are plenty of examples of this already in the market. By not using a brand, you can give the impression that you’re working in the same environment as a real startup and get a more objective market assessment.

In the end, it’s up to the DX organization to decide on the number and methodology of the different cases described above. If you follow traditional processes, you’re likely to be up to speed internally but slow to collaborate with other departments. It’s important to remember that empowerment and accountability go beyond the core of execution to unite all members of the chain of business model or new product testing and centralize all decision-making.

Process visibility over process replacement

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Process visibility over process replacement

Process visibility rather than process replacement. The fourth installment of Digital Transformation Processes: A Key Guide to Success explores the importance of process innovation and digital transformation (DX, DT, Industry 4.0, digital transformation), covering examples and challenges of real-world process improvement. Emphasizes new approaches to process visualization and the importance of process digitization.

The importance of process transformation and how to approach it

Along with business strategy, process transformation has long been a major project for consulting firms. Process transformation involves creating optimal processes by drastically eliminating redundant and unnecessary work in various value chains, such as sales, marketing, supply chain, purchasing, logistics, production, and manufacturing, and introducing customer-centric ways of doing things so that better products can be made faster and cheaper.

In general, it’s important to keep the following in mind when driving process innovation Start from scratch, without thinking about the existing processes and systems; define the existing processes as a legacy and look at them from an outside perspective; and create and implement an organizational change management plan. This means training employees to adapt and buy into the new system. It’s not unlike applying a DX mission by creating a DX execution organization and engaging with different departments within the company.

The Challenge of Process Transformation and the Opportunity of DX

One thing we shouldn’t forget is that many process transformation challenges are not easy to succeed at. Most often, we diagnose a process and come up with meaningful conclusions about how it should be changed. However, when it comes to execution, the new processes are often ignored due to unfamiliarity and the old ways of doing things are reverted to. In the process, we add one exception after another to make things easier, and we get farther and farther away from true process innovation.

Process visibility over process replacement

If you’ve been through this before, a DX project is an opportunity to do process transformation right. Processes that have been left untouched for the sake of expediency or avoidance of responsibility by some incumbent departments.

Real-world examples and challenges of process improvement

Let’s take a look at some examples of unreasonable processes. First is the process of individual employees applying for and approving time off. While some companies have moved to self-approval, many still rely on team leaders to approve team members’ vacation requests. At its core, personal time off is a matter of self-determination within the time allowed, and there’s no need to go to the team leader for approval.

If the purpose of the approval process is to check the schedule of the team leader or manager, a separate schedule management system can be used to check and adjust the schedule. In this case, the schedule management system becomes an element of the DX project. Let’s also look at the payment process for expenses. In the U.S., individuals are given a lot of authority and the organization is basically based on trust.

So if there is no agreement on the expense, you just notify the people involved via email and if there is no feedback that it’s a problem, you just do it. However, in the case of Korea, we basically derive a process based on the premise that individuals can misuse it, so the approval process takes quite a long time.

The processes of ‘approval’ and ‘consensus’ can also be said to be a case where they are only separated by name according to the roles and positions in the organization, and they are misused to hold on to organizational influence or to avoid responsibility. The definition of this will vary from organization to organization, but there are certainly ways to reduce the time it takes to approve processes. The final example is related to budget increases. In larger organizations, each department is given a business budget and an expense budget at the beginning of the year to guide their execution.

This is important from a financial management perspective, as it ensures that every organization stays within its budget for the year. However, the problem arises when a particular account goes under budget. Since budget limits for each account are determined at the beginning of the year, when an account runs out of money, it’s necessary to divert money from other accounts, which requires reporting and approval of the diverted money. This is the same process we’ve been doing in our organization for a long time without realizing it.

Process visualization: a new approach

So how can we change these processes with DX? The bottom line is that instead of trying to change the processes, I would recommend focusing on “process visualization.” Process visualization is about making the way you’ve been working implicitly tangible, and creating a kind of visualization of how much work goes into each process and how much time it actually takes to do that work. In other words, making the process visible at a glance, like a billboard, just as you would if you created a dashboard for DX management. To do this, you should start by digitizing any files that aren’t already digitized and are being managed manually.

The importance of process digitalization and data analytics

Once a process is digitized, it becomes easier to analyze the time spent on it from a data analytics perspective. You can see how often a process occurs, how long it takes, and how it affects productivity. This is not unlike a DX project.

What to watch out for when adopting digital tools

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What to watch out for when adopting digital tools

What to watch out for when adopting digital tools. The third installment of the Digital Transformation Process: Keys to Success guide explores key factors to consider when adopting digital tools for digital transformation (DX, DT, Industry 4.0, digital transformation). Topics covered include IT project management, budget planning, the challenges of SaaS adoption, security management, employee training, and the role of the executive team. Provides a practical guide to successfully introducing and utilizing digital tools.

Intrinsic considerations for adopting digital tools

We’ve talked about adopting digital tools as a first step to improving your employees’ digital capabilities. But does simply introducing digital tools instantly build digital skills? Not necessarily. In most cases, IT departments within organizations lead digital tool adoption projects. Traditionally, their primary goal is to deliver on time and at a given cost. As a result, it’s easy to lose sight of the post-implementation impact, adoption, and change management. But can IT be held accountable for these qualitative outcomes? It’s hard to say. It could be corporate strategy, corporate culture, or HR. But if it’s not an initiative of the IT department itself, but rather a request from the CEO or another organization? It’s just a mechanical project.

The importance of project management and cross-functional collaboration

To address these challenges, you need to take a different perspective. Treat digital tool adoption like any other IT project and don’t just look at it as a cost and schedule. The value it will bring to the company and how employees will use it must be explained and addressed within the project scope. This requires a process of employee buy-in as part of the project introduction. And if necessary, involve other departments outside of IT.

What to watch out for when adopting digital tools

Understanding and budgeting for subscription services

Adopting digital tools inherently requires an investment of money. Subscription services, primarily in the form of software as a service (SaaS), dominate. Google Workspace, Microsoft 365/Teams, and Slack are all examples of enterprise subscription services. For subscription services, it is common to pay a monthly fee. Therefore, unlike traditional SI projects, the cost is centered on operating expenses (OPEX) rather than capital expenditures (CAPEX). If you need to create a new budget for your project, you need to fully understand these differences and prepare a plan.

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The challenges of SaaS adoption and the impact of enterprise size

In the case of subscription services, it is difficult to customize them to suit your company because they are already standardized and used by companies. Until now, many companies have optimized their requirements in the form of SI to carry out IT projects. However, when using a SaaS subscription service, you have to use the service provider’s servers, let alone change the functionality. These differences make the whole process of adopting SaaS digital tools challenging. If your company is small and hasn’t yet established its own IT systems and infrastructure, you can get started without too much difficulty, but as soon as your company exceeds 100 employees, the complexity of stakeholders increases exponentially.

The importance of security and privacy

The first step is to integrate with your existing legacy systems for a seamless service. For example, automatically integrating a company’s organization chart and employee information. In most cases, the SaaS service provider does not do this directly, so the adopting company needs to integrate it separately according to the SaaS service’s specifications.

This kind of integration is easy. The hard part is security. If you’re a security-conscious company, you’ll have to go through a lot more trial and error. There are a variety of security issues that come with new tools, from document security to data leaks within the organization. Due to the nature of SaaS, these services don’t exist on your internal network, but on an external network. This means that all intellectual property created within the enterprise is stored in external storage.

This fundamental change in environment needs to be well explained and convinced to other stakeholders in the organization. While adequate security and internal controls are necessary, poor decision-making can prevent organizations from fully leveraging the benefits of SaaS and reduce the likelihood of project success. This means that the essence of DX can get lost in the shuffle of unreasonable requirements. So, whenever this happens, you should never forget to ask yourself, “Why do we want to introduce digital tools into our company?”.

Practical direction and employee training on leveraging digital tools

Adopting digital tools is all about changing the way you work. The changes that digital tools bring are bigger than you might think. Everything that was previously done in analog form or based on personal experience becomes digital and standardized. The centralization of all work processes within a company, making them available as corporate assets, is the hidden goal behind the adoption of digital tools.

As mentioned earlier, you need to provide your employees with guidelines for using digital tools in order to inspire change in their daily work. If your company’s culture is not accustomed to the digital environment, you should also consider training your employees. This shouldn’t be a one-time thing, but an ongoing process to ensure that working digitally is internalized.

Companies are already creating and distributing detailed workplace guidelines to employees even before they start a DX project, such as how emails should be formatted (subject line, content, etc.) or how files should be named when creating work files. If you’re using messengers, you might want to tell them how to distinguish between chats that need to be kept private and those that don’t, or that when editing documents in the cloud, they should always create and edit files in the cloud, not on their personal PCs. You can also include guidelines for forwarding files to links in the cloud rather than physically attaching them in emails or chat conversations.

Guidelines and training can also guide employees on how to create team spaces that align with the company’s organizational chart, how to operate channels when new project teams are created, and when to delete used online collaboration spaces at the end of a project. And while it would be great if all employees were proficient once trained, that’s not always the case, so it’s important to keep checking in with employees to see how well they’re utilizing digital tools, and to conduct internal assessments of utilization and retraining after a certain point, so that they can continue to build on their skills.

Leadership roles and strategic use of digital tools

More importantly, however, is the change in management and executives. The fastest way to spread digital tools is to start at the top. Of course, it’s harder for executives to adapt to an unfamiliar environment than it is for employees, but if you want to accelerate DX, their example is critical. For example, take meeting minutes directly in the cloud and share them with employees.

When creating slides for reports, I instruct them to communicate their opinions in the cloud, and I also check the reports written by workers and give them feedback with comments. Project schedules are also discussed in the project management tool, not in Excel tables or reports. Weekly reports are also discussed in the wiki or documentation in the collaboration space, not in a separate document. If executives or executives take the initiative to utilize digital tools, employees are bound to feel more nervous and try to use them themselves. That’s why we need to train executives separately.

The key is not to explain how to use the tools or what the guidelines are, but to focus on why they are using digital tools and what the business benefits are. It should be done in a way that resonates with them. It’s not about explaining that the times are changing and we should follow suit, it’s about convincing them that it’s a necessary step to get results. Explain how working in the cloud, giving and receiving feedback along the way, and having all information centrally managed will help improve productivity from a management perspective, not a functional or technology perspective.

And if you can explain how it helps manage the risk of employee transition and turnover, you’ll get a lot of buy-in. If you can explain how you’re sending files back and forth via physical email, but you can’t find the email, and you have to call back and ask them to send you the file, and even after the final report is created, it’s “final,” “final,” “final,” “final,” and so on, you’re going to get a lot of buy-in.

Don’t forget that digital tools are the first step in improving your employees’ digital capabilities, so don’t just focus on introducing them, but also on how to use them, what they can do for you, and getting buy-in from your employees, including management, is a critical approach to your DX journey.