DX Talk - Digital Transformation

What it takes to be a leader in a digital transformation organization

01/07/202412/04/2023 by DX Talk

“What makes a digital transformation organizational leader”. I’d like to talk about the second condition of a dedicated digital transformation organizational leader: acquiring and organizing talent to drive digital transformation (DX) success.

Common approaches and limitations of digital transformation organizational charting

The most common way for companies to drive DX is to create an organization of digitally literate employees. In this case, this tends to be members of the existing IT department. However, if you can’t find enough people internally, you may need to hire outside experts.

The importance of selecting a head of digital transformation and the role of external experts

The decision to hire an external expert is not an easy one, but it can be one of the surest ways to ensure the success of your DX. External experts should have a basic understanding of the IT environment and be experienced in projects that utilize key DX technologies such as AI, big data, cloud, IoT, etc. Of course, they should have at least 10 years of experience in their field.

Limitations of traditional organizational leaders and the need to gain expertise

In Korea, many mid-sized and large companies rotate their leaders to gain experience in different areas. For example, a leader who was in charge of business unit A may be in charge of business unit B as needed. In these companies, the head of the DX organization is likely to be a leader who has been successful in the existing organization. From a hiring decision maker’s perspective, there is a need to develop the next generation of executives, and they may feel that they are capable of performing the core tasks of DX because they have done so in a variety of organizations.

However, these leaders are clearly limited by their lack of expertise. Another option to overcome this is to bring in experts. This can be done by hiring a professional with experience in an IT company, but it’s important to make sure they have development experience. However, sometimes outside companies that don’t come from an IT background can get it wrong and hire the wrong people, especially if they don’t understand the business outside of IT. Choosing the head of a DX organization is never an easy decision.

Digital Transformation Organizational Leadership Challenges and Solutions

DX is one of the fastest-moving fields in the world, and its core technologies are subject to very rapid change, even in IT. What happens when you put DX in the hands of someone who is not familiar with this environment? Let’s look at a few aspects.

The first is if the DX practitioner is technically better than the director, i.e. the director is a non-technical person. In this case, the practitioner will have to focus on training to understand and convince the manager. However, the problem is that the practitioner may miss a critical execution time in the process of convincing the manager. If the manager is willing to learn and knows exactly what they don’t know, the situation can be better. In many cases, however, the director provides inappropriate feedback to the practitioner, which can end up confusing the DX direction.

The second is when both the DX lead and the practitioner lack specialized technical skills. In this case, it is difficult for anyone to take the initiative. The result is a waste of time and money that may end up going nowhere. In this case, enlisting the help of external experts may be a more realistic option. However, this has the limitation of not building in-house capabilities.

Build the ideal leadership for digital transformation success

Finally, there is the case of two organizations running in parallel. You may already have a dedicated IT department within your company. In this case, the IT organization may be lukewarm to the DX project, or there may be competition for the position. In this case, the head of the new DX organization may not have a role in the organization, or they may end up doing similar work to the existing IT organization. The result is a lack of originality in DX, which can lead to failure.

Develop strategic leadership to drive digital transformation

DX is one of the fastest-moving areas of IT, so it’s important that your DX leader is comfortable with change. If possible, hiring an external, proven expert is probably the smartest choice. But hiring externally is not enough. It’s also important to work with the existing organization, so it’s best to identify employees who enjoy change in the IT environment and have the ability to learn IT and put them in leadership roles. This way, with enough support from management, you can achieve good results in DX.

To summarize, DX success requires expertise on both the practitioner and leadership side. If you’re looking to build a new DX organization at your company, make sure to clearly explain the situation to management and emphasize the need for internal or external experts. This is the surest way to make DX a success. Executives should also keep this in mind.

The choice for digital transformation success: the expert organization for DX

01/07/202412/01/2023 by DX Talk

The need for and role of a dedicated digital transformation organization

‘The choice for digital transformation success: the expert organization for DX’. I’d like to talk about the first part of the talent acquisition and organizational structure to drive digital transformation (DX) success: creating a dedicated digital transformation organization.

If I had to define a digital transformation organization in one word, it would be a center of excellence for digital transformation within an enterprise. The reasons for having a separate organization of experts are the same whether you’re in IT or non-IT. It’s to quickly solve problems that require specialized expertise. The key to this is to have dedicated people working on projects, whether they’re pulled out of departments, hired separately, or part of a group of experts.

Distinction from traditional IT organizations and the importance of specialist organizations

The same reasoning applies to the creation of a new digital transformation organization, which is separate from the existing IT organization. This is to create a separate organization under the direct supervision of the CEO, and to establish a compensation and personnel evaluation system that matches the status of a professional organization. It may seem a bit excessive, but it is necessary to operate the organization separately from the existing organization, even if it is temporary.

Later, when the business is activated in earnest and additional employees are hired due to the implementation of digital transformation, the organization will enter an expansion phase. At that time, it may break the mold of a professional organization and decentralize into a business organization. The end goal is to have an organization that is aligned with the internal operations, but in the short term, a separate specialist organization is needed to accelerate digital transformation.

Strategies for improving digital capabilities across the company

How do you run an organization when you want to improve digital capabilities across your entire workforce? Even if it’s not about digital transformation, it’s about improving organizational culture. This is where a professional organization can be effective. Otherwise, it can have unintended consequences. For example, if a manufacturing company with factories wants to increase the digital competence of its employees, it usually selects veterans in their respective fields.

Then we bring them together and train them. You continue to invest in them until they reach the level you need. Once the digital skills of the veterans from each department have improved, they are brought back into the organization. They are now the center of their respective departments, acting as a focal point for dissemination training and new and evolving technologies or ways of working. In this way, the acquisition of specific, relatively accessible skills, or even simple training, can be scaled up to transform an entire organization.

Challenges and solutions for developing digital capabilities in Digital Transformation

However, when it comes to digital competence, which is what we’re talking about in DX, it’s not easy to succeed in this way. DX goes beyond the acquisition and dissemination of intellectual information and requires a more fundamental change in working practices and culture. What would happen if DX were practiced in this way? First, a group of veterans from each department would be assembled.

Then, as far as training and upskilling goes, it’s not much different than it was before. But when they want to go back to their original departments to evangelize, they can’t easily overcome the forces of inertia that dominate traditional organizations. Executives expect these veterans to come in and raise the overall capability of the organization, but it doesn’t happen as quickly as they think.

It takes time, but here’s what I recommend. Start by treating the specialist organization of veterans as if it were a completely different organization, investing in them and training them. Once they’ve reached a certain level of competency, you don’t bring them back to their current organization, but instead, you send them to work alongside the organization that needs to change. We also consolidate physical office space.

We don’t change their jobs, but we do bring them in to work alongside the expert organization so they can get a taste of what it’s like to work digitally. By the time they’ve gone through this process, they’ll have a similar level of understanding of the digital culture as the experts, and they won’t have as much trouble using the tools. Once they are able to understand and utilize DX to a certain extent, we send them back to their original location, and we place another organization next to the expert organization. In this way, you can slowly increase the digital capabilities of the entire organization, like getting your clothes wet in a drizzle.

DX strategy for large organizations: incremental change and reorganization

What if you have a large organization? What if you need to change more than 20 people at once, and you can’t move next to an expert organization due to physical space limitations? In this case, you can either divide the large organization into smaller units and operate as described above, or you can hire veterans from your existing on-site organization and train them in proportion to the size of the organization.

There are only so many people in the field that one person can deal with, so the absolute number of people should be proportional to the size of the organization. If that’s not possible, then you’ll need to invest time in changing the current organization by mobilizing all the members of the expert organization. Of course, we’re not recommending this. It’s better to start with a small, controllable group of people and work your way up.

Changing people, especially changing ways of working or culture, is the most difficult task for organizations. Simply adopting a given business model without changing the way a company works and its culture is unlikely to bring about fundamental change. If you’re constantly thinking about how to change the perceptions and behaviors of your employees, you’ll be able to come up with your own solutions, whether you choose the ones we’ve suggested or create new ones we haven’t mentioned.

The role and importance of Center of Excellence

The CoE is a team of experts with diverse backgrounds, education levels, and experience. Each expert has the highest level of expertise in their respective subject matter. While there are many experts in the marketplace, CoEs are different because they are armed with an entrepreneurial spirit and attitude. The CoE must have a complete understanding of the entire business value chain, know the customer’s expectations and the company’s available technical resources to properly align technology and market mechanisms.

It should also act as a hub for innovation and information exchange between sales, customers, and partners. Unlike hypothetical teams that are set up at the boundaries of departments and hinder efficiency, CoE teams are goal-oriented teams with one clear mission, vision, and strategy.

A CoE is a flexible and innovative organization that drives innovation. They understand that moving faster than their competitors is the only way to succeed. For them, speed and flexibility are paramount, and this success is only possible by selecting the best people.

When you’re about to embark on the most important and strategic part of your digital transformation, when you’re setting goals and planning for the future, when you’re painting your corporate vision, building a CoE team of top experts is a way to increase your chances of DX success. They will drive DX as a team with stronger motivation, focus, and clarity of purpose.

Acquire and organize talent to drive digital transformation success

01/07/202411/30/2023 by DX Talk

Let’s take a look at acquire and organize talent to drive digital transformation success, because as we’ve said before, once there’s a consensus that digital transformation (DX) is essential for your company’s future growth and competitiveness, the next step is execution. This is the second people and organization part of Digital Transformation: Changing Organizational Habits. You can find more information in this book.

1. Create a dedicated digital transformation organization

It is important to establish a dedicated organization to effectively manage DX. This organization should have the following characteristics

1.1. Expertise-driven organization

A dedicated DX organization should be comprised of people with the specialized skills and capabilities required for digital transformation. They should have not only technical knowledge, but also the ability to manage change and think strategically.

2. Talent acquisition strategy

Talent acquisition for digital transformation is accomplished in the following ways

2.1. What it takes to be a leader in a digital transformation organization

The most important person in a dedicated digital transformation organization is the leader who will lead it. How should you choose a leader for your DX organization? You can choose an experienced leader from the outside, or you can choose a leader from within who has a strong understanding and curiosity about digital.

2.2. Cultivate internal talent

Identify and nurture talent among existing employees who want to learn digital skills. This allows you to build your organization’s digital capabilities internally.

2.3. Bring in external talent

Bring in experts or experienced talent from outside the digital space. They can bring new perspectives and skills to the organization to accelerate digital transformation. Other ways to bring in talent from the outside include M&A, joint ventures (JVs), and team-based hiring.

3. Outsourcing caveats

Some DX tasks can be outsourced to external specialized companies. However, you should be aware of the following

3.1. Set clear goals

You need to set clear goals and expectations for your outsourcer – this is the baseline for effective work.

3.2. Communication and collaboration

Ongoing communication and collaboration with your outsourcer is critical. You should have regular meetings and feedback to coordinate the direction of the project and resolve issues quickly.

4. Problems with traditional IT taking on DX responsibilities

If your digital transformation (DX) efforts are being driven by your traditional IT department, you may face the following challenges:

4.1. Lack of a strategic approach

While IT is often focused on technical fixes, DX requires a strategic approach that goes beyond solving technical problems to transforming business models and improving customer experience.

4.2. Resource limitations

Traditional IT departments devote a lot of resources to day-to-day IT management and maintenance tasks, which can distract from the resources and attention needed for DX projects.

4.3. Clashing organizational cultures

Conflicts can arise between IT’s traditional organizational culture and the innovative and flexible culture that DX requires. This can be a barrier to driving change.

5. Treatment of the DX workforce

DX talent should be treated in line with market standards, for the following reasons

5.1. Recognize expertise

DX professionals have a high level of skill and knowledge, which should be recognized and rewarded appropriately.

5.2. Retain top talent

Competitive treatment is key to attracting and retaining top talent. This will greatly benefit your organization’s digital transformation in the long run.

6. Organizational form: As a complete organization

It is desirable for a DX organization to have a complete structure. This is important for the following reasons

6.1. Flexibility and efficiency

A lean organization enables fast decision-making and flexible work, which helps you respond quickly to changing market conditions.

6.2. Achieve clear goals

By having each team work independently with clear objectives, you’ll be able to produce effective results.

7. Competencies of members of the DX organization

When building a digital transformation organization, you’ll need the following member competencies:

7.1. Innovative thinking

DX projects require a creative and innovative approach. Members need the ability to think outside the box and generate new ideas.

7.2. Technical expertise

You will need a deep understanding and specialized knowledge of the latest digital technologies. This is to effectively manage the technical aspects of DX projects.

7.3. Understand your business

The ability to understand how digital technologies can contribute to business goals is critical. This creates a link between technology and business goals.

7.4. Communication skills

Members must have the communication skills to effectively communicate and collaborate with various departments, which is critical to facilitating change throughout the organization.

Specific roles in a professional organization that are based on these competencies include the following examples Planners, PMs, POs, developers, designers (UI, UX, GUI), DX strategic planning, etc. will be explained in detail in specific articles.

We’ve covered the talent and organizational structure needed to successfully drive digital transformation. The right dedicated organization, the right talent acquisition strategy, and efficient organizational management are key factors for the success of digital transformation. With this approach, companies can effectively overcome the challenges of the digital era and achieve sustainable growth. For a more in-depth story, check out the specific linking articles in each table of contents.