Digital Transformation - Digital Transformation

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.

Questions about how and in what order to do Digital Transformation

01/07/202411/27/2023 by DX Talk

Questions about how and in what order to do Digital Transformation? That’s what we’re going to talk about in this article, which is the fourth part of Digital Transformation Strategy: The Essential Guide to Enterprise Success.

This article emphasizes the importance of digital transformation (DX), highlighting that it is primarily about changing the way work is done rather than focusing solely on business model changes. It emphasizes that technology plays a role as an enabler but organizational readiness and preparation are crucial. The article uses the example of Blockbuster and Netflix to illustrate the need for adequate preparation and organizational change for successful DX.

DX’s scope includes innovating through digital capabilities and tools, transforming existing core products or services into digital forms, and even introducing entirely new business models. It also involves the transformation of work processes. The article underscores personalization as a key element of DX.

The article discusses the evolution of DX over time, from the early days of building digital infrastructure during the dot-com era to the expansion of digital foundations in the mobile era. It highlights technologies like the Internet of Things, cloud computing, artificial intelligence, and big data as critical in the current phase of DX.

In terms of prioritizing DX efforts, it suggests that defining and specifying the problems DX aims to address is crucial before diving into the technological aspects. The article concludes by emphasizing that DX will continue to be relevant across various organizational levels, with a focus on people, organizations, and processes being essential considerations.
– Summarized by ChatGPT

The Heart of DX: Changing the Way We Work and Transforming Your Business

Most of the DX success stories in the market have been focused on business model transformation. This focus on business models makes us think that DX is far from something we can do today. But as I’ve emphasized before, DX is about changing the way we work, and then transforming the business around it. Technology is just a stepping stone to unlock the possibilities, so it’s a journey where it’s clear who has to be the hero. DX doesn’t just happen because a CEO wakes up one day and says, “From now on, we’re going digital.” It’s not something that happens naturally, even in digitally savvy companies.

The challenges of digital transformation and the importance of changing your company’s culture

Evolving a traditional business is hard enough, but transforming it digitally requires significant investment and effort, and there’s no guarantee of success. Transforming a company is not a matter of copying other companies. If you try to copy another company’s DX practices, you’re more likely to fail.

Blockbuster and Netflix: Contrasting Examples of DX Failure and Success

Even if they were the number one company in their field. The case of Netflix and Blockbuster, which Harvard Business School professor Clayton M. Christensen cites as prime examples of what he calls “disruptive innovation,” provides us with a great example of the failure of a number one company.

Blockbuster started out as a video rental store, with rental locations in major cities across the country and a model that allowed them to rent DVDs to customers for a fee and collect late fees for late returns. Netflix, on the other hand, opted for a subscription model, sending DVDs in the mail and receiving them back in the mail. Since they had already paid for the subscription model, they didn’t collect any additional late fees.

What were the results? Well, as we all know, Blockbuster went bankrupt, and Netflix made history as an OTT (Over The Top, meaning “over the top of your TV set-top box”) service that delivers broadcast programming, movies, education, and other media content over the Internet. Along the way, Blockbuster, like Netflix, adopted a no late fee model and also became an OTT service. But Blockbuster eventually went bankrupt. Why? Because it wasn’t organizationally prepared for the change.

The importance of starting small with DX

Blockbuster’s example is not unique. No organization can secure its future if it doesn’t prepare itself internally for change. It’s one thing to know that change is necessary, but it’s quite another to actually implement it internally, so it’s important to start with small steps that everyone can take, rather than just consulting and arguing about big DX.

But even this is difficult to apply to all companies. Every organization is different. If you’re trying to make your organization more pro-digital, you might miss out on some really important business changes, or your culture might be disrupted. So you have to be mindful of all of that and always be thinking about what roadmap you’re going to apply and where and how you’re going to apply it. So the trick is to have a different sequence of DX for each department instead of a one-size-fits-all company-wide approach, or to have one destination for the DX and create a kind of welcome mat.

DX roadmap: departmentalized, targeted strategies instead of an enterprise-wide approach

From that perspective, let’s summarize what DX is all about. DX is the process of leveraging digital capabilities to create targeted innovation. Specifically, it involves innovating technologies, tools, culture, etc. that correspond to digital capabilities, and then using them to digitize existing core products or services or innovate into completely new business models. Along the way, business processes are also transformed. All of this is the subject of DX.

And it’s about putting people at the center.

The evolution of DX: From digital infrastructure to personalization

DX has gone through three evolutions so far. The first evolution of DX is the establishment of a digital infrastructure foundation, which occurred during the dot-com era when the Internet was in full swing in the 2000s. At that time, as the use of the Internet increased rapidly, a variety of related products began to emerge, from traditional music to digital music such as MP3, and from video and DVD videos to digital VOD. In addition, offline businesses were also changing. Online bookstores have emerged, threatening brick-and-mortar bookstores, and numerous e-commerce services have replaced retail stores.

The technologies that made these services possible were server/client systems and networks. During this period, companies and individuals began to build digital infrastructure and actively pursue digital marketing, such as advertising in online media instead of mass media.

The second was the mobile era of the 2010s, when the digital base expanded. As iPhones and Android-based smartphones became popular, people began to purchase paid apps or in-app purchases from the Apple App Store or Google Play Store. It was a new business model to sell digital items on mobile, as opposed to selling physical goods online, and social networks like Facebook and Twitter were becoming ubiquitous.

Streaming video services such as YouTube have also become part of our daily lives. As changes in the media market accelerated, the product advertising market also began to move to mobile. It quickly became a global service, with Facebook, YouTube, Twitter, Instagram, and WhatsApp being used by more than 1 billion people worldwide.

As 2020 began, a third evolution began. At the heart of this third evolution is personalization. The Internet of Things, cloud computing, artificial intelligence, and big data technologies have connected devices and spaces that were not previously connected to the Internet, and the data generated is analyzed through the cloud, and artificial intelligence technology is used to solve the problems found. Businesses are providing personalized services and making them available to everyone. This affected not only large companies but also individual business owners.

Today, NAVER’s Smart Store service helps anyone open their own shopping mall and digitally transform their business. One-person businesses are now able to do business freely thanks to digital technology. This evolution has been driven by the COVID-19 pandemic, but also by stronger IT technology and delivery services. DX is now a conversation that applies to everyone, whether you’re a large enterprise, a small business, or an individual.

As such, DX is being practiced at many different levels and on many different levels. So you could say that there is no formula for DX.

The first step in running DX: defining the problem and the roles of members

So what should we focus on and prioritize for DX, and what’s the first question to ask? The first question we need to ask for DX is what is it that I want to solve with DX and define it specifically. If you can’t create a problem, if you can’t pinpoint a problem, you can’t find a solution. If you start interpreting DX through the lens of technology, it’s easy to get caught up in where you can apply technology.

It doesn’t matter if it’s necessary or not. For DX, we need to think about what the problem is and how our members can solve it. Then, it’s about what opportunities we need to give them. Depending on the definition, the method and sequence of DX will vary.

The DX we’re going to talk about will be detailed, from the individual to the enterprise, from building and leveraging digital environments to preparing for new innovations. At the heart of it all, we will continue to ask what people, organizations, and the processes that surround them should look like.

Digital Transformation takes at least 3 years

01/07/202411/27/2023 by DX Talk

Digital Transformation takes at least 3 years. Of course, it doesn’t happen in three years, but the point is that you need at least three years to make a difference. In this article, we’ll look at Kakao and other examples of why digital transformation doesn’t always produce results. This is the third part of Digital Transformation Strategy: The Essential Guide to Enterprise Success.

A successful digital transformation (DX) project requires a minimum of three years of time. During this time, year one should be focused on improving digital capabilities and expanding the digital culture within the organization; year two should be spent collaborating, choosing, and focusing on business-meaningful tasks and setting full-fledged DX goals; and year three should build on the previous years’ achievements and expand DX into new areas. Digital practitioners need to understand the “three-year time horizon,” moderate their expectations for deliverables, and persevere through the project. This process will help organizations anchor their digital culture and achieve a successful digital transformation.
– Summary with ChatGPT

The birth of KakaoTalk: A journey that began at iWillLab

South Korea’s KakaoTalk is the leading mobile messenger with the largest market share, used by most smartphone users in Korea every day. However, not many people know how KakaoTalk came to be.

Kakao started as a startup called iWillLab in 2006. For the first year of its existence, iWillLab created a web-based service called Buru.com, a social bookmarking service. However, most readers probably don’t even remember that it existed. In fact, Buru.com was shut down just three months after its launch due to a lack of users. The company then went on to create a social ranking service called Weegeea, which reached up to 50,000 users. Three years went by, and when the iPhone was released in November 2009, and the company saw that the entire game had shifted to mobile, they saw an opportunity and started planning a new service. This is how KakaoTalk was born.

In addition to KakaoTalk, other communication services with different targets but similar characteristics were launched one after another, such as KakaoAjit and KakaoSuda. In fact, KakaoAjit was the first to be released in February 2010, and KakaoTalk was released the following month in March 2010. The number of KakaoTalk users exceeded 1 million within six months. It was a huge success. In 2014, three years after its launch, Kakao merged with Daum Communications to form KakaoTalk.

The long road to success: examples from startups and enterprises

We started out as a small startup and failed to launch a single service for more than three years. Many of the services we use every day also require quite a few failures and time to reach success. This is true not only for Korea but also for famous services abroad. Amazon and Facebook also had to wait at least 5 years and up to 10 years after starting their business before they gradually secured a stable business model and started growing in earnest.

In the process of growing a startup, you often hear the term ‘death valley’. Death Valley refers to the process in which a startup successfully launches a new service or business, but then faces difficulties in attracting funding and is pushed to the brink of bankruptcy. It usually happens between three and five years after launch. The reason why startups go through death valley is simple. It’s because it takes at least three years, and often five, to succeed. It doesn’t end when you build something, it takes time to establish yourself in the market and establish a new business model.

The importance and challenges of digital transformation

What about enterprise-driven DX? Like startups, DX requires a minimum of three years. The people and organizational changes that are most important for DX to take hold can’t be done in 1-2 years. When I see DX failures, especially in professional management, it’s often due to pressure to deliver results in a short period of time. This is the reason why we miss it even though we know it in our heads.

If you focus on short-term results, your DX is likely to fail, even with strong executive support. That’s why it’s important to communicate this timeframe to management and explain well why they should wait.

Digital Transformation takes at least 3 years: Step-by-step approach

So what’s the best plan to have and execute over time? Every organization is different, so there’s no one right answer, but we recommend the following phased approach.

In year one, focus on activities to increase the digital capabilities of your existing organization. Introduce digital technologies and tools, and run training and support programs to improve employees’ digital skills. Also, start thinking about extending the digital culture to the rest of the organization and create a dedicated DX team. This organization works with the existing IT organization to focus on the challenges of improving the digital experience. For example, pilot projects that apply the core technologies of DX – artificial intelligence, big data, and cloud – to the enterprise environment. At this stage, focus on gaining experience through execution rather than high performance. Make sure to communicate this to the executive team and get buy-in.

In year two, select a business-critical challenge from the pilots in year one and set a full-scale DX goal. This is where collaboration with the existing organization is critical. It is difficult to achieve a successful outcome if the benefits of DX are unclear and irrelevant to existing organizations. Therefore, it is important to start by focusing on the challenges that existing organizations need and can quickly move to commercialization. In other words, be selective and focused.

Year 3 is when the work selected in year 2 is at a commercial stage and has business significance in the eyes of management. It’s not complete, but it’s the end of the DX cycle that the organization has come to expect. If you think you’ve made significant progress at this point, it’s time to scale the success equation to new areas.

A long-term view of digital transformation and advice for practitioners

My mantra for DX practitioners is “three years”. You need at least three years to embed DX into your organization’s culture. If you don’t have three years, take a step-by-step approach as described above, but lower your expectations for results.

If we’re not an IT company, or if we’re in a business that’s far from IT, then as a DX person, I’m like a wanderer in the desert. You have to endure that time. You can never get lost.