Digital Transformation - Digital Transformation

Transforming organizational culture for digital transformation success

01/07/202412/08/2023 by DX Talk

Transforming organizational culture for digital transformation success. As the fourth process change in Digital Transformation: Changing Organizational Habits, this article explores how the success of digital transformation (DX, DT, Industry 4.0, digital transformation) is more than just a technological change; it’s also deeply connected to a change in organizational culture. This article explores the key elements of organizational culture to successfully drive digital transformation.

1. Take care of your employees’ user experience first

One of the most important factors to consider when driving digital transformation is the user experience of your employees. Change starts with the introduction of technology, but it’s the people who make it happen, so it’s critical to ensure that your employees are able to adapt to and effectively utilize the new digital environment.

1.1. The importance of employee experience

When adopting digital tools and systems, it’s not just about functionality and efficiency, it’s also about how your employees will experience them. You need user-friendly interfaces, intuitive workflows, and tool choices that fit your employees’ work styles. This will make it easier for them to adopt the new system faster and apply it effectively to their work.

1.2. Feedback and Improvement

Feedback from employees is crucial during digital transformation. You should regularly collect feedback from your employees on the challenges, improvements, and additional needs they have while using new tools and systems. This feedback will help you continuously improve your systems and enhance their experience. It will also make them feel like they are part of the change, which can increase their engagement and support for your digital transformation.

1.3. Training and support

When introducing new digital tools and systems, it’s important to provide adequate training and support. It’s important to help your employees understand the new technology and equip them with the skills to use it effectively in their work. You can do this by providing a variety of training methods and materials, including online training, workshops, user manuals, and one-on-one support.

1.4. Cultural adaptation

The adoption of digital tools isn’t just a technological change; it also affects organizational culture. Adopting new tools and systems changes the way employees work and communicate, so it’s important to ensure that your organizational culture can embrace and adapt to these changes. This can be done through an organizational culture that promotes open communication, fosters collaboration, and encourages an experimental mindset.

Transforming organizational culture for digital transformation success

2. DX organization performance and the role of the CEO

The success of digital transformation (DX) relies heavily on the active support and attention of the C-suite, including the chief executive officer (CEO). Their leadership sets the direction for digital change across the organization and motivates them to make it a success.

2.1. The importance of leadership

Setting the vision: The CEO must set the direction and goals for digital transformation and clearly communicate them to the entire organization. This vision should include not only technological changes, but also changes in organizational culture and ways of working.
Motivate people: Executive support motivates everyone in the organization to embrace change and actively participate. This creates an environment where new technologies and processes can be successfully introduced and utilized as part of digital transformation.

2.2. Create a vision and goals

Align with organizational strategy: CEOs should make digital transformation a key element of their organizational strategy, which should go beyond short-term gains and aim for long-term growth and innovation.
Ongoing communication: Ongoing communication about digital transformation ensures clear understanding and transparency within the organization. This reduces employee anxiety about change and fosters engagement.

3. Report less and focus on the essentials

As you drive digital transformation, it’s important to reduce unnecessary reporting and meetings and focus on essential work.

3.1. Increase efficiency

Simplify reporting: By streamlining the reporting process, employees can focus on more important tasks. This contributes to increased productivity across the organization.
Accelerate decision-making: Streamlining reporting helps speed up the decision-making process, enabling an agile organization.

3.2. Focus on the essentials

Focus on what matters: Allow employees to spend more time and energy on what matters, which is critical to creating real value during digital transformation.
Foster creative solutions: Freeing employees from unnecessary administrative tasks gives them room to explore creative solutions and try out new ideas.

4. Drive innovation across the board, from office locations

Successful digital transformation is more than just a technological change; it involves a transformation of the workplace and organizational culture.

4.1. Changes in the physical environment

Innovative workspaces: Modern, flexible workspaces foster a creative and collaborative atmosphere. Open office structures, multi-purpose meeting spaces, and areas for relaxation and socializing help employees feel free to share and experiment with new ideas.
Integrate technology and space: Adopt smart office solutions that utilize the latest technology to seamlessly integrate your physical and digital environments. This increases work efficiency and improves the employee experience.

4.2 Organizational culture transformation

Horizontal communication: Encourage open and horizontal communication. This promotes the free flow of information and enhances collaboration among employees.
Experimental mindset: An organizational culture that encourages new ideas and experimentation is key to digital transformation. Adopt an attitude of not being afraid to fail and pursue continuous learning and innovation.

5. Embrace always-on DX and open innovation

Digital transformation is an ongoing process, not a one-time project. The adoption of open innovation enriches this process.

5.1. Continuous change and improvement

Continuous digital transformation: Digital transformation should be an ongoing process. Continuously improve and innovate your organization’s strategies and processes to keep pace with changes in technology and the marketplace.
Learn and adapt: Organizations must continually learn about new digital trends and technologies, and adapt by applying them to their work. This keeps them competitive and enables sustainable growth.

5.2. Open Innovation

External collaborations and partnerships: We work with companies, startups, and research organizations across industries and disciplines to explore new ideas and solutions. This brings new perspectives and innovation opportunities to the organization.
Co-creation: Adopt a co-creation approach to developing products and services together with customers, partners, and employees. This brings in diverse perspectives and enables user-centered innovation.

This digital transformation requires a transformation of the traditional office environment and organizational culture, as well as the adoption of continuous digital transformation and open innovation. These changes help organizations become more agile and innovative in the digital age.

Adopt a startup process

01/07/202412/06/2023 by DX Talk

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.

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

01/07/202412/06/2023 by DX Talk

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.

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.