Digital Transformation - Digital Transformation

How to acquire digital transformation talent: M&A, JV, and team-based hiring

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

“How to acquire digital transformation talent: M&A, JV, and team-based hiring”. In this third part of Acquiring and Organizing Talent to Drive Digital Transformation (DX) Success, we’ll talk about different ways to acquire talent for a dedicated digital transformation organization.

How to acquire digital transformation talent: M&A

If your company doesn’t have digital DNA, one way to build a DX organization is to acquire a company that is already digitally savvy and increase its capabilities in a short period of time. Often referred to as talent acquisitions, these deals are not done for financial gain or business synergies.

However, there are very few companies in Korea that have this option, especially in the U.S., where big tech companies have been able to take advantage of it. However, there are quite a few such mergers and acquisitions in the United States, mainly among big tech companies.

Digital Transformation Talent Acquisition Methods: Joint Ventures

The next option is to create a joint venture with a company that already has digital DNA. The benefit of creating a joint venture based on a financial investment is that you’re not bringing DX talent in-house, but you’re still partnering with people who have the expertise. You can also ensure business continuity and reap financial benefits as the other company or joint venture grows. Even if it’s not necessarily financially beneficial, it’s a viable option if you don’t have the internal manpower to execute DX, which can be quite costly. Again, there are examples of this from well-known global companies, and there are also recent attempts by domestic companies.

Analyzing digital transformation talent acquisition methods and practices in domestic companies

The first two methods are not yet practiced in Korea. Except for a few well-known IT companies, they are hard to find. In general, people only think of talent scouting, not the idea of acquiring an entire company to secure talent. In Korea, Naver’s acquisition of Sunun in 2006 to develop a search engine was a highly publicized M&A for talent acquisition.

Kakao has also acquired several startups to acquire talent, and in fact, they are contributing to the growth of Kakao. However, it is difficult to find such cases in traditional companies other than IT companies. The same goes for joint ventures. Most executives have a lot of control, and in many cases, they want to keep the new investment firm under their control. They are reluctant to create a separate joint venture with no control simply to add staff. While there have been some media reports about the joint venture between LG CNS and cloud provider MegaZone to create Cloud Gram, there have been few examples of joint ventures to acquire IT talent from traditional companies.

The importance of leadership in digital transformation organizations and where to look for talent

So what’s the right way to organize? We’ve already covered the answer above. Create a new dedicated DX organization with strong executive commitment and investment, and hire someone with DX experience to lead it. In short, empower the leaders of the DX organization and give them the power to shape and hire the team. Unlike other fields, IT is structured in such a way that no one person can produce results alone.

This is why there are so-called “gurus” who are recognized as experts in a particular technology. They act as influencers within the community of their peers. Hiring these candidates as DX leaders creates a pool of people who want to join the organization to work with them. It’s a unique hiring culture in the tech industry. Hiring a good leader, a good grunt, can go a long way in building your workforce.

can go a long way in shaping your workforce. Of course, in larger organizations, these people may not be the right fit when compared to internal standards. However, the most important thing to look for in a DX leader is someone who can actually execute DX and show results, so it’s important to look at hiring from a different perspective than the traditional talent requirements.

How to acquire digital transformation talent: Hiring by teams

The next hiring option is to hire in teams. At the risk of sounding like a broken record, the nature of the IT industry is such that you can’t work alone. As the saying goes, you can’t see the hand that feeds the tongue, and collaboration takes time to build trust. While it’s one thing to work toward a deliverable in a limited timeframe, such as an SI project, it’s another to hire in teams to ensure continuity. If the leaders of your DX organization are good enough at team building to bring their own crew, that’s fine, but if not, you’ll need to hire from the open market.

In this case, it’s a good idea to empower leaders to hire and allow them to select their own people. While there are benefits to this kind of leader-centric hiring, there is also a downside. That’s when they leave en masse. In fact, overseas companies often use M&A to acquire technology companies to eliminate this risk. Otherwise, there are ways to compensate them well. In addition to compensation, there is also the option of signing an employment contract with a mandatory service period and a lump sum payment upfront. This is called a retention bonus.

On average, it takes about three years for a DX project to succeed when hiring new IT talent, whether through M&A or general recruitment, who have never experienced the culture of an existing organization. During this time, you’re in it for the long haul, and you need to keep an eye on them to make sure they don’t drift away.

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.