Digital Transformation takes at least 3 years

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.