Digital transformation: changing organizational habits

Digital transformation (DX or DT), a two-year process, was completed in two months during the COVID-19 pandemic, and many companies are now well aware of its existence. However, while everyone agrees on the need for digital transformation, there is still resistance to DX in the enterprise.

The myths and realities of digital transformation

Conceptually, we all agree. But when you ask them to change the process (or sequence) of what they’re doing, to use digital tools to do things differently than they’ve done before, they come up with all sorts of reasons why they don’t need this, they don’t need that.

Here’s another scene: I’m in a line of business, I see the trends in the market, I’m 100% aware of the need for digital transformation, I’m receptive/open to it, but I don’t understand what these DX people and DX consultants are doing. They say they’re going to teach you, they say they’re going to explain things well, but they just throw a manual at you and leave. 

These two scenes are still happening in many organizations today. DXers say they can’t DX because the field isn’t helping them, and the field says they can’t DX because the DXers aren’t teaching them enough. 

Over the course of this blog, I’d like to dive into the following key elements of digital transformation:

Over the course of this blog, I’m going to unpack a lot of different stories about digital transformation, but I’m going to start with what the CEO needs to do. Because DX is a kind of constitutional change, there is nothing more important than the leadership of the CEO. Next, we’ll talk about how to select the members of the DX organization and who should be the leaders. Then we’ll talk about how to communicate with the frontline departments, how to gain their trust. Then we’ll talk about what experiments should be done with DX, how they should be done, how much time should be given to experiment, and what should be done as a first step.

I’ll also share tips from the field that I’ve experienced while driving digital transformation in traditional companies that are far from digital. (I’ve led various DX efforts at LG Electronics and now at SK discovery and SK bioscience)

Digital Transformation Strategy: An Essential Approach to Transformation

1. Vision and strategy: You need a clear vision and strong executive commitment.
   • A clear vision and strong commitment from the executive team is required.
   • Understand that DX is a long journey.(1) (2)
   • Requiring at least three years of execution time and support.
   • Select a DX execution model that works for your company.
2. Talent and organization: It is important to build an expert organization for DX execution and acquire talent.
   • Creating a Center of Excellence (CoE) for DX is the starting point.
   • Having the right people with the right expertise is a critical key to DX success.
   • Think about market-driven, not company-driven, systems for DX organization leaders and members.
3. Process change: Process change and the adoption of digital tools for work transformation.
   • Transforming work through DX starts with process change.
   • We recommend introducing digital tools as the first DX task, and it is important to manage change among employees.
   • If you can’t identify process issues, run process visualization.
4. Culture: Improve the user experience of your employees and change your culture.
   • The user experience of employees is just as important as the UX of consumers.
   • Change the external elements of your organization that can affect your DX, such as reporting culture and office location.
   • If there is a limit to how much you can change internally, look to external partners to expand the experience.
5. Introduce technology: Introduce technology elements for DX and integrate technology for work efficiency.
   • Introducing technology elements for DX (AI, big data, cloud)
   • Incorporating various technologies to streamline work (PPA, LowCode)
   • Changing internal company standards to apply DX, such as security regulations to adopt the latest technologies, is also necessary.
6. Business model transformation: the importance of streamlining operations and developing new business models
   • It is necessary to clarify the target of innovation: operational efficiency, core business competitiveness, and new business models.
   • Operational streamlining can generate short-term results and is a driver of DX.
   • Completion of new business models is an area that requires significant investment of time and money.

My one-line summary of digital transformation is, “Digital transformation (DX) is about changing organizational habits.” It’s a definition that captures the essence of how we should be looking at DX. After all, if we’re going to look ahead to the next 10 or 20 years, we’re going to need to make sure that our people are agile and open-minded, and that we’re adopting new technologies and solutions to truly innovate in this fast-moving world. That’s how I’ve interpreted DX as “changing organizational habits.” Good habits make a company stronger. Let’s look at how digital transformation can be used as the first mission to change organizational habits.

“Digital transformation is not a one-time project.”

“It’s a corporate habit for sustainable growth.”