Digital Transformation - Page 15 of 18 - Changing habits in your organization

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.

The Long Journey of Changing Habits in a Digital Transformation Organization (2/2)

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

Today I’m sharing a two-part article on The Long Journey of Changing Habits in a Digital Transformation Organization. This is part 2 of Digital Transformation Strategy: The Essential Guide to Enterprise Success.

Be sure to check out our previous post, The Long Journey of Changing Habits in a Digital Transformation Organization (Part 1 of 2).

COVID-19 and DX: The New Business Landscape

COVID-19 has changed not only our daily lives, but also the business environment of companies. DX, which was only a question mark, has suddenly become an authority and taken over everything. With the outbreak of COVID-19, companies suddenly faced shutdowns, and telecommuting was implemented without proper preparation.

In addition, the performance of brick-and-mortar companies, which had been leading the market, crashed, and IT companies, which had been represented by contactless, began to lead the market. Digital has entered every aspect of our lives and companies, with contactless environments becoming commonplace and video conferencing becoming the norm. In response, Satya N. Nadella, CEO of Microsoft, said that DX, a two-year project, was completed in just two months during the COVID-19 crisis.

The DX Imperative: Responding to a Rapidly Changing Industry

As a result, companies in traditional industries, as well as IT companies, are becoming more comfortable with the semi-forced acceptance of working from home. They are also realizing that not having to meet face-to-face doesn’t make a huge difference to corporate productivity. The internal culture of companies is also changing to the point where it’s no longer awkward to conduct video conferences face-to-face.

Collaboration in the cloud is also becoming increasingly important to support remote work. As a result, even companies that have been reluctant to invest in IT have begun to embrace digital tools. (In its earnings call, Microsoft Teams Solutions, a cloud-based collaboration tool, announced that it surpassed 100 million daily active users in October 2020, a 53% increase from April.)

Obstacles to DX: Changing internal systems and culture

Of course, there were problems. From small issues such as what to do if you forget the password to your company-issued laptop to how to resolve various system access errors in the company, various issues began to emerge that would not have come up without the changed environment. However, the fact that many companies, regardless of industry, have been actively responding to the COVID-19 situation by using IT technology is enough to say that DX has successfully broken ground.

From unilaterally creating a program and urging employees to use it, companies are now starting to reorganize their internal IT systems to improve the user experience for employees’ convenience. This means that we are starting to look at DX as an investment in people, not just an investment in technology. It also meant that DX wasn’t seen as something big and far away, but rather as improving the digital experience of our people, whether that meant working remotely or having video conferencing.

DX’s Ultimate Goal: Toward Sustainable Growth

What do companies really want from DX? A common expectation for many companies is “sustained growth”. But the word “sustainable” can mean many things. In a world where even the fastest-growing companies have a hard time looking 10 years ahead, sustained growth means a fundamental shift. In particular, companies in traditional industries that are far from digital (B2B companies, brick-and-mortar companies, and one-person businesses where digital is a secondary means of doing business) are being asked to change more than companies that were born in IT.

Up until now, these companies have simply adopted IT tools and, in some cases, increased their IT investments. But now they need to digitally transform their entire workforce and organizational culture. So, from transforming business models to digitizing existing products and transforming operational efficiency, it all falls under the concept and scope of DX. That’s why DX should be thought of as a “long journey” to support “sustainable growth,” rather than a one-time endeavor. Therefore, rather than thinking of DX as a project with a clear beginning and end, it is better to recognize it as an attitude or habit that should be done all the time.

DX: Changing organizational culture and attitudes beyond technology

When it comes to DX, technology has been at the center of the discussion, but once again, it’s not about technology, it’s about people and process. It’s all about attitude and sequencing. In short, DX is a long journey to change the way people work, which in turn changes the processes, which in turn changes the business.