Digital Transformation - Digital Transformation

The CEO role determines digital transformation success

01/07/202412/09/2023 by DX Talk

The CEO role determines digital transformation success. The second part of Transforming Organizational Culture for Digital Transformation Success explores the importance of the role of the CEO and executive team in successfully driving digital transformation (DT, DX, digital transformation). Emphasizes the importance of executive support and leadership in cross-organizational collaboration and change management.

The early challenges of digital transformation and the role of the CEO

There is a common process that many new organizations go through. Initially, there is a lot of interest and support from the management team, and other organizations around them are also interested and supportive. However, when it comes to the actual execution phase, there is a lack of cooperation from other organizations. Inter-organizational interests and political logic make it difficult to get the right information and hinder the progress of the project. As a result, the new organization is not satisfied with what it has created and naturally dissolves or is absorbed into an existing organization.

DX organizations are no exception to this problem. DX organizations are even more likely to follow this path if they started as a separate entity, rather than a small group of people based on an existing IT organization. They are destined to have DX execution be their only accomplishment, not their other existing tasks. It’s a different story if you’re already clear on what you’re trying to accomplish when you create it, but if you’re creating an organization and then defining your company’s DX direction, time to explore is essential. Here’s where the problem comes in.

Overcoming barriers to cross-organizational collaboration and the importance of the CEO

As mentioned earlier, a new organization doesn’t have a complete understanding of the company’s history and deliverables, its culture, and its politics. This is one of the reasons why it’s a good idea to organize all the people involved into one organization if possible. In one form or another, when a new organization has limited access to information, the original problem it’s trying to solve is never even close to being solved.

For example, if you’re running your servers on-premise (i.e., not in the cloud, but in the company’s own computer room), and the DX organization says you need to move to a public cloud environment, the business unit organizations, including the traditional IT organization, are very resistant to that, and they feel that the DX organization is invading their territory.

The traditional IT organization may not be ready for DX because of their own circumstances. The existing organization may appear to be cooperating, but in reality, they are resisting because they don’t want to take away their territory. They feel that being open about the work they’ve been managing is a sign that they’re being compromised, and they feel very insecure. As a result, collaboration in the workplace moves at a very slow pace. Departments are likely to be as uncooperative as they can be within their power, including being slow to open up data and grant access to information. For established organizations, this can be a fight to protect their turf, or it can be a natural resistance.

The need for active executive support for DX success

How can this situation be resolved? First, the executive or decision maker who is sponsoring the DX initiative must recognize the discomfort of the legacy organization. Make it clear that the IT organization and line of business have not been doing anything wrong, but that this is about growing the company with the changing times. They should be asked to take on a new role as key participants in the important work ahead. It’s important to make it clear that the new organization is there to help them with their problems, and to give them the expectation that the information that the DX organization gains through access to data will eventually solve their problems.

Failure to control this emotional climate in the early stages of DX implementation can lead to deep antagonism between organizations that should be working together to create synergy. Therefore, the CEO needs to explicitly declare that the DX task is the CEO’s to execute, and that the DX organization, a fledgling entity, is responsible for its progress and accountability. It is also important to intentionally invite DX leaders to participate in various decision-making processes to get their input and make decisions based on it.

For the traditional business units, they need to understand that the IT systems and data they’ve built don’t belong to them, they belong to the company, and they need to recognize the importance of leveraging them to drive the company’s continued growth. In addition, the C-suite will need to give the DX organization undue attention and regular progress reports until the initial tasks are clearly defined. This is to give the entire organization a sense that the C-suite is on board with DX.

I once heard an anecdote about a new government minister who was selected through a difficult process. The new minister had been selected by the president through a painstaking process, but was not well-received not only by the people in the ministry, but also by ministers in other parts of the government. What the president did was to end the cabinet meeting and take the new minister aside in front of everyone for a private meeting.

The president did not have anything in particular to say, but only to show that he was alone with the new minister. However, as this was repeated over and over again, the policies that the new minister wanted to promote gained momentum, and internal and external cooperation naturally occurred.

Focused attention and support from the CEO is key to DX success

Similarly, the odds of DX success increase slightly when decision makers are sufficiently informed throughout the organization that they care, that they see it as an important challenge for the company, and that they are empowered to do so.

Improving user experience for employees: digital transformation in the age of remote work

06/25/202412/09/2023 by DX Talk

Improving user experience for employees: digital transformation in the age of remote work. The first part of Transforming Organizational Culture for Digital Transformation Success explores the importance of employee user experience (UX) in a remote work environment. Learn strategies for adopting the right digital tools for the post-COVID-19 workplace and building efficient remote work systems.

The importance of employee experience, user experience (UX) in the age of remote work

After COVID-19, many companies started to realize something new when they started working remotely: they started to look at their corporate IT systems (groupware of sorts) with a critical eye. Especially when compared to the various mobile services that we use in our daily lives, the company system was not very sophisticated.

When all members were working in the same space, they were willing to use it even if it was inconvenient, but this was not the case in the non-face-to-face environment of remote work. Moreover, the remote environment forced them to try other services, and as they looked at the company’s system objectively, complaints began to emerge. “It doesn’t work like this,” “It doesn’t auto-save, so I have to enter it anew every time,” “The editing screen and the output don’t match,” and these complaints naturally began to affect employees’ productivity and work style.

Historically, user experience (UX) has been a topic of concern for B2C services, but in the post-COVID-19 era of DX, we are beginning to recognize the importance of not only the digital user experience for customers, but also the user experience for employees. In a nutshell, if employees are comfortable and don’t experience any problems, they won’t resist using digital tools or adopting projects. Therefore, the experience and satisfaction of employees is the first and most important factor to ensure a successful DX journey.

The importance of digital tools to improve employee satisfaction

Once you’ve decided to adopt a SaaS digital tool, it doesn’t take much time to start using it. Most of them are available in the cloud without any special integration development, and the experience of using them isn’t much different than using many of the services you use every day. For example, tools like Teams and Slack are optimized for mobile and are easily accessible on the web.

In addition to your work PC, you can continue to work on your home PC or smartphone, and notifications work just as well as any other app. The user experience is not much different from the shopping apps and messaging apps that we often use in our daily lives. We don’t feel any less comfortable using shopping malls like Coupang or 11th Avenue, or messenger and portal services like KakaoTalk and Naver. This is because we have already had a lot of experience using them, and various services provide almost standardized user experiences.

However, when we think about the internal IT system used by our company, it is very frustrating. Even though I’m not in finance or accounting, I have to learn a fairly complex ERP system to apply for a corporate card or process expenses. If you’re not in HR and you want to perform a single HR-related function, you’ll have to learn the HR system’s screens and move on to step 2 and step 3. This is because corporate systems have historically adopted the systems provided by vendors and forced employees to use them, rather than focusing on employee convenience or user experience.

Imagine starting to work from home in this environment. You’re trying to access your company’s systems on a company-issued laptop, you haven’t signed up for a VPN for security, and you’re working from home for an extended period of time, and a new employee joins your team. You need to train them, give them an ID, issue them a laptop, etc. You could find a contact person and do this via email or phone, but it’s a bit complicated.

In a traditional face-to-face environment, this might not be a big deal, but in a non-face-to-face situation like working from home or remotely, these little things start to become a problem. Furthermore, as more and more users have experienced various types of IT services, they naturally want a similar experience within their company.

A practical approach to building an effective remote workforce

So why can’t the onboarding process for new hires be delivered like the messaging and commerce services we use every day? A new employee arrives at work, submits the required documents for each department with just a few clicks online, applies for a laptop and a work account, and then watches a video on basic skills training. Of course, this process can be done on a PC or mobile phone without any difficulty. In short, it’s a very pleasant groupware experience. Recently, there have been a number of alternatives that have been introduced to the market. One of the most prominent is ServiceNow.

Already used by 80% of the Fortune 500 companies in the US, ServiceNow is focused on improving the workplace. In the case of a new hire program, for example, ServiceNow takes the training that used to be scattered across departments and creates a single flow that automatically notifies you whenever a new hire completes it.

This means you don’t have to make phone calls or emails to departments and get approvals. These flows can be linked to digital tools such as Teams and Slack, as well as the company’s basic systems such as HR and ERP, giving users (new hires) the feeling of receiving a single service. By using these services to build a digital environment, employees will have a consistent user experience in a single mobile or web environment when using company systems, rather than a decentralized experience such as ERP, groupware, and project management. In short, a single service desk is all that’s needed to access corporate systems. The results are self-explanatory.

The importance of digital experience and culture for DX

When it comes to digital transformation (DT, DX, Digital Transformation), embedding a digital experience and culture within the organization is a critical first step. To do this, think of your IT systems from the perspective of the employee (user), rather than the supplier, and this is the first step towards not only improving the employee experience, but also increasing productivity and digitizing and logging everything that happens in the company.

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.