Introduction

In the last article, we talked about the origin and history of DX, explaining what it is and how it's currently happening in Japan. Now, we'll keep the conversation going by looking at how Japan compares to the West in terms of DX.

DX: Perspectives from Japan and the West

Here’s a surprise quiz for you:

You're the person handling the accounting department. Your daily routine involves verifying receipts with the paper vouchers submitted for reimbursement, entering the details into the system, and notifying the person if there's an error. You even make calls to remind them if it's urgent. You consistently work late to keep everything in order. Then, one day, the entire process is digitized, freeing you from the long hours. Now, you can focus on the more analytical side of finance. Is this transformation considered DX?

In Japan, it's X (or at least a △ close to 〇), whereas in the West, it's more like 〇 (△ close to 〇).

In Japan, just making work digital and more efficient isn't considered DX. But it's often labeled as DX when the perks of going digital free up time for people to do new and valuable tasks. In the West, they do recognize DX, but if it lacks the "X" factor, meaning it's not tied to management strategies and opportunities for change, it's not highly regarded.

According to the Ministry of Economy, Trade, and Industry's DX Promotion Guidelines, DX is about gaining a competitive edge by changing products, services, business models, operations, organizations, processes, and even the corporate culture. This transformation is driven by customer and societal needs, using data and digital technologies to adapt to the fast-changing business environment.

In contrast, Gartner, a top research and advisory firm in the IT field, talks about "digital business" and breaks down how companies use IT into 3 phases:

1. Changing the way business processes work.
2. Linking and combining businesses, companies, and people.
3. Blurring the line between the digital and physical worlds, creating direct connections between people, objects, and businesses. This leads to a situation where rapid changes in relationships with customers become the usual way of doing things.

Furthermore, McKinsey & Company, a major strategy consulting firm, describes DX in the following ways:

1. Comprehensive digital transformation: Using digital methods to fundamentally change the structure of an organization and promote strategies that are digitally focused.
2. Digitization of customer experience: Restructuring the way customers interact with a business by using digital tools in marketing and personalization efforts.
3. Operational resiliency: Enhancing the strength and adaptability of operations through analytics, such as preventive maintenance and productivity improvements, and optimizing and automating back-office processes.
4. New business development: Creating new businesses or exploring new customer segments by leveraging digital technologies.
5. Skills retraining and organizational capability building: Developing the necessary skills within the organization for digital endeavors, retraining existing staff, and establishing systems that enable digital personnel to contribute actively.
6. Overall organizational agility: Cultivating agility throughout the entire organization by implementing agile operating models and building the necessary frameworks.
7. Modernization of core technologies: Upgrading the foundational technologies of the organization, including the use of cloud and API technologies, optimizing IT costs, and implementing data architecture and transformation.

To put it simply, in Japanese DX, the focus is often on improving day-to-day operations like making things more efficient or implementing new systems. These are seen as significant achievements. However, in the West, DX is just one part of the process and is considered a basic step. There, DX is mainly valued as a chance to make changes according to management strategy, especially those that benefit customers.

Moving Forward with DX

In a conversation with the head of a big company's DX Promotion Office, he mentioned, "Our DX Promotion Office mainly focuses on enhancing operations through tools like RPA. I know the crucial part of DX is the 'X,' but relying on just one department isn't enough. Without top management leading the charge, ideas tend to stay at the frontline, and improvements stay limited. But for now, I'm okay with that. By making small tweaks, we're building up DX skills, and I'm confident we'll eventually see a breakthrough".

He seems to understand that the ultimate goal is achieving the 'X'. However, he admits that the current approach isn't fast enough, and unfortunately, it falls short

So, what's the plan? We'll address this question later on.

Conclusion

In this article, we talked about how DX is seen differently in Japan and the West, touching on just a small aspect of how to move forward. In the future, we want to delve deeper into how to proceed and the steps to consider.

References

1. Business + IT: What does Gartner recommend for digital business?
2. McKinsey & Company. Acceleration of Digital Transformation