Introduction

Previously, we covered what DX means, compared approaches between Japan and the West, and looked at the current situation in the field. Now, let's explore the crucial aspects of driving DX within a company based on these findings.

How to Drive Digital Transformation (DX)

In the previous article, we highlighted how people's perception of DX differs between Japan and the West. But what exactly is different, and why has this gap led to the current disparity in evaluations?

There are 3 main reasons:

1. Not fully grasping the definition of DX
2. Weakness in strategy and execution
3. Insufficient talent development

The first point, the definition of DX, has been discussed in previous articles. However, the term often precedes its actual implementation, and by the time it is translated into concrete initiatives, its original purpose is frequently lost. This disconnect is likely one of the key reasons for the gap between Japan and Western countries.

Even though definitions may vary, they are often categorized into the following three steps:

Digitization → Digitalization → Digital Transformation

The true meaning of DX is "Digital Transformation". However, there is often a blurry understanding, and people might mistakenly think it is just about converting paper documents into digital form (digitization) or using tools to digitize some aspects of company operations (digitalization).

This lack of clarity can lead to unmet expectations. As mentioned before, it is crucial for all employees, not just top management, to grasp that DX involves reshaping organizations and operations using digital technology. Achieving this requires continuous and comprehensive efforts, including company-wide education.

The second point is that, as mentioned earlier, digital transformation will bring significant changes to the organization, so it is crucial to have a company strategy and the ability to implement it effectively. Many times, individual teams or units are formed to create and push these strategies.

However, Japanese corporate culture often emphasizes "genba" or a frontline-driven approach, a legacy of the rapid economic growth in the past. It is commendable to focus on improving things directly from the field, as seen in the kanban system and "kaizen" (continuous improvement). But driving DX involves altering company policies, making major operational changes, staff reassignments, and more, placing a considerable burden on the frontline. This can result in strong resistance from the field or a drift away from the original goal due to this opposition.

For this reason, it is crucial to structure the company's plan, consistently communicate it to the frontline, place capable individuals there, and empower them. Simply forming an organization will not yield full results if it aligns too closely with the current setup, given the challenges mentioned earlier. Moreover, it is vital for management to actively participate and demonstrate that this transformation reflects the leadership's intent.

The third point, as highlighted in the IPA's "DX White Paper", is about developing people's skills. Japan is reported to have lower IT literacy compared to the West, and there is less effort being put into improving this situation. While computers and the Internet are widely used, basic skills in their use are lacking across Japan. Typically, the business department sticks to the systems used within the company. If any issues arise, they usually turn to the systems department for help, and when it comes to system development, the company often relies on external vendors more than its overseas counterparts. Unfortunately, the company itself may lack sufficient skills in this area. Consequently, even if a company aims to push for DX, there is a shortage of employees with digital expertise, hindering the ability to create internal strategies, plans, and move forward with them.

This process might be a bit time-consuming, but it is crucial to figure out where the company is headed, then establish a strategy, identify the skills required to reach these goals, and create a plan for training. If there is already a vendor on board, quick action is possible. If external vendors are already involved, rather than simply leaving everything to them, companies can immediately begin by assigning internal staff to work alongside the vendors. In some cases, the training of internal staff can be incorporated directly into the joint work processes.

Closing

What did you think? In this article, I highlighted the essential aspects of driving DX. The fundamental concept is to clearly define the term and ensure everyone in the organization understands and shares this definition. I hope this information proves helpful for those involved in driving DX efforts.

Looking ahead, I plan to explore the concept of creating shared value (CSV), commonly seen in company strategies, particularly in relation to human resources, as I briefly mentioned in this discussion.