Digital situation in Japan

Even companies with existing and large businesses can no longer rest in peace. We are now entering an era in which competition comes from all angles.

“The situation surrounding Japan’s digital world is not one to be optimistic about. According to one survey, Japan’s digital competitiveness was ranked 24th. It is said that the reasons for this are the lack of human resources and the foundation for nurturing new things, delays in regulation, and above all, the extremely slow response to business transformation agility.” (Mr. Koba)

Even in the "DX Report 2 (interim report)" released by the Ministry of Economy, Trade and Industry in December 2020, there is an issue that the delay in responding to corporate transformation is weakening Japan, and although it was postponed until now, Misfortune points out that the realization of DX is an urgent issue.

“In the concept of Professor Eric Stolterman of Indiana University, who first advocated DX, DX is ``the penetration of IT will change people's lives in a better direction in every aspect.'' This is a concrete interpretation. To summarize the Ministry of Economy, Trade and Industry's DX promotion guidelines, it is necessary to "respond to drastic changes in the business environment", "new digital services and products", and "change operations, organizations, corporate culture, and climate". The same thing is said in the definition of business agility in the Scaled Agile Framework by Mr. Dean Leffingwell.In other words, it can be said that the acquisition of business agility leads to DX." (Mr. Koba)

The acquisition of business agility is well advanced in North America and Europe, and has crossed the so-called chasm. On the other hand, in Asia Pacific and Japan, it is the state before that. But don't despair.

Mr. Koba says, "Our predecessors have repeatedly failed and started over. I believe that by using these experiences as a reference, we can work on reforms more efficiently and smoothly in a shorter period of time. ” says.

What is a “dual operation system” for mature companies to make changes?

Next, I would like to introduce the idea of a “dual operation system,” which is the basis for transforming a mature company.

When a company first starts a business, they honestly think about what kind of solutions, products, and services they will create and provide to their customers. If you create something better, it will spread throughout the world. Then, the organization will grow to a scale of dozens or hundreds of people. Along with this, it is necessary to improve the efficiency of the organization, and gradually a hierarchical organization is created.

“Even at the stage when a hierarchical organization is established, network-based organizations that have created new things can coexist. There will be problems.” (Mr. Koba)

As an organization grows, a business that was initially customer-centric may eventually become more inward-looking than outward-looking, placing more emphasis on sales and company stability than on new initiatives. Hierarchical organizations aren't all bad, though.

“Business administration, which developed in the 20th century, is packed with efficient ways of conducting business and methods of conducting large-scale business. It is necessary to put a business structure in place and run management on both wheels.By doing this, in addition to stability and efficiency, we will acquire innovation and speed.However, it will be implemented by one company. Therefore, we must not be separate.We need to share 'strategy,' 'leadership,' employee 'mindset,' and 'culture.'" (Mr. Koba)

The “dual operation system” advances on both wheels of a network-type organization and a hierarchical organization.

In order for a network-type organization and a hierarchical organization to develop in a well-balanced manner, it is necessary for managers to turn their attention to "cost allocation." When considering the allocation of investments, we should continue to invest in the next few years.

It is important to look several years ahead when investing in a networked organization

What is "Scaled Agile Framework" that realizes business agility?

In order to implement this dual operating system and acquire business agility, it is effective to utilize a framework called "Scaled Agile Framework (SAFe)". SAFe is a massive knowledge base that is freely available for viewing.

More than 20,000 organizations worldwide use SAFe

"Among the effects of the introduction, I would like to particularly mention the improvement in employee engagement. By improving engagement, employees can carry out what they have decided on their own, gain a sense of accomplishment, and continue their efforts to move on to the next step. As a result, they will be able to take pride in working for the company, which will lead to excellent human resources who will continue to stay with the company, lead innovation, and grow the business." (Mr. Koba)

In Japan, NTT DATA is making advanced efforts using SAFe. The company had been providing CAFIS, a cashless payment service with a history of 35 years, but it was faced with the challenge of being able to more quickly introduce new services that meet market needs. . In addition, issues such as responding to new competition, breaking away from the internal high cost structure, creating a system to manage increasingly complex systems and create new things, and responding to new technologies have also emerged.

“We decided to create a next-generation CAFIS called 'Digital CAFIS' and used SAFe to transform our business. As a result of our efforts over several years, employee engagement has improved by 20-30%. In addition, the release frequency has been reduced by 200%, which means that we can release in half the time, which means that we have doubled our ability to respond to new payment services, and productivity has increased by 20-30%. On the other hand, we have been able to maintain the same level of quality as before." (Mr. Koba)

Digital CAFS has been successful for three reasons. The first is leveraging SAFe itself. By using methods already in place in the West, we were able to implement change more quickly. The second is that the company has pushed for change.

“One of the major factors was that the management decided to prepare a mechanism for technology specialists to support the team over the long term. As a result, we were able to respond to the growing need for cashless payments after entering the pandemic with a new foundation in place." (Mr. Koba)

Third, using SAFe as a foundation, we implemented various reforms other than processes, such as reforming employee awareness, developing human resources, digitizing the workplace environment, and reviewing internal rules, which led to the creation of a digitized organization. It can be said that

"Transformation is a tough road. However, there is a globally proven way to proceed with transformation, and by applying it, we can accelerate DX in Japan like NTT DATA." (Mr. Koba)

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