To celebrate its 20th anniversary, Korea IT Times is presenting special contributions that share the profound insights of opinion leaders from Korea and abroad. Following the notable experts who authored articles in July and August, we introduce the contributors for September:
- Prof. Jong-Shik Kim: Digitalization and Digital Transformation
- Hyunseok Shin, CEO of Smilegate Vietnam: Changes and Strategies in Software Development due to AI (Part 1)
- Sukhvinder Singh: South Korea's Economic Miracle: A Critical Analysis of Challenges and Future Prospects.
- Agustín Liserra, CEO and Co-founder of Num Finance: Stabilizing Volatile Markets: RWA Investments, Carry Trade, and Currency Risk Strategies.
- Hyunseok Shin, CEO of Smilegate Vietnam: Can AI replace the technical skills of developers leading the digital world? (Part 2)
- Alex Haigh, Managing Director Asia Pacific, Brand Finance: Brand Resilience: How South Korea's Leading Brands Adapt to Market Fluctuations.
- Jinkook Kim, CEO of Coreline Soft: The New Changes AI will Bring to the Emergency Room.
- Josh Lee Kok Thong, FPF Managing Director Asia Pacific: APAC is at Risk of AI Regulatory Fragmentation.
- New Role for the Asia Institute building closer ties between US, Korea, and Japan.
- Hyunseok Shin, CEO of Smilegate Vietnam: Replacement of software development due to AI, present and future(Part 3).
By Jong-Shik Kim, Chair Professor.
Digitalization and Digital Transformation
In today's corporate landscape, digital transformation is frequently cited by CEOs and international enterprises as a fundamental strategic priority. However, research indicates that despite substantial investments in digital transformation, the anticipated returns often fail to meet expectations. Consequently, digital transformation has become a somewhat nebulous concept, akin to a "white elephant," for many business leaders.
There are indeed numerous cases of companies leveraging innovative digital technologies to gain a competitive edge. Tesla, for instance, has revolutionized automotive technology by digitalizing essential vehicle functions through its mobile app. Features such as remote climate control and third-party vehicle operation, as well as the popularization of semi-autonomous driving via autopilot, can all be augmented through over-the-air software updates. While these functionalities are now prevalent, Tesla was a pioneer of such innovations.
In the realm of drone technology, DJI stands out as a vanguard. The company has introduced advanced safety features enabling drones to navigate around obstacles like buildings and trees, overcoming previous technical limitations. With sophisticated capabilities such as subject recognition for continuous tracking during aerial filming, DJI has firmly established itself as a leader in the global aerial photography market.
Volvo's adoption of the T-map navigation system in 2021 marked a significant shift in strategy. Embracing a glocalization approach that entailed approximately 30 billion won in development costs, Volvo addressed widespread consumer dissatisfaction with the "unintelligent factory-installed navigation systems" by partnering with T-map, a prominent local provider. This collaboration set a precedent, prompting major imported car brands like Mercedes-Benz and BMW to incorporate T-map as their standard navigation system across various models.
These examples affirm digitalization as an inexorable trend with proven benefits, such as delivering innovative customer experiences, reducing operational costs, enhancing efficiency, and capturing greater market share across industries.
Digital Transformation vs. Digitalization: A Comparative Analysis
Despite these success stories, it is crucial to distinguish digital transformation from digitalization. Both terms are frequently used interchangeably but represent fundamentally different approaches. Digitalization focuses on tactical improvements and efficiencies achieved through the deployment of digital technologies—such as artificial intelligence, data analytics, cloud computing, and augmented reality—at the project or departmental level. By contrast, digital transformation entails comprehensive, strategic change impacting the business model or organizational structure.
Digital transformation endeavors to redefine the entire organization through a holistic integration of digitalization efforts, emphasizing both people and business, rather than solely technology. Netflix exemplifies this metamorphosis, having transitioned from a DVD rental service to a streaming giant, thereby reshaping industry paradigms. This transformation was facilitated by technological advancements that made high-speed internet widely affordable and accessible, thus enabling seamless streaming.
Pursuing a digital transformation akin to Netflix's trajectory is fraught with challenges due to the associated costs and risks. For instance, General Electric (GE) embarked on an ambitious digital transformation under former CEO Jeff Immelt, envisioning GE's evolution into a digital enterprise. Despite significant investments in their digital platform Predix, GE's attempt to disperse resources across its vast divisions ultimately proved untenable, culminating in a failed transformation experiment. This misadventure precipitated the company's division into three separate entities focused on healthcare, aviation, and energy.
These examples underscore the complexities and prolonged nature of digital transformation, further complicated by the difficulty of garnering employee consensus. Consequently, measuring success in digital transformation can be elusive. A more pragmatic approach involves employing digitalization as a transitional strategy, gradually integrating digital technologies throughout the organization. This method fosters a smart working culture, empowering employees to generate market competitiveness and value through AI and data-driven business analytics. Once this cultural shift takes root, companies can expedite their response to market demands with innovative offerings, thereby refining organizational structures and fostering new business models.
Ultimately, while technical innovation is a constant, successful digital innovation requires clarity of direction and investment.
About the Author
Dr. Jong-Shik Kim is a Chair Professor at aSSIST University and a visiting professor at Hanyang University. With a deep interest in the startup ecosystem, he serves as an advisor on leadership and decision-making for emerging technology-based ventures. From 2013 to 2023, Dr. Kim operated the Master of Science in Technology Management program of Stony Brook University at aSSIST University. He also demonstrated over 20 years of senior leadership in global corporations, including serving as the CEO of Cummins' business and investments in Korea, China, and Asia, and as the CEO of Tata-Daewoo Commercial Vehicle Ltd., a Korean subsidiary of Tata Group. Dr. Kim earned a Bachelor of Science degree in Mechanical Engineering from Seoul National University (1977), a Master of Science degree in Mechanical Engineering from the Illinois Institute of Technology (1981), and a Ph.D. in Mechanical Engineering from Purdue University (1986).
