Why have DX project consultations poured into KDDI Digital Gate even amidst COVID-19?

Feature article for "be CONNECTED." October 21, 2020

Amidst the spread of COVID-19 and the accompanying economic crisis, KDDI Digital Gate – which provides support for digital transformation (DX) and development of new business in such cutting-edge fields as 5G and IoT – took its services online in order to keep its DX support going. The result was a large jump in DX support requests. What was the reason behind this? We asked KDDI Digital Gate head Takayuki Yamane to find out.

An increasing number of companies are viewing COVID-19 as a chance for business reform

The spread of COVID-19 has had a heavy impact on both societies and economies. Following a declaration of emergency by the Japanese government and calls for the public to limit their time outside, many corporations adopted the use of telework, while many facilities and shops were forced to temporarily close. The way payment transactions are conducted also changed, with an increase in Internet shopping and stores capable of processing cashless transactions.

KDDI Corporation
Head of KDDI Digital Gate

Takayuki Yamane

Technologies such as telework, Internet shopping, cashless transactions were already top-priority DX items for corporations since before the COVID crisis. With the arrival of COVID, corporations faced yet greater pressure to put these new technologies into action.

How does KDDI Digital Gate, which has supported DX promotion and new business creation through co-creation with client companies, interpret the changes in companies' approaches toward digitalization?

“The situation has changed significantly from before the issuance of the state of emergency to now, after it was lifted,” says KDDI Digital Gate head Takayuki Yamane.

“At the beginning of the spread of COVID-19, many companies were refraining from making new investments. However, when it became clear that it will take time for COVID to end and we will have to coexist with it for the time being, I feel that many companies began to see this crisis as an opportunity for change and are thinking of advancing new initiatives.”

At KDDI Digital Gate, which was opened in the summer of 2018, KDDI Digital Gate staff and client companies, and in some cases members of KDDI Group companies, work as a team through design thinking* workshops and software development through agile development**, solving problems and creating new business models.

  • * Refers to discovering issues centered on people and searching for solutions to those issues before creating new goods or services. It is used as a method for creating innovation and developing new business models.
  • ** Refers to a type of planning of development, based on the premise that the market will continue to change, in which one creates small and quick products and services with high customer value and continues to refine them to suit the market. KDDI Digital Gate uses a method of agile development called Scrum.

According to Yamane, the number of consultations coming to KDDI Digital Gate has increased since the COVID crisis began, and the team's operation schedule through the end of August was almost filled in just one-and-a-half months from April this year. Not only has the number of consultations increased, but the scale of the projects being consulted for has also increased. Before the COVID crisis, about half of the consultations were for business reform and half for new business development, but now the number for new business development is overwhelmingly the larger one.

“Many companies already had already felt the need to work on DX, but I feel that the impact of the COVID raised concerns about the sustainability of traditional profit models, accelerating the move to create new business models,” says Yamane.

An increasing number of companies would seem to believe that, to survive the era of COVID, it is not enough to protect their existing businesses; it is essential to create “winning” ones, and for that reason, it is now necessary to step on the accelerator with regards to DX.

All of KDDI Digital Gate’s steps quickly brought online

One large reason Yamane gives for the continuing growth of customer consultations to KDDI Digital Gate amidst the COVID crisis is “We have brought online all of our steps, from our tours to our workshop events to our scrum development.”

The first step, a tour, is now done in a virtual space. A guide from KDDI Digital Gate wears a pair of virtual reality (VR) goggles and walks about in a recreation of the facilities, called “Virtual Digital Gate”, while giving an overview. Video of this is shown via a specialized tool to customer companies, allowing tours to be experienced from physically separated locations. For the planning and development of the VR system, KDDI Digital Gate cooperated with Synamon (Shinagawa Ward, Tokyo), a technology venture company invested in by KDDI.

Artist’s rendition of virtual tours Artist’s rendition of virtual tours

Yamane says, “We had already developed Virtual Digital Gate for introducing KDDI Digital Gate to distantly-located customers and attendees at exhibitions, and now with the COVID crisis we came up with the idea that it could be used for tours as well. Over about 3 weeks we added tour functionality and finished testing.”

Step 2 is a workshop based on design thinking, where participants dig down in analyzing the issues and needs of end-users. When doing the workshop offline, participants used sticky notes on which they wrote out their ideas and opinions, but now, in the online version, whiteboard tools allow the use of digital sticky notes to achieve the same thing.

Yamane adds, however, “To energize debate, rather than simply recreating offline meetings in an online context, it is important to make use of the advantages online meetings provide.”

For example, when participants vote on which of the ideas produced during the workshop they like, if participants can see who has already voted for what, this can create bias in what they vote for. With the online web conference functionality, however, it is possible to hide who voted for what, allowing this bias to be avoided. Additionally, doing the workshop online frees participants from locational restrictions, allowing people at disparately-located places to participate together.

Step 3 is agile software development, and this has also been brought online. “In agile development, it is transparent what your team plans to do on a given day, and it is well-suited to bringing online, so we took the opportunity to do so,” says Yamane.

In addition to conducting morning planning meetings and evening review meetings via web conferencing, development members can reach each other for communication at any other time as well. It is often pointed out that creative ideas are born out of face-to-face chats, and at KDDI Digital Gate they have intentionally created time to allow for online chats so as not to lose these ideas.

Customers have praised the online measures, saying they provide the same quality that was achieved offline.

Helping KDDI Digital Gate in making its quick adaptation to the major environmental changes brought by the COVID crisis were its strong relationships of trust with companies participating in the open innovation ecosystem that KDDI Digital Gate provides for both startups and large corporations.

The company Synamon, mentioned above, is a participant in “KDDI Mugen Lab”, an incubation program launched by KDDI to support startup companies, and KDDI Digital Gate has worked closely with KDDI Mugen Lab, which together enabled the quick accomplishment of this project.

Additionally, many of the companies that came to consult with KDDI Digital Gate in April and later this year were repeat customers. In other words, companies that experienced the KDDI Digital Gate process were persuaded by the high quality and trust they encountered to come back again for additional consultations. This shows how mutual trust between companies leads to fast decision making and action.

Yamane says, “Even if we have customers experience the online process, if we don’t have a relation of trust where we recognize each other as equal partners, we won’t function as a single team. We at KDDI Digital Gate place the highest emphasis on creating a relationship of trust with the customer.”

Producing results on a short time-scale through small, quick cycles

Although DX and the creation of new business models was seen as something that had to be done since even before the COVID crisis, Japan is said to have few success stories for these. What is necessary to raise the success rate? Yamane responds, “We need to use a small, quick cycle of building, testing, and improving so that we can produce fast results. To do this, it important to use not only our own ideas, but to combine them with strength from outside, so that we can accelerate the process.”

At many large Japanese corporations, separate organizations exist in charge of planning, development, specifications and operations are set up, with software creation going through these organizations like a product on a conveyor belt. However, in an age of rapid, major change, this model can no longer keep up with the rest of the world.

“Instead of dividing the development process of new products and services per process, it is important to have small teams that work in short cycles of a day or a week, repeatedly creating and testing prototypes,” says Yamane.

Amidst the COVID situation, in order to support companies in achieving fast results in promoting DX and creating new business models, it has been decided that KDDI Digital Gate will provide a free “Special Program for Creating New Business Models”.

In this program – which is to help those with projects that have been frozen due to COVID or those that need to secure budgets to get their new projects off the ground – customers participate in workshops and prototyping for a period of about a week. The entire process is provided online.

“At about 1 week it is a short period, but being able to develop software that clearly does something should make it easier to persuade others within one’s company. We hope that such ‘small successes’ in the departments in charge of such projects will lead to DX promotion and new business model creation across customers’ companies at large,” says Yamane.

The recurring business model envisioned by KDDIThe recurring business model envisioned by KDDI

This special program will be provided from July 2020 through September for only a limited number of projects, so interested customers are encouraged to contact KDDI Digital Gate.

Looking past the COVID crisis to the time post-COVID, many companies are likely worried that they existing business models will no longer work. In response to this, Yamane says the following: “Business models are methods created by companies to sustainably provide customer value, so they can be adjusted after-the-fact. If you make something that is truly of value to the customer, and can create a situation where they will continuously use it, you can use that as an axis on which to change your business models.”

Yamane is sure that if, through co-creation at KDDI Digital Gate, customers can clearly define the true issues facing users and create revolutionary value to solve those issues, this will lead to successful business models.

Translated by KDDI CORPORATION based on the advertisement article published on Diamond Online on July 17, 2020.

  • *The information contained in the news releases is current at the time of publication. Products, service fees,service content and specifications, contact information, and other details are subject to change without notice.

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