[Opinion] Digital Transformation of Corporate Organizations Triggered by COVID-19

Social change begins with technology. The development of agricultural technology led to the emergence of large-scale communities and the formation of civilization, and the Industrial Revolution, triggered by the steam engine practicalized in the 18th century, opened the modern era. The advancement of women's rights, which progressed in earnest in the 20th century, also centers on the invention of guns and machines. Women, on average, have less physical strength than men, which posed limitations in combat using spears and swords. However, this changes with the use of guns. Even a muscular strongman can be brought down by a single bullet fired by a delicate woman. Furthermore, in workplaces after the Industrial Revolution, intellectual abilities to design and operate machines gradually became more important than physical strength. Additionally, women's unique roles of pregnancy, childbirth, and childcare were constraints on social activities. However, the invention of contraceptives and various home appliances in the early 20th century broke down these limitations.

The First and Second World Wars served as catalysts for the advancement of women's rights. As men went off to the battlefields, women were massively deployed in industrial sites on the home front. Women gained confidence as they performed roles even in heavy industries producing aircraft, tanks, and automobiles, which were previously considered male domains. The unavoidable roles performed during the special circumstances of war laid the groundwork for social change. In fact, women's suffrage was recognized after World War I in Germany (1919), the United States (1920), and the United Kingdom (1928), followed by Japan (1945) and France (1946) after World War II.

While new technologies change products and markets, it takes a long time for these changes to translate into social structural transformations. However, special situations such as wars or pandemics accelerate these changes. The novel coronavirus originating from Wuhan, China, is no exception. In particular, remote work implemented to prevent virus spread is expected to become a catalyst for digital innovation, transforming work methods and organizational structures in companies.

The basic production structure of the industrial era was division of labor within a physical space. Workers arranged along lines centered on motors and engines communicated directly through voice and documents. However, in the late 20th century information age, technological advancements overcame these spatial constraints. With the development of communication technologies and the advent of computers, communication expanded globally through email, the internet, video calls, and social media. Furthermore, various information technology solutions to improve work efficiency were commercialized, but actual adoption was not widespread. Non-face-to-face work methods are not merely technical issues but involve corporate culture and social institutional dimensions.

However, the unavoidable implementation of remote work in this emergency situation to prevent the spread of infectious diseases will accelerate the trend of overcoming spatiotemporal constraints in internal corporate work processes. This means that while face-to-face work that is effective will continue, the scope of non-face-to-face work will expand, and the two will combine to find an optimal point of efficiency. Of course, results will vary greatly depending on business areas, organizational characteristics, and technological capabilities, and there will be trial and error, but the overall direction is clear.

For these changes to be effective, improvements in both internal corporate management structures and external institutional frameworks must proceed simultaneously. Internally, as non-face-to-face work expands, comprehensive innovation in human resource management, including performance evaluation and compensation systems, must take place. Especially, evaluations and rewards based on qualitative factors such as performance rather than quantitative factors like time are key across companies. Externally, fundamental reforms in labor-related systems are essential to move away from the analog era’s quantitative regulations, represented by the current 52-hour workweek system, toward flexible and performance-centered work systems suitable for the digital age.

The forced deployment of women to munitions factories during the two world wars in the early 20th century unexpectedly led to the expansion of women’s social participation. Similarly, the current forced situation of remote work in companies is acting as a turning point for the digital transformation of workplace culture and work methods formed in the analog era.

Kim Kyung-jun, Vice Chairman, Deloitte Consulting