Becoming (Digitally) Competitive
TL;DR
- Even if you don’t realize you are constantly deciding whether to perpetuate legacy models or innovate. As a business, not having a tech strategy is not something you can afford.
- To undergo any Digital Transformation, you must first address your digital gap.
- That’s why Digital Transformation is a multistep process where Digitization is how you fill that digital gap, and Digitalization is what you do with it.
- Digitization is necessary but, in many cases, not enough to remain competitive. It should be your business goals that determine your tech strategy and not the other way around.
A fork in the road.
No matter what it is you do, I would venture that, in the past 12 months, you have gone through some form of introspection, be it: personally, professionally, socially or all of the above.
During this period, I have had hundreds of conversations with people who, more or less abruptly, come to the same fork in the road: they have to choose to direct their efforts towards:
a) Going back to the way how things were.
b) Looking forward and preparing for the future.
In theory, we all “know” that b) is the correct answer, or at least it should be (no pun intended). To many, the answer isn’t evident at first. Those who quickly choose b) embark on self-examination journeys to see what needs to change to remain (or become) competitive.
Businesses face this choice, consciously or not, in every decision that informs their strategies. A large part of the “how” in their strategy involves technology, no matter the business. Some effectively argue that every company is (or should be) a technology company in this day and age. Businesses can’t afford not to have a technology strategy.
This begs to question, for established companies or businesses in sectors yet to be disrupted; What is the first step towards becoming competitive?
Many organizations find they have yet to fill their digital gap.
What is the Digital Gap?
I haven’t been able to find a universal or consensus definition for the digital gap (although there is an entry for “digital divide”). It may be that, because it sounds self-explanatory, it’s easy to side-step the need for a standard articulation.
In my experience, I have come to understand that:
The digital gap contains any analogue information and analogue processes of an organization that could be digital.
If the digital gap is the problem, digital transformation is considered the solution. If you’re anything like me, when you hear the term “digital transformation” in passing, you may think you know what it means and not think twice about it. However, when put on the spot, it’s (again) not that easy to articulate.
What is Digital Transformation?
If you research the term on Wikipedia, the first thing you will find in the page referring to Digital Transformation is this:
Irony aside, valuable sources are referenced.
At the top of the page, the definition quotes a book called Digital Literacies: Concepts, Policies and Practices by Michele Knobel. She describes Digital Transformation as the last stage in a process that starts with the individual and builds up to a collective manifestation.
The ultimate stage is that of digital transformation and is achieved when the digital usages which have been developed enable innovation and creativity and stimulate significant change within the professional or knowledge domain.
The complete process mentioned in her thesis includes:
- Digital Competence: having basic knowledge and being able to use digital tools.
- Digital Usage: moving from mere competence to literacy.
- Digital Transformation: doing something new with this new literacy.
This definition helps understand what the endstate of Digital Transformation should look like and what it should achieve. The goal, in itself, is helpful to start to think about how to get there.
There are, unsurprisingly, many takes and angles available on what Digital Transformation is. I encourage you to have a gander to see how vague some of the definitions presented by those who sell digital transformation are.
Actually, best if you don’t.
Now really, what is it?
Coming to a clear understanding of what Digital Transformation is, is something that many professionals and business struggle with unknowingly. I was no different.
In pursuit of an answer (away from Wikipedia), I came across another helpful definition.
Technologist John Maeda published an eloquent post where he breaks down Digital Transformation into two (more practical) steps: Digitization and Digitalization, which he defines as follows:
Digitizing: Taking what is an existing process or activity and making it electronic to create cost efficiencies.
Digitalizing: Realizing an entirely new digital business that can take on the likes of Amazon or Netflix to generate new topline revenue.
This distinction is what has shed the most light on my understanding of Digital Transformation. Before seeing this definition, I would use both terms indistinctly. Digitization is the prerequisite to go on and digitalize (it corresponds to the actual transformation) . This transformation is what enables phase 2 of Knobel’s framework, Digital Usage.
To provide an example, to Digitize a business process means transferring everything previously recorded on paper onto digital files (i.e. PDF or word-processor file). In technical terms, it means turning something analogue into 1s and 0s (i.e. digits). It’s the next step in mass standardization after the invention of print.
For anyone interested, Claude Shannon’s story, American mathematician and digital pioneer, is as underrated as it is interesting — also, here’s a brief history of Digitization.
On the other hand, to Digitalize would be to take these (newly created and standardized) files and do something that was not possible in their analogue form. From something as simple as share it with thousands of people simultaneously; to something more sophisticated like running an algorithm to produce new content and files within seconds.
Gartner, the reputed research and advisory firm, articulates their definition of Digitalization very clearly along these lines, including the vital aspect of adding something new to the business.
So What?
Digitization is both necessary and a struggle, but, in many ways, it isn’t enough.
Going back to that fork in the road I mentioned initially, option a) would be replicating legacy processes in a digital medium (only Digitize); while option b) means going beyond and innovating to do new things (Digitalize).
If you look beyond the “how”, you can restate these in terms of the “what”, each option means:
a) Cost efficiency
b) New ways to monetize
All businesses (should) aspire to be cost-efficient, no matter what they do or at what stage they are. However, embarking on the creative endeavour of adding new services or products (as any respecting Product Manager will tell you) is not a decision that should be taken lightly. This is also a decision that shouldn’t be made for you by someone who doesn’t know your business intimately.
To inform the next step towards becoming (digitally) competitive, the first question isn’t what technology strategy you should implement but rather: What are you trying to achieve?
The rest follows.
