Organizations today are in different stages in their digital journeys, and might not be fully aware of where they really stand and what else they can do to remain competitive, innovative, and more importantly, sustainable. Making some, most, or all of a company’s data digital is just the beginning of the journey.
Current digital lingo includes terms like digitization, digitalization, digital transformation, robotic process automation (RPA), web3, metaverse, decentralized autonomous organizations — you name it — but what do they really mean?
Doing vs. Being Digital
Not sure whether we can call it general consensus, but many would agree that the main difference between digitization and digitalization is that while digitization is about data and information — e.g. converting a paper document into a digital one — digitalization is about processes — e.g. instead of completing a form on paper, you use an app on a device to enter data directly.
It doesn’t really matter how we phrase it. What does matter is that when it comes to digital transformation, there is a fundamental evolutionary difference between having data and files in a digital format, and converting core processes or interactions that are manual into their digital equivalents.
Then comes automation. With automation, forms — whether paper-based or digital — are no longer required. Instead, we can make processes run automatically and autonomously. Process logic is pre-programmed and applied to control the output, and processes are triggered by a rule, an event, or time. Branches of automation are growing like mushrooms, which is not surprising in the digital world. RPA, in particular, is a software technology that can be used to automate mundane, repetitive tasks. RPA allows you to create bots that can learn and mimic human behavior and thinking, and execute rules-based processes. While RPA eliminates the need for humans to do repetitive tasks, digital process automation (DPA) focuses on automating processes to improve customer experience.
Economists often look at the impact of digitization, digitalization, and/or automation — well, the use of digital technology in general — on the labor market: job creation vs. job destruction. According to the World Economic Forum’s The Future of Jobs Report 2020, by 2025, 85 million jobs may be displaced by a shift in the division of labor between humans and machines, while 97 million new roles may emerge that are more adapted to the new division of labor between humans, machines and algorithms. This signals a positive effect in the long run. I believe that the key angle here is the transformation of how we engage, communicate, interact, collaborate, transact, etc.
Transforming Business Models
Transformation doesn’t stop at making data and processes digital. Business models also need to evolve in order to stay relevant, at the very least. Just think of Blockbuster vs. Netflix. Blockbuster essentially failed in transforming its business model to be able to compete with Netflix. Blockbuster is history now — well it’s been for years — however, it’s a good example of a well-oiled machine that needed to transform to survive, but did either not realize it or just ignored it.
Another example is what’s happening in the financial sector. As I said in a previous post, with all things — incl. eroding trust and decentralized innovation — happening in the payments and financial services space, in the long run, there is no ecosystem player that can feel fully in terms of not being disintermediated. In particular, commercial banks that fail to apply new digital technologies, and are unable to adapt their business models to new realities, will sooner or later disappear.
Optimizing and Adapting to New Realities
Whether you are an established company that has gone through a digital transformation — including data, processes, and business model — or a young, digital-native business, your digital journey doesn’t really end, ever.
Technologies improve, market trends evolve, and industries change. You need to keep a pulse on emerging technologies, the ever-changing needs and preferences of your customers and target market in general, what your competitors are doing, and make changes accordingly.
The coronavirus pandemic, in particular, has reminded us — once again — that things can go awry very quickly. COVID-19 is certainly not the first, and most likely will not be the last black swan event that hits humanity.
Digital transformation has a different meaning for digital-native businesses (DNBs) than more established enterprises, as they don’t have the legacy baggage (as we understand legacy today). However, as previously mentioned, the journey doesn’t end. DNBs can easily be disrupted by newer entrants. Don’t ever let your guard down.
Emerging Concepts: Web 3.0, the Metaverse, and DAOs
Web 3.0 — aka web3 — and the metaverse are without a doubt two of today’s most buzzing concepts in digital land. Decentralized Autonomous Organizations (DAOs) are a vehicle with potential to transform work as we know it. The common denominator is distributed ledger technology (DLT) — e.g. blockchain — and what it can do.
At the heart of web3, we find decentralization and the commitment to give power back to netizens. In addition to the ability to read (web1) and write (web2), owning your data is a fundamental right when it comes to web3. Web3 will most definitely change the way in which businesses use users’ data. Full transparency and user focus are the name of the game.
The metaverse — simply put — is a convergence of our physical and digital lives. It comes from the gaming world, but is now being explored and adopted in other industries, including banks and governments. South Korea, in particular, has recently set aside US$177.1 million for metaverse projects. Earlier this year, JP Morgan opened a lounge in Decentraland. A number of fashion brands have opened their virtual stores. The list goes on. Depending on what your business is about, and whether you like it or not, this is something you need to keep an eye on, at the very least.
Decentralized Autonomous Organizations (DAOs) are essentially internet-native businesses, owned and managed by their members, that have no central leadership, and are built on top of blockchain and associated technologies such as smart contracts. It’s very early days for DAOs, however, they promise a more flexible and transparent structure and a more fulfilling worklife by allowing you to easily and fairly engage with several projects in parallel, and focus on more stimulating and high-value activities.
It’s Never the End
When we start our digital journeys, we aren’t really aware of what lies ahead. When we think that our digital journey ends, it really doesn’t. Does it ever?There’s always something to improve or optimize, and something new to adapt to. There are always opportunities to innovate and disrupt any markets.