Human value in the digital age — digitalization and digitization
Digital transformation is the talk of boardrooms and it sits at the top of corporate agendas across all industries worldwide. More than a third of financial institutions expect to undergo a major digital transformation over the next few years and emerge as significantly different companies (financial industry is the top leader in adapting digital solutions). Fundamental actions to focus, simplify and lead in the upcoming digital revolutions are for enhancing customer value and shareholder returns. For some reasons, it could be difficult to achieve significant levels of both indicators as shaping of businesses aligned with customer patterns is not an easy task. According to Forbes, 74% of companies have already launched digital transformation initiatives to achieve business goals which can give them potential growth and additional revenue. Definitely today, going digital is the talk of the town. Why is it important to have a digital service and a digital transformation strategy? Now we know that mobile is the future of everything — at least at this moment. With the noteworthy growth of Internet of Things and smart devices human life and habits have clearly been changing. Obviously knowing that the digital revolution is not only a technological shift but an organizational change at the intersection of technology, business and people. As a part of this adaptation, people can suffer the most and be replaced by machines and automation systems which can be more efficient and cost drastically less than a human.
Many fear that the new wave which automation and robots can bring is connected with jobs lost in all industries.
Definitely, digitalization will transform labor markets. According to PwC, in Japan, 21% of jobs are at risk of being automated, in comparison to 30% of UK jobs and 38% of US jobs. The main reason for such high differences between countries is robot density which is amongst the highest in Japan. The effect of digitalization on the labor market differs per type of job. The risks appear the highest in economy sectors such as transportation and storage (56%), manufacturing (46%) and retail (44%). Employees in those sectors mostly engage in manual and routine tasks such as solving simple problems. In the digital age, as technological progress speeds up and the potential of artificial intelligence is unleashed, humans should focus on soft and technical skills that robots cannot replace. Relatively abstract and higher educated skill sets such as social and creative intelligence will be in greater demand. Low skilled workers which perform non-routine tasks such as hairdressers or personal trainers will also remain in high demand. The best way to be prepared well for this transformation is to take into account the fact that digital transformation requires emotional agility. People to people interactions where humans involvements cannot be replaced is a place where humans can find a spot for themselves.
Shifting from cognitive skills to character qualities requires a long term strategy which has to be placed in each business. During the process of digital transformation strategic and investment priorities for the next few years need to be considered. The top strategic priorities will be focused on expansion processes where companies acquire new soft skills employees which will be able to interact with business as well as startups with unique technological solutions; creating new products and services; diversification into a new business area including geographical diversity. As the hype around digital transformation continues to go on, the terms digitization and digitalization join the contexts, increasing the level of hype and adding sometimes confusion.
Digitization is used in many contexts and it’s very often interchangeably used with digitalization. On the most basic level, digitization is creating a digital version of analogy or physical things such as paper maps, paper documents, photographs or sounds and more. The simplest explanation of this term would be to say it’s a process of converting a non-digital into a digital format which then can be used by a computing system for plenty of possible reasons. In order to make something digital, it does not mean replacing the original version of documents but keeping the original as a backup. The explained process just helps us to share the digital formats much easier with others.
The second term which should be explained is digitalization. In business which is the keynote of this article, digitalization is often referring to enabling or improving business operations, functions or models by leveraging technologies, turned into actionable knowledge with a specific benefit in mind. In the enterprise context, digitalization is important both for dealing with analog information as well as with paper based processes which contain a lot of paper documents which cannot be delivered digitally. For some reasons those processes are required by local law where for example, documents have to be signed traditionally.
An organization might undertake a series of projects which focus on digitalization ranging from automating processes to retraining employees. In contrast, digital strategy is not something that companies can implement as projects. Instead, these terms refer to the customer driven strategic business transformation that bring additional and real value to customers and change cross cutting organization model as well as deploy new technological solutions.
Digital transformation initiatives include several steps and projects which follow the digital roadmap which should be prepared before any digital transformation. In reality, the process requires the organization to deal better with change overall, essentially making change in the entire company value chain as a business becomes customer driven end to end. In the final stage of digital analysis, we digitize the information, processes and documents (digitization process) that make up the operations and transform the organizational model completely.
Building a digital business model requires success indicators such as transformation awareness where every person must be aware of the digital process; liquid learning called lifelong learning; human centered design model; agility of innovation continuous improvement; sustainable growth and new business revenue model.
Artificial intelligence and automation are fundaments of digital transformation. In fact, there are also a lot of corners for some business because of this change. According to Forbes, many businesses face new digital challenges such as the airline industry — the glass cockpit problem or the food industry where people will not eat anywhere that a web food advisor will not recommend. Another problem is that humans blindly trust technology, and our inclination towards viewing machines as our superior. Self-driven cars are awesome but accidents are happening everywhere and not because the system malfunctioned but because a driver overestimated what the autopilot can do. What is more, HR analytics platforms start measuring human performance and in some cases recruit new employees. Based on the received information, autonomous systems will decide who should be laid off or employed.
The main benefits which technology will never replace and will not be able to measure are elements such as creativity, instinct, empathy and imagination. Each one is necessary and sufficient for the next business development model. Because of this, digitalization transformation will change the business and our life and habits, but it will not replace humans from their workplaces in all cases. According to Gerd Leonhard’s book “Technology vs Humanity”, people should not trust in technology 100% but treat it as an option which can be used by them or not. Everyone has a choice and the right not to allow companies to be disadvantaged if they choose to use people instead of machines even if it’s more expensive and less efficient. “How much freedom are we willing to sacrifice in order to be either more efficient… or more secure?” (“Technology vs Humanity” Gerd Leonhard).
Written by Lukasz Kudlak
