Is your digital initiative digitalization or digital transformation?
In today’s VUCA (Volatile, Uncertain, Complex and Ambiguous) world, Business Leaders realize Digital Transformation is a top priority on their agenda. There are a ton of research articles indicating the need for Digital Transformation but some are successful and some may be not.
There could be many reasons why Digital Transformations including Organizational Culture and Behavioural reasons, Lack of IT Infrastructure, Lak of dedicated funding and many more. But there is also another reason why such initiates could fail. Many employees misread the purpose of Digital Transformation Initiatives and simply believe it is to automate manual processes or eliminate excel sheets in the company. Well, this can be a goal for some digital initiatives but is it Digital Transformation? If the vision and the mission of such initiatives are not clearly communicated to the employees, they might misinterpret Digital Transformation as Digitalization and can lead to failure of such initiatives. It is like the famous parable of the blind men and an elephant.
“The point of digital transformation isn’t to become digital. It’s actually to generate value for the business.”
Digitalization is the process of leveraging digital technologies to improve business processes. These initiatives are typically the examples we spoke about earlier like automating manual processes or eliminating excel sheets.
Digital Transformation on the other hand aims to redefine an organization's value proposition like creating new business models, new operating models, etc
One might argue that their organization has always been focussed to do things faster, cheaper and better. So, why now call this as transformation. Well, at the core of this transformation is to offer a new value proposition. For example, when Netflix moved from it’s DVD by Mail business model to Online Streaming, it created a new business model.
At the core of these digital initiatives is technology. I remember hearing about SMAC (Social, Mobile, Analytics and Cloud) a few years back. While they still are considered as pillars for digital transformation initiatives, one can also argue for AMPS (Analytics, Mobil, Platforms and Social). Platforms and eco system have become key pillars for Digital Transformation Programs. In our next article, we will go through this concept.