In our ever canging world, our vocabulary is enhanced by many new words. And it is usual, that a lot of people start to use these word, because they think that it shows their expertise. But a large amountof these people haven’t got a clue what’s it all about. This leads to a general confusion and abuse of these terms.
In this post, I would like to explain the differences betweem digitization, digitalization and digital transformation. The first two terms are more based on facts. Digital Tranformation is more complex.
Why Differentiating the Terms Matters
When one considers that ‘digital transformation’ once referred to ‘digitization’ and ‘digitalization’ was once called ‘computerization,’ nomenclature matters when discussing phenomena where the terminology changes as fast as the technology does. If business leaders think they can digitize a business or digitalize enough processes to digitally transform they are misunderstanding the terms and missing out on opportunities to evolve, gain competitive advantage, respond to consumer and employee expectations and demands, and become agile businesses.
Digitazation in diffrent contexts
Digitization is the conversion of any information or analog into a digital format (1s and 0s) that is understood by a computer system. It uses tools and technology to automate manual tasks and improve time consuming transactions, lowers costs, improves transparency and efficiency while enhancing security. For some organizations it is moving away from the use of paper to a paperless environment using technology. Digitization for example can transform customer-facing journeys in powerful ways, often by creating the potential for self-service to improve user experience.
Digitization of content
In everyday business, digitization can mean digitizing documents such as invoices, archives, products and using them for processing, storing or sharing. For example, image recognition programs can be used to read content from forms and transfer it to the system. This is the first part of how businesses can digitize themselves by converting documents and analog content into digital form.
Automation thanks to digitalization
Digitalization is also often used as a synonym for automation. Thus, existing processes can be digitally mapped or automated in order to save work steps. Companies often already use the term digitization when they digitize and automate their processes. An example of such an automatic process would be as follows: An order is created, the shipping label is created, the invoice is sent and the warehouse is contacted to prepare the shipping. This allows complete processes to be transformed into a single automated workflow.
At Digital Business, we talk about digitalizing business units, business models and entire companies. These are changing due to digital technologies and digital possibilities. This involves constantly adapting to new technologies, adapting processes such as the supply chain and ensuring that people can network and exchange information with others.
Digitalization is the use of converged digital technologies to optimize and automate the entire value chain of the business in order to deliver differentiated value proposition to customers. According to Porter (1985) value chain is a linked series of activities that an enterprise uses to convert raw material into profitable product or service. This is still relevant today, raw material could be data, information etc.
Digitalization has caused value chains to evolve into digital ecosystems. It is making the boundaries across the different areas of the business, functions and roles more flexible and fluid. Digitalization continues to redefine how enterprises interact with customers and vice versa. It enables organizations to rethink legacy business models and effectively manage the customer experience ecosystem.
Let’s get into the complicated stuff
“Digital” is driven by rapid pace of technology innovation and adoption in the market. It represents new ways to doing business. For example, it transforms value proposition of products or services, introduce flexibility, agility, convenience and richer customer experience. It fundamentally change how most businesses engage with their customers and vice versa. Business dictionary defines “Transformation”, in an organizational context, as a process of profound and radical change that orients an organization in a new direction and takes it to an entirely different level of effectiveness. Unlike ‘turnaround’ (which implies incremental progress on the same plane) transformation implies a basic change of character and little or no resemblance with the past configuration or structure.
Digital transformation is how an organization adopt and adapt emerging or exponential technologies to create new business models, transform legacy systems, culture, structures and ultimately providing richer customer experiences. It is about creating and delivering new value in processes and systems that supports organizational vision. As Digital transformation continues to move more rapidly impacting many industries. Innovation in digital technologies and new business models is expected to continue in the upward trajectory, with new disruptive technologies introduced in the market.
The fundament of a digital transformation is culture
Sone cornerstones first:
Look outside, not inside.
A digital culture encourages employees to look outward and engage with customers and partners to develop new solutions
Prize delegation over control.
A digital culture diffuses decision making
throughout the organization.
Encourage boldness over caution.
A digital culture encourages people to take risks, fail fast, and learn.
More action, less planning.
A digital culture promotes speed and
Value collaboration over individual effort.
A digital culture thrives on transparency
“Culture eats strategy for breakfast” – Peter Drucker
The most successful digital transformation is grounded in cultural change which is promoted by the leaders.
Success in a team starts with you and your management style. In order to meet the demands and expectations of your employees in the long term, you need good ideas – especially in today’s increasingly digitalised working world.
Change mindsets, be more future-oriented, try out new ideas, be open and learn from experiments, failures and successes.
We want to change our way of thinking. We want to be more future-oriented, try out new ideas, be open and learn from our experiments, failures and successes.
Rohan Garg (VP Product, kununu)
The digital transformation not only changes the workplace, but also what employees expect from their superiors. Managers must learn to develop themselves, to adapt and to treat employees with respect. And they must focus on turning the team into a community in which all employees are integrated – this is the only way to create a future-proof, successful and, above all, humane workplace.
This measure means…
- encourage commitment and retention by establishing a relationship with team members and meeting each other at eye level
- a smooth transition to the digital and automated world of work and thus increase the success of the company
- integrate working models such as home office or freelancing
Listening and showing compassion: More than just interpersonal skills.
Just listen: A leadership concept that every manager should take to heart in 2020
Ketan Panda (Founder, Goodvitae)
Being a good boss means much more than just giving commands. Employees want to be heard, to feel respected and valued – only then can they be truly productive. For a manager, this means focusing on interpersonal skills, on compassion, listening and emotions. Only if you understand your employees can you help them through difficult times and turn problems into challenges.
This measure allows you to…
- find out what is good for the team
- learn from the team and get new ideas
- create a supportive working atmosphere in which employees are happy to get involved
Bottom-up leadership: Inspiration from the bottom up
Leaders should embrace the idea of teamwork – and by that I do not mean working together on different tasks and projects, but rather that a leader generally focuses less on himself and his position as boss and more on the whole team
Matt Edstron (CMO, GoodLife Home Loans)
Not all decisions and results have to come from above. Especially in today’s world, where teams consist of well-trained, specialised staff. A clever manager should use this expertise rather than working against it. Giving employees responsibility and letting them decide for themselves what and how something needs to be done can create new perspectives and give the company a decisive advantage.
This measure may …
- promoting growth and the willingness to learn
- help the team to achieve better results together
- driving ideas and innovation to improve decision-making
Diversity & Inclusion: The power of unusual perspectives
Inclusion is not the same as diversity. We are all working to integrate more people from different backgrounds into our team – and that is important. But inclusion is not about the sum of people who bring diversity to the team with their background, culture, education or gender. It’s about how much these diverse characters are actually included in critical discussions and decision-making.
Amie Devero (Managing Director, Amie Devero Coaching and Consulting)
Different points of view and experiences make a team more productive, faster and better in decision-making. Promoting diversity and inclusion is no longer a “nice to have” but a “must have” for companies to remain competitive.
This measure can…
- increase turnover by up to 35 percent
- bring new and better solutions to old problems
- promote a versatile and robust corporate culture based on mutual respect and cooperation
Digital Leadership: Staying human in a digitalised world
People yearn for human bonding. Even in a digital age: Face-to-face conversations, phone calls and REAL conversations are crucial for a good management style.
Jan Spence (Jan Spence & Associates)
Leadership in times of digitalisation, i.e. digital leadership, is a double-edged sword. On the one hand, employees need the best technical equipment in order to be successful in today’s working world. On the other hand, they need a manager who supports them in using the tools correctly – but at the same time remains human and knows how to motivate his employees and make them happy. Moving on such a fine line is both a skill and a leadership concept that managers will need not only in 2020 but for many years to come. The ironic thing is that you can get technical help for this, for example in the form of digital feedback tools.
This measure can…
- strengthen staff retention by responding to the needs of team members in a digital age
- Increase productivity and innovation with better tools
- Helping to make full use of the talents of the team by automating simple assembly line tasks
Participative leadership: Let employees decide for themselves
I think participatory leadership is very important. This means that managers need to consider how to delegate decision-making ‘downwards’ – and empower teams to act autonomously
Moritz Kothe (kununu, CEO)
Collective decision making, involving employees: What at first sounds simple, in many management levels means a huge paradigm shift. After all, in many places the sovereignty over decision-making is still regarded as an expression of power and strength. In fact, no executive now does himself a favour if he does not leave part of his responsibility to his own employees. The prerequisite: manager and team trust each other and are convinced of each other’s professional competence. There should also be a certain motivation on the team side to get involved and take responsibility. Only in this way can the project “Participative Leadership” succeed.
This measure may …
- contribute to a higher acceptance of decisions
- bringing out new ideas and expertise
- promoting motivation, commitment and satisfaction among employees
Onboarding: Good leadership begins with familiarisation
The first weeks in the new company are crucial. I therefore believe that many companies should fundamentally rethink their onboarding and develop a strategy for 2020. This is the only way to ensure that new team members settle in well and feel comfortable in the long term. This gives companies an enormous long-term advantage.
Martina Ruiß (Personio, Head of HR)
Whether an employee feels comfortable in the company and is motivated in the long term depends largely on how he or she is integrated into the new team. Managers should therefore take time not only for the professional, but above all for the social integration of an employee. Especially in the first days in a new company it is important that a newcomer feels valued. Only if he/she perceives himself/herself as an equal team member and has the feeling of being needed, will he/she feel secure in the long term. For executives and HR managers this means putting more time and energy into onboarding.
This measure can…
- increase satisfaction and thus the sense of purpose
- avoid high staff turnover, because staff loyalty is strengthened in the long term
- lay the foundation for a trusting relationship between superiors and employees
Adaptive Leadership: Learn what needs to be done – and not what has already been done
Adaptability is one of the best qualities a boss can have. While some situations call for tough skills in a specific area, adaptability will always be useful in every imaginable moment. Despite our efforts to derive predictable, recurring results from every success and every failure, there will always be that element of chance.
Alexander Kehoe (Co-Founder and Operations Director,Caveni Digital Solutions)
Many managers still cling to fixed structures and routine working methods – and to a certain extent they will continue to be allowed to do so. However, workplaces are becoming increasingly dynamic and such methods will not always be the best choice. It is essential for managers to evaluate situations, learn from their own employees and become creative, rather than simply relying on the status quo.
This measure can help …
- to take things as they come
- to learn how to address problems and then find the appropriate solutions
- provide the company and its employees with the tools to sail rather than sink when faced with the unexpected challenges of tomorrow’s world of work
Agile leadership: Benefiting from the professional competence of employees
Today I follow one single principle: hire professionals and let them do their job – on their terms. I try to find the best people, so I don’t have to worry about the details.
Dmytro Okunyev (Khanty, Founder)
Today’s teams consist of specialised and highly qualified employees. No manager has as much specialist knowledge as all employees put together. By using an agile, i.e. flexible management, which gives your employees the freedom to do what they do best, you can make use of all this expertise. Many managers find it difficult to relinquish control. But especially today, this is becoming increasingly important. Because the effect on productivity and innovation is immense.
By this measure…
- as a manager, do you have more time to take care of the planning and organisation
- can you make use of the immense potential of your team
- if the company remains versatile and innovative, it will be well prepared for the challenges of tomorrow
Be inspiring: With enthusiasm to success
One of the strongest qualities of a leader is the ability to inspire people with a common mission.
Osnat Michaeli (Infarm, Co-Founder and CMO)
There is a prerequisite that is essential for the success of a company. Without it, no company will succeed in making a real and lasting positive impact on the industry and ultimately the whole planet. It is called “enthusiasm”. Awakening this enthusiasm in your own staff, rather than imposing it on them, is the great art of good management.
Companies with a clear mission need leaders who inspire others with their own passion and ultimately spur them on to honest commitment.
This measure may …
- increase the motivation of the employees
- create a sense of community
- increase productivity and thus the success of the company