Digitisation is not Transformation: Lesson One

This is a LinkedIn series by?Dr Keith Dear , Director of Artificial Intelligence Innovation at?Fujitsu Defence , which will cover seven lessons we can learn from transformations that fail. The Series introduction can be found here .

Lesson One: Definitions

All analysis and understanding starts with careful naming and categorisation.

A clear definition of terms is essential to distinguish between concepts. Definitions determine the meaning of the words you use, and therefore change what a listener hears, what they do or say in response, and in guidance, orders or plans, what they should prioritise.

Put another way, definitions are like a compass. They tell you which way to go.

Get them wrong, and your transformation will fail as everyone sets off in the direction they thought you meant, quite probably deciding you must have meant the direction they wanted to go in anyway, and not somewhere they don’t. A failure to define terms is intellectually lazy, but more importantly sets you on a fast track to transformation failure - giving your organisation space to consent and evade, rather creating one that ‘disagrees and commits’.

Let us start then with definitions, derived from the business and academic literature, of key terms in this discussion.

Transformation is clearly what CDS is talking about. ?Transformation creates a new system, supporting a new strategy. It is about what your new job is in that new system. Transformation is led by the CEO or equivalent, and is about operations, not IT.

It takes the full view of People, Process, Policy and Platform, re-aligning and re-designing the organisational and personal incentives around outcomes with a clear strategy – ends, ways, means aligned, prioritised objectives, trade-offs, and risks articulated – to achieve it.

Whereas Modernisation is the adoption of digital technology, broadly synonymous with digitisation or digitalisation – with all three used interchangeably here. Modernisation is usually led by the CIO, and sees upgrades or adoption of new tech systems, platforms and software solutions. In other words, it is about how you do your job within the existing system.

Modernisation and digitalisation provide possibilities for efficiency gains and enhanced operational effectiveness. But if the incentives and organisational structures remain the same, digitalisation will only magnify existing flaws.

For contrasting examples that illustrate this point, take the book business.

Borders bookstore is a frequently cited example of a business driven under by the speed of tech change – the introduction of the internet, e-books, and Amazon.

But that is misleading. Their runaway success was built on an exemplary inventory management system , which predicted customer’s buying patterns. They had a website as early as 1998. But their digitisation of that system added complexity, and became chaotic and gimmicky . Borders modernised and digitalised a successful model that had been overtaken by technology and made it worse.

In other words, they modernised and digitised, but didn’t transform.

And in 2011 they went bankrupt.

Waterstones, in contrast, transformed. In alliance with logistic company Unipart, they focused on building competitive advantage beginning with organisational design – and in 2015 Waterstones and Unipart won multiple awards recognising their successful transformation . They remain a profitable business, and the CEO who oversaw their transformation, James Daunt, has been given the job of saving Barnes & Noble in the US.

Being explicit about definitions in your strategy matters because modernising/digitising without transformation is a fast track to failure.

Properly defined, digitalisation and modernisation cannot drive transformation, they must follow it.?

Lesson Two to coming up..