Driving Digitalization - 5 Types of Innovation and Digital Transformation

By Thomas B. Cross - CEO TECHtionary.com

Anytime you deploy a new concept, technology or human idea it needs to find ways to provide a common set of language, tools, methods and ways for humans to understand rather simply, how it all works together. Often technical abstractions become distractions, misconceptions and misunderstanding leading one in the wrong direction. Digitalization is a great concept that applies to each company differently. However, implementing complex systems such as digitalization requires collaboration and corroboration among both vendors and customers where abstractions become realities for both. Collaboration gains a deeper understanding of the issues each other and corroboration means validating what each other knows and trusts efforts to be completed as agreed. Ericsson conceived of a new methodology for digitalization with different types or components with different objectives and desired outcomes. According to Ericsson, "The five different types of digitalization, relevant to different enterprises and situations, each requiring their own types of solutions and with different barriers to entry." I will try in this and other articles explain in business terms how these five types of digitalization are useful to consider. The full report explores these digitalization types and their impact.

1) Push digitalization deals with accelerating the forward productivity flow in the value chain.

Push digitalization is really about business process optimization looking forward at each step ahead in the value chain and then evaluate, what if, any procedures can be redesigned or in this case transformed by digitalization, eliminated by digitalization or other efforts. Instead of siloed efforts with limited links between departments, push digitalization can often lead to eliminate many steps often leading to simplified efforts.

2) Pull digitalization concerns adapting the value chain, to be more responsive from customer demand.

Pull digitalization comes from the customer but also from suppliers and other plays in the logistics and supply chain. This could mean more "self-service" by the customer or more "sales/support service" by the provider and suppliers in the supply chain. This means faster, more customized service with more value-added or less cost to all involved. Think of it as personalized ordering of products throughout the supply chain. 

3) Value add digitalization focuses on increasing the value in the end customer’s domain.

This kind of digitalization looks at the value-added processes such as the way VAT-valued-added taxes work. In another sense, value add means what features, services and upsell/cross opportunities are available throughout the supply chain. For example, one part may not add a lot of value by itself but when you add a number of them together you get a "happy meal." By mixing and remixing different solutions can maximize customer benefits and increase values aka profits to those involved.

4) Coordination digitalization is about bringing together resources needed for producing a certain result.

This is more complicated but here's one example. Within an automated warehouse there are many "within" processes that could be automated. However, the idea of a completed automated warehouse comes "outside" of the processes and then builds new processes within the warehouse. Systems or coordination digitalization may be a better term that looks at the entire airplane, super tanker, building, transportation network, city and other efforts to explore smarter solutions to all elements and then applies them to new systems. For example, if you have ever received a ticket from an automated red-light camera, this is small example of new digital transformation used "within" a smart city to reduce accidents and reducing the number of police officers involved.

5) Disruptive digitalization happens when new entrants step into the value chain.

Often an automated warehouse is internal to a distribution company as something customers will never know much about or see. However, focusing on two-hour delivery or faster is something both existing and hopefully new customers will notice. Another example is making fast delivery not just about delivery times but about what the customer really wants in terms of convenience and product options. Understanding what the customer "values most" is where disruptive digitalization and more importantly, innovation occurs. Whether books, short term home rentals, ridesharing and others, each represents significant valuation of what customers are looking for. By focusing on other simple concepts but in a context of digital transformation may lead to exciting business and valuable customer opportunities.

Summary - I would like to thank Ericsson for the opportunity to share some thoughts on insights in the exciting and innovative world of 5G and in future articles I will explore the impact of 5G in business and innovative customer solutions.

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