Are you Truly Digital?
In recent times, there have been a lot of buzz around Digital and Digital Transformation, and in most instances these words are used interchangeably with IT. However, are digital and IT the same and can your organization claim to be truly digital?
The IT foundations have evolved from traditionally a technical department and support function within organizations to a more integrated business activity which determines enterprise success or failure. Whilst it is premature to say that most organizations have an understanding that IT is not just a department within their firm, a number of enterprises have taken this leap and adapted their business functions to have IT at the center of all business operations. Indeed, leading enterprises increasingly view IT as a source of strategic strength and competitive advantage rather than just a means of automating business processes.
On the other hand, digital is just emerging and majority of enterprises are still yet to understand what it means to be digital and/or undergo digital transformation. Digital goes beyond being IT aware or having an inclusive and integrated IT function within an organization, but is more about understanding how the internet have transformed the business environment, clients, and traditional business functions (operational, tactical and strategic) as we know it. Research have highlighted that organizations which are to survive now and in the future are those that understand the impact of digital change and can adapt effectively to harness the power of the digital age.
Increasingly, I am finding out that winning organizations are those that have mastered the ability to become ‘digital’ by adopting digital approaches (Social, Digital Analytics, Netnography, Customer Engagement, and Collaboration etc). The subsequent section will discuss what it means to be digital and areas which influence organizational success in being digital:
What it means to be Digital?
In the simplest sense, being digital is about harnessing online capabilities to achieve organizational goals and objectives. Whilst it can be described as related to IT because of enablers such as website, and apps, in our experience digital needs to be considered across all areas of an organization as it influences the entire concept and definition of businesses from research and development, to production, commercialization and consumer engagement. There are 3 key areas which influences organizational success in becoming digital:
1. The organizational vision: the vision drives the overall direction of the organization. A clear digital vision would consider how the organization sees itself in terms of its values and purpose. This might result in a need to reposition itself, and its’ value disciplines (operational excellence, customer intimacy and product leadership). For example, firms like AirBnB have a digital vision and have positioned themselves as “trusted community marketplace for people to list, discover, and book unique accommodation around the world — online or from a mobile phone or tablet.” This digital vision enables the organization to operate with very low operating costs, especially as they do not own the accommodation advertised. As a result AirBnb has revolutionized the whole hospitality (accommodation) industry, as traditional service providers are continuously changing their processes in order to compete.
2. The operating model: This encompasses the way an organization functions including its culture, capabilities, and stakeholder and customer value propositions. The organizational vision influences the operating model, and determines how the organization would function in order to achieve the set goals and purpose of the firm. In order to be successful in the digital age, organizations require an operating model which is fluid and incorporates increased level of customer engagement.
3. Fluidity: This describes the ability of an organization to respond to change, including how it will respond to changes in the market environment and the increasing rate of new entrants. In order to be truly digital organizations need to be highly proactive in ‘responding’ to changes. By incorporating big data and analytics, enterprises can monitor trends and gain valuable quantitative and qualitative insights from the consumers and competitors which can aid in creating and sustaining competitive advantage.
Once organizations are able to understand these key areas, they realize that being ‘digital’ or ‘digital transformation’ is beyond just introducing new IT software or applications but more about understanding how the digital world is transforming their businesses, customers, competitors and markets, and how they can respond to such changes.