Beyond tech: what it takes to thrive in the digital era

by Maarten Jansen
As we enter the digital era, nearly every company is struggling to keep up with the pace of change. Legacy companies like Kodak have been left in the dust, while even digital pioneers like Facebook are struggling to stay relevant. If Silicon Valley giants have to fight to catch up, how are the rest of us going to not only survive, but thrive? It all starts with a better understanding of what it means to go digital.

Thriving in three layers

At dashdot we work on a diverse set of digital tools and products every day. This gives us a broad perspective on what going digital means for a wide range of businesses, from entertainment to commodities trading.

The way we see it, embracing the digital age means creating change in three layers:

1. Digitization

2. Digitalization

3. Digital transformation

We'll explain a bit more what we mean with each layer.

#1 Digitization: the straightforward one

According to the Gartner Glossary for information technology, digitization is defined as “the process of changing from analog to digital form.” Basically this is where companies take an analog process and digitize it without changing anything about the process itself. Most companies started hopping on this bandwagon long ago, switching from snail mail to emails and from paper ledgers and typewriters to spreadsheets and word processing software. It’s all part of the long evolution of human tools that started with the discovery of fire. 

This is the most familiar layer for most of us, home to trusted pals like:

·   The Microsoft Office software suite and Google Docs to write and present information

·   Dropbox and Onedrive to digitally store all of our documents (bye bye to filing cabinets)

·   Slack, Microsoft Teams and (sigh) Zoom, allowing our teams to gather round the meeting room regardless of distance (and in pandemic times).

Sure, this layer makes things more efficient, cuts costs and helps save the rainforest. But in terms of overall change, it only gives us a tech upgrade that prevents us from staying stuck in the dark ages. It’s the most passive kind of change to make, as you only have to adopt the technologies that everyone around you is using.

To truly embrace the digital age, we have to not only digitize information, but also our processes. This takes us to the next layer.

#2 Digitalization: the confusing one

Unlike digitization, the term digitalization is a little hard to get a grip on. Online searches tend to bring up confusing terms and vague descriptions. Gartner says: “the use of digital technologies to change a business model and provide new revenue and value-producing opportunities.”

For us digitalization comes down to how the company harnesses technology to change its business operations. That means not only optimizing processes but also using digital tools to rethink the entire business model. Think of how Netflix went from sending people DVDs by snail mail (oh yes!) to offering the online streaming platform which got us all addicted to The Crown (maybe that’s just me).

This layer is partly about improving efficiency and data transparency, for example by automating processes, which can save your company money and help you grow faster. This is where we integrate digital tools to further impact our processes, for example by using:

  • ERP software like SAP and Microsoft Dynamics which combine digitization of elements like invoices and stock with automating certain processes, like order fulfilment and invoice follow-up

  • Salesforce to digitize CRM information and then automating related processes

  • Zapier to connect siloes of data and automate workflows based on changes to the underlying data

But becoming a digital business isn’t just about integrating technology to streamline existing processes. It’s about rethinking the way you operate and how you monetize your offerings. This is where off-the-shelf solutions like the ones we list above reach their limit, and becoming a digital business demands a more proactive look at what you offer and how you reach your audience, asking questions like:

  • How can we leverage digital technology to adapt the business model from becoming obsolete?

  • Are there any missed opportunities that digital technology could open up?

But hold on a minute: you can’t rethink your whole business without rethinking the way you think. That’s where the digital transformation comes in.

#3 Digital transformation: the really tough one

Digital transformation has various definitions, and many are closer to how we would define digitalization. The problem is most people are still thinking too much about processes, and not about mindsets. For me the key to thriving in the digital era requires going a little deeper by embracing  fundamental and deeply strategic change to your businesses well beyond the adoption of any technology. IT analyst Jason Bloomberg captured the way we define it pretty well: “The customer-driven strategic business transformation that requires cross-cutting organizational change as well as the implementation of digital technologies.”

Digital transformation starts with asking questions like:

  • Which strategic changes will allow the current business to adapt to change faster?

  • Which skills and mindsets do our team members need in order to transform our model?

  • How do we rethink our roles, our hierarchy and the way we communicate?

  • How do we prepare our organization for change?

It's exactly this type of thinking that creates the agility needed to thrive in the digital age. And that is precisely the area where thought leaders like Eric Ries operate. If you haven't heard of him, we can strongly recommend you his book “The Startup Way” which provides a really solid framework on how to make this type of continuous change a core competency for businesses of any size.

By now you're probably left thinking, “That's great and all, but what should my business be doing?"

We were just getting to that.

So what should your business be doing?

As this cartoon so painfully illustrates, each layer in the process of embracing the digital era is built upon the last. There is no digitalization without digitization, and there is no digital transformation without digitalization.

Layer 1 is a no-brainer and comes down to selecting the right digital partners. Layer 2 is where you’ll start needing some tailored tools and expertise to automate those unique processes that make your clients choose you over your competitors. They require a thoughtful digital makeover which will most likely be part of a larger digital transformation. Layer 3, digital transformation, will require you to re-evaluate large parts of  your business in close collaboration with digitally savvy thinkers.

So the question becomes: "Which of these layers are implemented in my business today?"

You can get a feel for where you are by asking the following questions:

Layer 1: Do we have a solid IT infrastructure that allows us to document and communicate using digital tools?

Layer 2: Are the processes in my business automated using digital tools and have we created new digital tools for our unique processes? Is the business experimenting with alternative digital versions of the business model or even a completely new business model?

Layer 3: Have we made organizational changes to become more customer-centric? Have we transformed our leadership and corporate culture? Are we leveraging technologies to empower and enable employees?

Want to know more?

We’re always looking for an interesting conversation. We would love to discuss the challenges your business is currently facing in any of the three layers, and how you can conquer them.

If you want to know where your current business is positioned in the three-layer model and how to digitally transform your business, get in touch and we'll organize a video chat (if you're digital enough that is).

Just reach out to grab (a virtual) coffee chat and your first steps to making your company future-proof!

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