Wherever one looks, the word Digital does tend to crop up more and more. Every business publication will have at least one article concerning some aspect of digital. Often the term is used in conjunction with either Disruption or Transformation, but also derivatives like Digitisation and Digitalisation are becoming more and more widely used. And let’s not forget expressions like going digital. But what is meant by this and what is the difference between all these terms?
In this blog I will have a look at several key phrases and words, what they mean and especially how they relate to each other.
I will conclude with a short, unified definition of the overarching concept of Digital.
[Please do note that whilst I use UK English spelling throughout this article, I have kept the US English spelling intact in the quotes. This is most pertinent in the endings -ise, -isation vs. -ize, -ization.]
Let me start with the most negative and passive of the terms. Passive in a way that disruption is happening to us, whether we decide to take an active part or not.
As I pointed out in a LinkedIn Pulse article last year: Digital Disruption is a phrase that seems to be on everybody’s tongue at the moment and there is no end in sight. Deloitte Australia put it succinctly in the following video:
Ultimately Digital Disruption will affect every corner of business and society. The question is the length of the fuse and how big the bang will be.
Emerging technologies and business models and the resulting impact on the value of existing products and services do disrupt entire industries. We just have to think of examples like Amazon for books and retail, Uber in the taxi/transportation industry and Airbnb for accommodation. But forget those over-hyped examples: When last did you book a flight via a travel agent? Are there any video rental shops left close to where you live? And hasn’t your mobile phone become your camera, GPS, pager, newspaper replacement and many more – all in one?
Digital Disruption often gets compared to a coming Tsunami and with it comes the feeling of helplessness.
But it does not have to be that way:
Don’t be fooled by the term ‘disruption’. Many people misinterpret this as meaning the process of digital disruption is a negative one; that it is an attack on their business. In reality, it is only a negative force for those who chose to ignore it or try to fight it. Those who embrace it often find that it can benefit their business in various ways, contributing to their success. Oxford College of Marketing
The below video by James McQuivey goes into more detail about how digital disruption impacts brands and how they can work with it to create a stronger, more successful future.
Where do you stand on this? Have you already started?
The future is not happening to us, it gets happened. In our exponential world “wait & see” means “wait & die”. Futurist Gerd Leonhard
So let’s not wait and move over to the terms that do describe the activity of going digital.
Digitisation → Digitalisation → Digital Transformation
There is quite a bit of confusion when it comes to these three terms, and especially the first two often get used interchangeably in older articles and online discussions. Over the past year, the nomenclature is, however, getting more uniform.
Let me quote excerpts from the Wikipedia article on Digital Transformation for the three definitions as it concisely shows the difference in one place. As you will clearly see and as I also depicted with the arrows in my topic and in the graph below, the three follow a sequence with the former always being a subset of the next term.
In political, business, trade, industry and media discourses, digitization is defined as "the conversion of analog information into digital form" (i.e. numeric, binary format). Digitizing is technically explained as the representation of signals, images, sounds and objects by generating a series of numbers, expressed as a discrete value.
Unlike digitization, digitalization is the actual 'process' of the technologically-induced change within these industries. This process has enabled much of the phenomena today known as the Internet of Things, Industrial Internet, Industry 4.0, Big data, machine to machine communication, blockchain, cryptocurrencies etc.
The academic discussion surrounding digitalization has been described as problematic as no clear definition of the phenomena has been previously developed. A common misconception is that digitalization essentially means the usage of more IT, in order to enable and take advantage of digital technology and data. This early definition however, has largely been replaced by the above definition, now linked to holistic views on business and social change, horizontal organizational and business development, as well as IT.
Please note that this last point about the topic of digitalisation transcending just the realm of traditional IT and permeating the business as a whole is very important. Any further discussion would exceed the scope of this article, however.
Finally, digital transformation is described as "the total and overall societal effect of digitalization". Digitization has enabled the process of digitalization, which resulted in stronger opportunities to transform and change existing business models, socio-economic structures, legal and policy measures, organizational patterns, cultural barriers, etc.
Digitization (the conversion), digitalization (the process) and the digital transformation (the effect) therefore accelerate and illuminate the already existing and ongoing horizontal and global processes of change in society.
One more clear indication that the terminology is getting entrenched is the fact that Digital Transformation has got its own two letter acronym – DX.
With these definitions under the belt, let’s now take a closer look at what the overarching concept of Digital Transformation or Going Digital means to a business.
What Digital Transformation (DX) Means to a Business
You’ll probably get the best overview by starting with the article Digital Transformation for Dummies.
We have already in 2015 gone on record that Every Mid-Sized Business Needs at Least 4 Strategic IT Leaders and we are expanding that view to say that every business leader will have to become a technology leader. See also an excerpt from the following article on Digital Transformation in the Mid-Market:
As digital disruption becomes more acute and as companies embrace digital it becomes clearer that every business manager and executive will need to become a technology leader.
And here we are not talking technology experts, but would rather use the analogy with finance: These days every business leader is able to read a financial statement and knows how to handle terms such as depreciation and EBITDA.
One last concept that I would like to highlight is that of a DX Maturity Model as well as the changes in business model and increasing business agility that result from putting your business on a DX journey. We recently released our version in The 5 Stages of Digital Transformation Maturity in Mid-Sized Businesses:
To Conclude – A Short Definition of Digital
Now that we have a clearer idea about the different terms in use and what they mean, I would like to attempt a short, unified definition of the overarching concept of Digital:
There are many definitions for “Digital”, but in its simplest form it describes a state where information technologies are used in ever more profound ways by all types of business leaders (not just IT!) to generate business value.
As such it refers just as much to the many modern technologies (think of buzzwords like Cloud, Big Data, Artificial Intelligence, Robotics, Virtual Reality and many others) as it does to the increasingly agile management approaches needed to deal with our rapidly changing world.
Is your company ready to embrace the upside of Digital Disruption? How far are you already on your DX journey? Or is this all still greek to you?
We would love to hear your take on this topic; please post your comment below or do not hesitate to contact us.