Insight Article: Cultural Impact Of Digitalization and Strategic Digital Transformation
The terms Digitalisation and Digital Transformation are often used interchangeably when organisations start making use of technology. While they are both important to the future development of a business, the difference between them is clear cut.
- Digitalisation takes what you are currently doing and uses technology to improve it. This, of course, reduces human error, increases efficiency, and makes room for innovation.
- Digital Transformation, on the other hand, uses new digital technology to create new value propositions. For example, a takeaway allowing customers to order online is digitalisation. Digital Transformation of the same business might involve using data to remember a customers most ordered products and then offering them membership subscriptions or completely new offers to create genuine customer loyalty.
As we move out of lockdown and towards a state of relative normalcy, these two concepts are becoming increasingly vital to the success or failure of a business. In a world of homeworking, an organisation’s use of technology can differentiate it from competitors. Along with this technological shift, is a cultural one.
Fancy technology will do nothing for you unless you have the right people to build strategic insight around it. Now is the time to ask, what changes need to be implemented to your company culture, to ensure you are not left behind?
Aiming for ‘Agile’
Being an ‘agile’ business is, arguably, the key aim of digitalisation. By changing the infrastructure of your organisation and making incremental tech-based improvements to existing projects, you are creating space to respond quickly and effectively to a changing world. The hierarchal and siloed structures which have become the norm in many organizations are now outdated. COVID-19, and the surrounding economic and political changes seen in the last few months, have highlighted the need for an infrastructure that can respond quickly and easily to a crisis.
The wave of digitalisation that has come with the pandemic, has demonstrated how previously separate business areas could become interconnected. Greater autonomy from the leadership team is now essential and can be achieved by encouraging crossover skills within teams. When individual employees have a wider knowledge base, they can be trusted to think of the bigger picture within their area of expertise, rather than relying solely on those at the top. This freedom allows everyday decisions to be made by an integrated workforce, while larger strategic decisions can be handled by the management team.
Creating New Value Propositions
The underlying purpose of Digital Transformation is to make technology a core element of your business. This usually means integrating the SMACIT (Social, Mobile, Analytics & AI, Cloud, Internet of Things) technologies into your strategy and using them to create new business opportunities. This doesn’t mean completely changing the purpose of your organisation. On the contrary, your customer should be the driving purpose behind any changes. By being customer focused and listening to their wants, needs and fears, you can use technology and digital transformation to serve them in new and radically improved ways.
But how can you better understand your customer? Data is a good place to start!
“In God we trust, all others must bring data.”
– attributed to W. Edwards Deming and others.
A lot of organisations have piles of data about their customer which remain underused. Being data-driven involves taking that data and creating genuine customer insights from it. Data a driving force that can reinforce any decision and it is much easier to get this data than many fear.
For example, the cost of data analytics tools has reduced greatly in recent years; a market that was once the preserve of high-end companies such as Tableau and MicroStrategy has become increasingly commoditized as companies such as Microsoft, with their Power BI, have entered the market. This is great news for end-users (especially for smaller companies) as there now affordable and easy to use tools which can aid you in creating data-based strategy.
Likewise, a lack of understanding around new technology can lead to management teams imposing unnecessary limitations. There is wide array of products and services out there which can be utilised to grow organisations and move them into the tech world. Taking time to look at the work of your peers and research what can actually be done, is not time wasted when trying to form a cohesive digital platform that reflects your businesses design. Of course, it is almost impossible to get this right first time. Your platform should be a set of reusable components – data components, business logic components, and infrastructure components- that can be built on and adapted as you move forward.
At SKCI we rely on 5 Key Questions (5KQ) to guide our strategy development. Question number 4, ‘How are we going to change?’, asks you to consider what your current values are and whether they are conducive to the strategy you want to implement. Culture is often overused as a modern-day buzzword, but this alignment between culture and strategy is essential, especially with regards to Digital Transformation.
When you consider how you are going to change, remember that values and principles shouldn’t simply be empty words on your website, but rather a guiding principle which leads to decisions and can aid in employee’s daily practices. This, also, highlights the importance of having a leadership team who is open to change and will drive forward any shifts in culture.
All organisations are unique, making culture difficult to imitate. There are certain traits, however, which you may want to foster when becoming tech-enabled. Firstly, education should be at the core of your work. With technology advancing rapidly, no one will ever know everything, and hard skills can become outdated overnight. Building a workforce where employees have the space to learn and develop as well as a drive to learn new skills is a lot more valuable and over the long term more beneficial.
Secondly, once your existing projects are digitalised your employees will hopefully have more time to work on new projects that can add value. Innovation as a core principle drives growth and prevents an organisation stagnating. Being innovative doesn’t mean investing all of your resources into new projects. But it does mean giving people the space to try and fail, without being fearful of their future prospects.
If you truly want to transform your business, you need to be willing to let employees act fast, fail fast and move on.