Digitalisation versus digital transformation

Dan Smith - 12.12.2018

Having recently just held an event in Bournemouth all about digital transformation and frequently quoted Tom Goodwin, author of Digital Darwinism and one of the foremost thinkers on the subject, it was perfect timing on his behalf to publish another thought-provoking blog on the topic just days after.

Tom’s latest piece, The killer questions to ask before beginning a digital transformation, tackles one of the issues at the core of the conversation around digital transformation – that many companies are making token gestures of ‘digitalisation’ that are simply just papering over the cracks of much deeper issues that a touchscreen monitor in a shop window simply won’t solve.

Airlines still may have a booking system based on code written in the 1960s, which is creating entire system-wide limitations, but will choose to update an app that sits on top of it. Grocery stores may need to entirely rethink their distribution and logistical supply chain, but may stick a robot in a store in San Jose to signal to the press they are forward thinking. Fashion retailers may need to entirely rethink their store presence, but will stick in some smart changing rooms and iPads into some branches.

Conceptually Tom’s point here is a logical response, but not every business has deep enough pockets to totally reinvent their supply chain, or build out a whole new booking engine, as in the example given. These are sizeable projects that carry an inherent risk and also won’t be completed overnight either. They are seismic changes in the way a business operates. And that is what Tom is getting at – a true digital transformation project requires fundamental changes to a business model that will have dramatic consequences.

This theme about paying lip service to digital transformation is the crux of Tom’s article…

For me, there is a key distinction between digitalisation and digital transformation. Digitalisation is taking existing processes, existing business models, existing systems and applying new technology and new thinking like oil to them. Digitalisation is adding video phone kiosks to car rental pick-up locations, it’s a grocery store using pickers at night to fulfil ecommence orders, it’s a bank building an app to let you scan checks to pay into your accounts.

We don’t disagree Tom, and perhaps the ability of a company and its decision makers to grasp just what it is their business provides for its customers (Are you a car maker or a mobility provider?) and how their industry is changing to new user behaviours and expectations is going to be a key factor in determining which businesses can survive in a digital-first economy.

If we can see an Uber’s location in real time, we don’t accept a four-hour window for a repair person. If we’ve never waited online to pay for items, we won’t accept queues in-store.

Funnily enough, the point Tom ends up making causes me to wonder if we’re overlooking a crucial aspect of a successful digital transformation project – people. Without the right strategists cutting through the noise, truly understanding the value your business provides customers and being able to forecast shifts in the market driven by changing behaviours you’re always going to be behind the eight-ball.