Digital Transformation, Digitization and Digitalization

I came across three words related to transformation in the digital age; Digital Transformation, Digitization and Digitalization. I was quite confused especially with Digitalization hence decided to explore their definitions and real-life meaning. Here is what I learnt in the process and will love to hear your thoughts and feedback.

Digital Transformation

Digital transformation is the practice of leveraging emerging technologies to build new business systems, business models, consumer & employee experience, or to change current ones to address increasing industry and market needs.

Digital Transformation is focused on CX, EX, Business Systems and Models
Digital Transformation is focused on CX, EX, Business Systems and Models

Digital transformation goes beyond conventional systems such as distribution, marketing, and customer support. Instead, digital transformation starts and ends with the way you think about customers and the way you engage them.

Digital Transformation, Digitization and Digitalization

Since all of these words have “digital” in them, they must be the same. Wrong. These words define and describe three different things and are not interchangeable. Let’s take a brief look.

Digitization

Digitization is the transition from analog to digital. Not that long ago, businesses had paper accounts and ledgers to keep track of their activities and transactions. The business data was analogous, whether handwritten in ledgers or typed in documents. You dealt with physical documents, such as papers and binders, Xeroxes, and faxes, if you wanted to gather or share information. Digitization is the process of converting information into a digital format as per TechTarget

Another great example is our videos in VHS to CDs or DVDs and audio in cassettes to CDs and eventually MP3. Computers became popular, and several corporations began turning all those paper and physical documents into digital data archives. The method of transforming material from analog to digital is called digitization.

Digitalization

This one is very confusing for me at least. For some, it means Digitization and for some digital transformation.

As per my understanding Digitalization enables and improves business processes by leveraging digital technologies e.g. APIs, big data, cloud etc. Digitalization is not about changing the way you do business or creating new business models. It is about making everything quicker and easier now that the data is readily available and not stuck anywhere in a rusty folder in a file cabinet or a homegrown database server.

In the example of customer support, Digitalization has fundamentally improved operation by allowing consumer information simple and fast to access via the device. The simple customer support approach did not shift, but as scanning paper ledgers became substituted by inserting a few keystrokes on a computer screen or mobile app, the procedure of answering a query, looking up the appropriate records, and providing a response was far more effective. It has not changed how you provide support by using new platforms like social media etc.

As per Gartner Digitalization is the use of digital technologies to change a business model and provide new revenue and value-producing opportunities; it is the process of moving to a digital business.

Closing thoughts

Digital Transformation, Digitization and Digitalization
Digital Maturity: Digital Transformation, Digitization and Digitalization

Digital Transformation, Digitization and Digitalization are all steps in the right direction at different times with different outcomes and value. While Digitization initiates the journey, Digitalization accelerates the business systems and makes it easier to access information. It is Digital Transformation that enables the end to end game that every organization needs to win it’s customers, employees and investors.

The companies who are just happy with Digitization or Digitalization are the ones that will not be able to compete and stay in business for the long term. Even when you may not be competing with Amazon, Uber or Delta but your customers and partners are learning what good looks like from them and they expect the same from you!

History Of Digital

History of Digital and Transformation it has enabled

If you look around, you will see that every single aspect of our modern world runs on electronic devices. The core of everything is ones and zeroes nowadays, and the world is on a path of aggressive modernization and digitization. This was not the case for the last century. We have come a long way, and today, we will decipher the history of digital and the revolution it has created.

Ones and zeroes have become the building blocks of modern technological advancements. Moreover, digitization has led humanity to new heights of prosperity, progress, and success. From landing on the moon to creating social media platforms for billions, digitization plays a vital role in every aspect of human lives.

From smartphones to personal computers, from tablets to gaming consoles, everything runs on ones and zeroes. However, this was not always the case. Let’s take an in-depth look into the history of the digital era.

History of Digital 1703 – 1847

Yes. The birth of the digital era took place in 1703 when mathematician Gottfried Wilhelm Leibniz developed the modern binary number system and published it under the name “Explication de l’Arithmétique Binaire.”

In the year 1847, Boolean algebra was born when George Boole published “The Mathematical Analysis of Logic.” The book would later become the foundation for a new field of mathematical logic using the modern binary number system. In his words, “The respective interpretation of the symbols 0 and 1 in the system of logic are Nothing and Universe.”

History of Digital 1937 – 1969

In 1937, Claude Shannon established the foundation for digital circuits in his Master’s thesis at MIT. He came up with a method of implementing Boolean algebra and logic to enhance the design of relays used for routing switches in telephones.

In 1947, John Bardeen, Walter Brattain, and William Shockley invented the first transistor at Bell laboratories, which changed the course of history forever and opened a new window to the digital future. This was among the most important inventions of the century. This semi-conductor device replaced the giant vacuum tubes and offered a simpler way of amplifying or switching electric signals.

In the year 1950, the very first series of pagers were introduced for physicians in New York City. Pagers showed a new mode of communication with the help of wireless telecommunications devices. These pagers could receive a message within 40 kilometers of the nearest transmitter tower.

In the following year, 1951, the first commercially available computer, Britain’s Ferranti Mark I, was delivered to Manchester University. This computer was created for simple arithmetic and data handling. Several other companies released their versions of general-purpose computers, such as UNIVAC, EDVAC, and LEO, etc.

In 1969, the precursor to modern-day internet was born, and it was named ARPANET (Advanced Research Projects Agency Network). The first message that was transmitted via ARPANET was “LO.” A student, Charles Kline, tried to send the word “LOGIN” to the other computer, but after LO, the receiver crashed.

History of Digital 1971- 1984

The very first email was sent out by computer engineer Ray Tomlinson to himself in 1971, and it read “QWERTYUIOP.” This laid the foundation for the modern email and data exchange protocols observed by the majority of email providers.

1975 saw the invention of TELENET, the world’s first commercial packet-switched network. This was the first version of the internet, and it connected company computers to other systems all over the world.

In 1981, the laptop computer was born. The 8/16-bit Epson HX-20 was invented in 1981 and was commercially sold in 1982. The screen was a little bigger than a matchbox (120×32-pixel dot-matrix LCD). The screen only displayed four lines of text at a time. It came with 16 KB of RAM (expandable to 32 KB).

In 1984, the very first mobile phone was launched for 4,000 USD. It offered only 30 minutes of use after a 10 hours’ charge. However, it laid the foundation for modern cellular and smartphones.

History of Digital 1989 – Present Day

Thanks to Tim Berners-Lee, in 1989, the “world wide web” was invented and thus born the modern internet. He was working at CERN at the time, and he created the system to facilitate the automated information-sharing among different scientists.

In the following year, 1992, dial-up internet and modems became public, and everyone was introduced to the joy on the internet. We all remember the era of unplugging phone lines to use the internet on our personal computers.

In 1994, the very first smartphone was introduced to the public, and it allowed the ability to place calls, send a fax, retrieve emails, and send text messages to others. It was known as IBM Simon Personal Communicator, and the battery only lasted an hour.

In the year 2000, Broadband was introduced in the UK, and a new form of internet connection was introduced. People quickly started replacing their dial-up modems for Broadband modems.

In the year 2003, Skype was launched. This was the very first medium of video conferencing and communication between people. It quickly became popular, and there was now a new medium of communication.

Facebook was launched in 2004 and became the number one social media platform for years to come. It gave birth to a new age of social media communications and earned millions of users within a few years of inception.

Did you know that the first iPhone was launched in 2007? The first iPhone also resulted in a sudden and an immense surge in the usage of smartphones. It sold over 6.1 million units all over the world and established Apple as the best brand for smartphones for a while.

In 2011, Bitcoin made history by becoming the first widely accepted fully digital currency. When Bitcoin focused on modern encryption technologies to offer a form of wireless currency, it became all the rage, and people started investing in Bitcoins.

2016 was the year when Facebook released the virtual reality headset, Oculus Rift, to consumers and set a new age for virtual reality applications.

Closing Thoughts

We live in an age of 4G (soon to be 5G) networks where we can watch or access anything from all over the world within a matter of milliseconds. Everything is available on the internet nowadays, and you can communicate with your loved ones from thousands of miles away.

From a mere email conversation to significant business decisions, everything is done via digital mediums. It all began with a binary number system, and the modern digital advancements are not showing any signs of slowing down for decades.

What is meaning of Digital in Digital Transformation

This is the most common question I am asked during all my years in digital transformation. It may come in various formats, but the intent is to understand the digital transformation scope. Every digital transformation lead will have a different answer based on the state of the company’s evolution. Hence no answer can be right or wrong in my opinion.
As per me, Digital is the new way of doing business and engaging with customers in this digital age. That is why a digital transformation should focus on both customers and employees in transforming the following:
  • User Experience
  • Business Processes
  • Business Systems
Do you agree? Please share your thoughts.

Leading Digital Transformation (Step 8)- Institute Change

Articulate the connections between the new behaviors and organizational success, and develop the means to ensure leadership development and succession.

Don’t manage – lead change before you have to. -Jack Welch

Here are some of the things that I have seen implemented in order to solidify change that has been initiated or created due to Digital Transformation initiatives:

  • Start a Digital enablement program
  • Promote and adopt ROI mindset
  • Align Digital KPI’s to Performance KPI’s in long-term
  • Whatever else that you think can work based on the culture of your organization

This is the final step on the list of 8 steps that I recommend for digital transformation in your organization.

Leading Digital Transformation (Step 7)- Sustain Acceleration

At this stage, all successful digital programs already have huge momentum. Frequent small wins and the guiding coalition is working in the favor of digital transformation to move to next big and bold things that are right for the organization. At this stage the digital transformation program is already generating some clear ROI hence you can feel confident about bringing necessary changes to accelerate the program.

This is the best time to change systems, structures, and policies that don’t align with the vision that you have for the organization. If you can find efficiencies in your organization this is the best time to make those moves and restructure your team. Also hire, promote and develop employees who can implement your vision. This is also a right time to reinvigorate the process with new projects and teams.

Some of my personal favorites at this stage are:

  • Get your long-term plan for build and maintain phase pitched and approved.
  • Setup bigger change mediums like digital Center of Excellence for internal consulting and engaging more internal customers so that ROI of the digital transformation program can be further enhanced
  • Pitch next big digital projects. This will also help to ensure that digital continues to be a priority for C-level
  • As ROI become more and more critical and the center point of your operating model, engage with business functions and help them understand how the services of your digital teams can be leveraged by their teams to generate more business, customer satisfaction etc. Help them plan for the next fiscal year using all this information.