What is digitalization all about? Is there a thing as a digital company? Why are some companies and industries considered more digital mature than others?
During the last couple of years, I have studied the phenomenon of digitalization in-depth to understand its DNA and how it affects IT and business organization. I must say, that the more I study the subject, the more respect I have for this complex topic and the more confused I get when approaching it. Whenever I seem to grasp the subject, a new dimension opens and another level of complexity appears. It is an everlasting journey of surprises. In my journey to understand digitalization (and its affects), I find myself studying leadership, psychology and social marketing – not very digital.
“Digitalization is like Alice in Wonderland – you never know what to expect”
The simple definition of digitalization is the integration of digital tools in our everyday life. But the affects of digitalization are large and more complex that we ever can imagine.
For certain, there is for certain no “silver-bullet” solution that we can fire off to digitalize a business or IT organization – it is more complex than that. To limit digitalization to big data, mobility or Internet of things is to simplify the topic too much. Maybe it is needed to get an idea of the topic but does not help us to master digitalization. No, setting up a Big Data center or function is not digitalizing the organization – it is normal business analysis (should have done years ago) with a fancy name.
“Spotify is considered an innovative and digital company. What is it they do to be successful in a digital market place?”
In management, we try to build models and practices based on observing past behavior to conquer the future. To find an easy explanation to why a company was successful or why a product failed in the market. There is often a nice story (supported by a model) to describe a behavior or success. However, much of management is based on people and markets being rational and predictable. That is not the case. If man would be rational, we would still live in caves eating raw meat. The evolution of man is based on man challenging the common norm and seeking improvements – not being rational. So how much are the models worth if we take into consideration that man is irrational?
“What if there are no models or practices to explain the affects of digitalization?”
But my point of view is that it is too early to have all the answers to digitalization and we need to embrace the uncertainty we live in. The fact is that very few people or managers have seen the full affect of digitalization – and even fewer understand the mechanics of digitalization. Digitalization is not a destination but rather a journey without periods of stability. We don’t know where the digital journey will take us – so why try to guess? Whenever we seem to understand digitalization, defined methods to master it – then it has changed shape to be something different.
I meet many companies and IT organizations aiming to digitalize the company. What does that mean in the unpredictable journey of digitalization? What we have to ask ourselves is what version of digitalization we aim for in its journey into the future. Do we aim for 2010 version, 2012 version, 2015 version, or 2020 version? The truth is as soon as we implemented a digital operating model – it is outdated.
My point of view is that digitalization starts from people, our behavior and mindset, and how our lives are changing due to digital tools. There are no technical boundaries, no geographical barriers or political regulation that can hinder the digital tsunami to change our view of the world. It is challenging the gravity of business – the fundamental principles that no one expected to change. It requires new management models based on customer value creation, agile business development and self-governance based on trust. That is the difference between traditional companies and digital companies – the way they view the world (fast or slow changing) and adopting management models to support that view. It is all about how we view the world.