Defining digitalization: digital development, not digital transformation

Digital transformation is a term widely used and disputed in the media, at events and on forums. It is a strategic imperative – “we finally have to…” – that in reality is still progressing at a slow rate and unguided, is being approached half-heartedly or is “still asleep”. That is the unanimous opinion. The reason for this non-development is often a foggy or simply non-existent understanding of the necessities and opportunities involved. What is digital transformation? And what is it not? Why is just talking about it not enough? Here is clarification and a definition.

What does digital transformation mean?

According to Wikipedia, the term is “part of a larger technological process, and is the change associated with the application of digital technology in all aspects of human society.” When talking about companies, as we are here, then it is about value creation processes and business processes, and their transformation with the aid of digital technologies.

So far, so… not good enough. Since if you were to use the terminology just like this, then you would only be considering the technical necessity. In trying to improve the existing analog business processes, you would be limited to firstly molding them so that they become digital. This may well be a good start, but it is medium-run business optimization at best.

What is lacking for digital transformation?

With this purely technical viewpoint and approach, companies are lacking a business goal. What’s hidden is the question of which processes should be transformed digitally and what the company wants to achieve with them. Targeted, strategic digitalization is not the result. There is not a bridge between business and IT. And it is all done using old ways of thinking.

To achieve real transformation – to be capable of real, sustainable change – all too often a crucial detail is lacking: a modern “digitally competent” mindset. If companies want to survive and grow in the long run, they need to be open to new approaches. Digital thinking and data thinking are in their DNA. They need to open up to new approaches and opportunities, and, what’s more, a new culture with new leadership. This starts with the fundamental way of thinking and continues all the way until it is implemented into the organization.

Digital transformation? Better still: digital development

The opportunity for digitalization is in re-aligning business processes and having completely new ones emerge. More importantly, it is in capturing new business fields or even new business segments. This enables companies to embrace new market conditions and data situations, utilize them and build on them.

Digital development is a continuous project. It is the crucial factor for sustainability and future viability. No company gains or maintains a stable market position by standing still. Just as with a bridge or skyscraper, flexibility enables size and stability.

Digital transformation remains the buzzword of the hour. But to constantly repeat it or call for it does not make it more correct. And it is also not enough to align the future of a company to new, successful business models. Each company has its own specific requirements and objectives – or should do, at least – and can fulfil its own digital development. Important drivers for achieving this are data (Big Data analytics), algorithms (machine learning), technology and mindset. And preferably somebody who knows what they are talking about.

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