Digitalization is often perceived as the latest cure for companies that are loosing customers in the market. The Media and Blogosphere is looking down at them, claiming that their digital strategy must have failed, that they have acted too late or simply do not understand that we are living in a digital world today. That sounds usually very smart. But what is digitalization exactly and what do we need for to putting it into place?
It has some history
Digitalization is a term much older than the internet. Initially it was used to describe the transformation of analogue into digital information (signals). Systems that perform such a transformation are embedded in computers, radios, television sets, digital cameras etc. and are called digitizers. For example a digital camera converts the analogue picture into several million digital pixels, each representing a tiny but very distinct portion of a picture. In digital images with a terrible resolution, we can spot these pixels with the bare eye – but usually we do not see any difference between a digital picture and its analogue original version. By the way – printing a digital picture is somewhat reversing the digitalization as the borders of individual pixels get blurred into each other and hence transformed into analogue information. Anyhow, this is not the Digitalization we are looking at here.
Re-Invention in modern times
The modern meaning of digitalization is defined by the use of (software) applications that change the way we interact as individuals or organizations within a society. Our personal, social live is impacted by social media platforms such as Facebook, Twitter and others. Our live as consumers is impacted by online-shopping and extended interaction possibilities with suppliers for our daily needs. Our working live is impacted by digital collaboration, allowing us to work together everywhere with everybody in a given context. In the past, information technology was mainly a driver for (production) efficiency. Today its main purpose is building networks between individuals, companies and public entities to share information and provide services that have mostly some positive or desired impact in our analogue lives.
Hence, for companies, digitalization is mainly the challenge to cater to the everyday digital needs of their customers. The main purpose is to meet the customers at their native location – and that location increasingly is placed in some sort of digital area. Many companies who have understood that, are therefore trying to come up with new and innovative ways to get directly to the customer. But offering a mobile app or shiny new web portal but leaving everything else untouched is digitalization 1.0 and not efficient enough anymore. Customers expect more. They expect to be integrated in a (digital) process or even product- or service-lifecycle that is responsive and fast. They want a beneficial and possibly holistic experience. Customer experience is not to be misunderstood as entertainment. It is rather a way of interaction between customer and company that is suitable for the product or service they are buying or using. That implies that any process that manages the customer relationship has to be deeply integrated within the core value creating processes of a company. Or even more: Any company that relies on customer interaction will only be successful if they are shaping their processes around these interactions, crucial for the customer experience. And this is the point that companies need to reflect in the core of their strategy.
Digitalization as we experience it today is the integration of the customer into the heart of the company, the strategy thinking and hence into the core of all processes. Do we need new and fancy information technology to accomplish that? No, most of the technology needed to get the digital transformation off the ground was available for long. The innovation is rather within the combination of that available technology and the neat integration into front-end business processes.
After all, the world we are living has not changed dramatically: Trees, houses, streets – all still very analogue. What has changed and is continue to change is how we all are interacting within this world. We use digital tools to manage our social interactions as well as our bank accounts and relationships with our insurance companies. And increasingly those interactions will no longer be just data entry points but real participation for a true spot-on customer experience.
Image source: Rick Doble, 2003 via Wikimedia.org under Creative Commons Attribution-Share Alike 4.0 International license