- The term digital is used in many ways these days,
but what does it really mean?
There are a variety of terms related to this
that are noted, such as digitization,
digitalization, digital transformation.
Are these the same thing?
Let me offer some definitions,
as well as a couple of examples of each.
Digitization is the conversion of analog
or physical information to a digital format.
Think of it as converting atoms to bits,
creating digital opportunities in the process.
Think of paper instruction manuals.
Converting those from physical paper
to a digital format represents digitization.
Another example is from traditional print media.
The New York Times is distributing digitized
or digital content through digital channels:
its website, nytimes.com and through the New York Times app
rather than physical channels, the printed newspaper.
These are each examples of digitization.
Digitalization is the use of digital technologies
and digitally-enabled approaches
to enable or improve business models and processes.
Think of this as the process
of exploiting digital opportunities.
For example, using smart glasses to provide mechanics
with line of sight digital instructions
can improve efficiency and reduce errors.
To take another example from the New York Times,
that publication pioneered new business models,
such as a paywall expanding its digital product offerings.
The expanded offering would eventually include
video, podcast, virtual reality, and more.
It also entailed leveraging digital data and analytics
to increase usability and drive subscriptions.
This represents the digitalization activities
that the media company has undertaken.
Digital transformation is the coordinated
digitalization change efforts at scale,
diffused through the operating model
and all aspects of the business,
including people, processes, technologies, and metrics.
The goal of this is to bring meaningful
outcomes to the organization.
Integration of various digitalization initiatives,
such as augmented reality guided instructions,
3D printed tools that have Internet of Things-enabled
sensors connected with them can result
in the fundamental transformation
of the manufacturing process.
This is an example of the digital transformation.
Continuing with the New York Times example,
the company has reoriented itself
as a digital first organization,
having increased digital subscriptions
418% between 2011 and 2016.
And the company's on track to hit $800,000,000
in digital revenue by 2020.
By clearly delineating different digital concepts,
the New York Times was able
to formulate a digital transformation strategy
to respond to digitization in its industry
more effectively than any other publication.
As you can see, there's a logical sequence
from digitization, to digitalization,
to digital transformation.
It's important to understand the differences,
communicate them effectively,
and chart the progress you and your team are making.
Words matter and it's important you,
as a leader who will drive or at least be involved
in digital transformation in your organization,
champion the use of the right terms.
This will help ensure that everyone is on the right page
and that you can truly reap
the rewards of digital transformation.