Digital is a term that we all think we understand. Organisations are rushing to go digital as quickly as they can to keep up with the crowd. But do we really understand what digital means? To think about this issue might be particularly interesting for businesses interested in becoming a social business.
This is a question that has been proposed in a recent paper by Karel Dorner and David Edelman (2015) for McKinsey and Company, which suggests that people should understand what going digital really means before pressing ahead to try to achieve this. The implication of this is that at least some of us do not know what going digital signifies. As Dorner and Edelman argue, it is no use being vague on this matter if success is to be achieved:
“Business leaders must have a clear and common understanding of exactly what digital means to them, and as a result, what it means to their business.”
They have tried to help in resolving this problem by suggesting that going digital is more about an approach rather than a “thing”, and that there are three factors involved. These are argued to be:
- creating value at the boundary of the business world;
- creating values in processes that provide great customer experiences
- building capabilities at the core that support the structure.
Creating value at the boundary of the business world
Looking first at creating value at the boundary of the business world this means being able to review the whole business and see where new potential for value lies. This may involve looking at entirely new ways to do business, or it could be working to create value in areas that already exist. Being able to achieve this means understanding the business environment and being able to scan it and analyse it effectively to understand the risks and possibilities that might come about as a result of taking a specific approach.
The example of the Internet of Things is provided where it is explained that there are many opportunities, but there are also many questions outstanding such as those relating to privacy associated with data captured. It is also argued that understanding what customers want or need and how this is changing both in relation to the business and in ways that are outside of this may be important in finding ways to add or remove value.
Creating values in processes that provide great customer experiences
The second attribute is all about building value in the core business. It is related to creating value in processes that provide great customer experiences. It is explained that digital allows us to find new ways to enhance customer service through a deep understanding of the purchasing journey that the customer takes and looking at ways that digital can offer a better experience. One important factor to bear in mind here is that it is argued that this should not be a one-off activity, but that rather improvements need to be made all of the time. It is suggested that this includes steps such as looking at ways to automate interactions with customers in real time, as this helps to better deal with customer demand to the customer satisfaction. Another suggestion is looking at the way the customer interacts with the business and finding ways to improve this to enable an easier purchasing decision.
Building capabilities at the core that support the structure
The third attribute is explained to be building capabilities at the core that support the structure. To achieve this it is proposed that two areas need to be looked at. These are mindsets and system and data architecture. Looking at the latter first, digitisation needs technology that can support it, and particularly that can support faster responses to customers. The approach needs to be one where improvements can be made iteratively and continuously. With regard to mindsets it might be argued that people need to be empowered to be able to make decisions that support digitisation. This needs to occur across the organisation and not just in areas where it might seem “obvious” such as in product development. It is also helpful to foster cross-team collaboration to find more interesting ideas that may offer real value in a digital world. Idea production is essential in a digital environment, and it is suggested that objectives that support this and incentives that reward it can be helpful in delivering the right mind sets. Taking a collaborative approach and allowing everyone to contribute might also be argued to be important.
Paula Newton is a business writer, editor and management consultant with extensive experience writing and consulting for both start-ups and long established companies. She has ten years management and leadership experience gained at BSkyB in London and Viva Travel Guides in Quito, Ecuador, giving her a depth of insight into innovation in international business. With an MBA from the University of Hull and many years of experience running her own business consultancy, Paula’s background allows her to connect with a diverse range of clients, including cutting edge technology and web-based start-ups but also multinationals in need of assistance. Paula has played a defining role in shaping organizational strategy for a wide range of different organizations, including for-profit, NGOs and charities. Paula has also served on the Board of Directors for the South American Explorers Club in Quito, Ecuador.