This blog formalises the insights, ideas and opinions voiced at our lean beer conversations held in July in Tauranga and Auckland. The specific topic that we discussed at this session was “what is digital and what is a digital organisation?”. The actual notes of these conversations can be found in this post to the “Thriving Through Digital” LinkedIn Group.
In developing this blog I have considered the conversation and resulting online dialogue, research findings and also my own views on the topic. The intention is that this blog (as amended and updated over time) will be combined with future blogs and insights to form the basis of a book, which addresses the question “What does it take to transition from a successful “analogue” organisation to a successful digital leader?”
I have lost count of the number of conversations I have had with people where we have tried to answer the questions what is digital? I have captured the general themes of these discussions in earlier blogs including this blog. In essence, different people view digital differently and often a person’s definition of digital says more about their perspective or role in an organisation than it does about an independent view of what digital is. Marketing and sales executives for example usually define digital as being all about the customer and customer experience whereas a COO often focused on creating new ways of working inside the organisation and HR executives see it as enabling employees. Then there is the classic technologist view represented here by a definition from WhatIs.com:
“Digital describes electronic technology that generates, stores, and processes data in terms of two states: positive and non-positive. Positive is expressed or represented by the number 1 and non-positive by the number 0. Thus, data transmitted or stored with digital technology is expressed as a string of 0’s and 1’s. Each of these state digits is referred to as a bit (and a string of bits that a computer can address individually as a group is a byte).”
At one level they are all correct, at another they are very limited definitions and in the end the discussion becomes circular. Business is about the customer, so digital is all about customer experience however, if that is all you do you risk becoming noncompetitive, so you need to change the way you work inside the organisation and how you interact with your ecosystem of partners. It’s all true but it talks more about “business” than it does about “digital.”
In the face of this dilemma Mckinsey suggest that “to be meaningful and sustainable, we believe that digital should be seen less as a thing and more a way of doing things.” (What digital really means, July 2015). I like this view of digital as it plays to the essence of what I believe digital is: digital is a set of new electronic and “information technology” based tools and enablers that allow organisations to be more effective in delivering outcomes by changing what they do and how they do it.
With this as a working definition of digital we can thing begin to think about the question of what is a digital organisation? My attempt to define a digital organisation then is ….
“A digital organisation is one that seeks to improve organisational performance by utilising new and emerging electronic and “information technology” tools, and the business models and new ways of operating that they enable, to improve the effectiveness of how they operate.”
Note that this definition is broader than technology, it includes digital ways of working. From one perspective these new and changed ways of working have little to do with technology but advances in technology has made them possible, or perhaps more accurately, allowed them to be applied effectively in many more circumstances. One example of this is the emergence of “platform businesses”. A platform business is one where the focus of the digital company is the creation of a marketplace where willing sellers or providers are matched to those who want to use that service. Examples of this include Uber, AirBnB, TradeMe and eBay. They do not participate in service delivery rather they facilitate the transaction by providing a platform that makes it simple and cost effective to do business.
Strictly speaking this is not a new business model, it is the model that auction houses have fulfilled for centuries. Bringing buyers and sellers together and charging a commission on business that takes place. Although it’s not new, advances in technology have meant that this model can now be applied to many more markets to the point where it is now considered one of the preeminent and defining features of the digital business model.
Digital then is partly about the new technology but it is also about the new business models and ways of operating that are opening up new markets, new ways of doing business that provide different value streams and in many cases are demonstrably superior value streams to traditional business models and ways of operating. And this is where the disruption is! It’s not the technology it’s in the new ways of working and the new business models that technology enables. Being a digital organisation then is defined as much by how you view the world, how you operate and how you intend to create value as it is about technology. You can throw a lot a of money into technology at an “analogue” company and still not be digital because while you may have changed how you operate you still view the world through traditional lenses and largely operate through traditional methods.
So there it is, a proposed working definition of digital and a digital organisation. What do you think? Does this ring true for you? How would you amend this view?
Based on this, how digital is your organisation or are you predominantly an analogue organisation?
Watch out for part 2 of this blog where I will explore the differences between a digital organisation and an analogue organisation further.
First published on LinkedIn