Parlez-Vous Digital: Is Everyone at Your Company Speaking the Same Digital Language?
History reads like Shakespeare’s The Comedy of Errors with deadly consequences because of simple miscommunication. A regrettable translation of a single word, “mokusatsu,” uttered by the Japanese Premier Kantaro Suzuki, led to the decision to use nuclear weapons during World War II. Miscommunication in multi-lingual treaties has led to more than one international incident, including the First Italo–Ethiopian War. Manufacturing executives are no better communicators than government officials. It’s no secret that many manufacturing plants congratulate themselves for dashboards lit up with green on key customer metrics, but also get customer feedback telling them they are missing the mark. The cause? The plant defines the success of a key performance indicator, such as on-time delivery, according to their performance promise and measures themselves accordingly, whether or not it meets the customers’ needs. The plant promises the shipment in 5 days, but the customer needs it in 3 days. It’s no wonder the customer still complains.
When it comes to digital the same is true. Definitions matter and they aren’t universal. In the digital landscape, we are each an interpreter navigating a brave new world. What is a digital strategy? Are we digitizing or digitalizing our business? Do those words mean the same thing or are they different? And what about digital transformation? Is this term a new business buzzword or a profound transformation on the horizon that requires significant preparation?
It’s easy to assume you are communicating effectively when you are speaking the same language, but even that is a dangerous assumption. Even when we think we are clear, it often seems we aren’t. History has tried to teach us humans this lesson repeatedly, but our brains are hardwired for cognitive biases, so we are slow learners. When we talk about digital, we often make the same mistake our forbearers made in foreign policy negotiations and forget to make sure we are being understood or that we understand others properly.
Here is how MAPI differentiates between digitization, digitalization, and digital transformation in our work:
- Digitization: using data to automate business processes and workflows.
- Digitalization: enabling, improving, or transforming business operations or business functions or business models/processes or activities, by leveraging digital technologies and a broader use of digitized data; turned into actionable knowledge (e.g., insights), with a specific benefit in mind (e.g., new revenue streams).
- Digital transformation: the transformation of business activities, processes, competencies, and models to fully leverage the opportunities (e.g., new types of innovation and creativity) offered by digital technologies, rather than simply enhancing and supporting traditional activities, processes, and models.
These key terms are important, but they aren’t the whole story. It’s also important to establish the difference between digital and IT strategy. Even though the line between these two strategies blurs, they aren’t synonyms. A company’s digital strategy enhances its core business strategy by combining digital technologies and physical resources in new ways to create value. Whereas a company’s IT strategy establishes the technology infrastructure the business relies upon to deliver its objectives, for example, business applications, equipment, network infrastructure, etc.
We recently asked a group of CEOs and company presidents how many of their companies had a digital strategy, 32% said they did. Over the course of a day of discussion about IoT-enabled business models, leveraging big data to drive decisions and digital talent, a few sheepishly asked to change their initial votes. It turns out their companies have well developed IT strategies, but not a digital strategy. Without a clear definition and understanding of the difference between the two strategies, it’s no wonder that these seasoned leaders easily mistook one for the other. Definitions matter and without them, we can easily miscommunicate.
If you are a CEO, president, C-level executive, or other senior manufacturing leader engaged in regular discussions about digital, digitization, digitalization, or digital transformation at your company, here are some things you can do to make sure everyone on your team is speaking the same digital language:
- Ask your leadership team how they define digital terms to make sure you are all speaking the same digital language. You may be surprised by some subtle differences between how each person interprets what seem like common and straightforward terms.
- Define what going digital means for your company. Is digital about your business processes, production environment, supply network, customers, some of these things, or all of these things? Clarifying the scope of digital for your business will further clarify your digital language.
- Separate your digital strategy from your IT strategy. When your digital strategy is conflated with your company’s IT strategy, it’s both confusing and underleveraged. A digital strategy is an important tool to drive business growth by keeping your business focused on the digital edge. This separation will deliver both clarity and business results.
The digital transformation is on the horizon, and it promises to revolutionize business activities, processes, competencies, and models. The companies that are innovative and creative, and that embrace the new opportunities presented by digitalization, will win in their markets. The rest will be acquired or liquidated. This is the beginning of the era of digital Darwinism.