In this post, we examine what is meant by a digital organisation. What are their common features and how does an ‘analogue’ organisation ‘go digital’?
Most organisations are undergoing some form of digital transformation. That’s to be expected – 2016 is undoubtedly the dawn of the first ‘digital decade’.
Given its incredible transformative potential, it’s no surprise that business leaders are viewing digital innovation and development as key drivers of future success. But with the real world benefit comes the inevitable hype and the tendency to call everything new ‘digital’.
With that in mind it is worth revisiting a question which, on the face of it at least, is simple. What is actually meant by ‘digital’?
Breaking down digital
The Guardian defines digital in its broadest sense as “any technology that connects people and machines with each other or with information”. We can expand on that by identifying the four technologies at the heart of today’s digitally connected world: Social, mobile, analytics and cloud (together, they are commonly referred to as SMAC).
Meanwhile, McKinsey & Co believes that digital is about “unlocking growth now”, and should really be seen a way of doing things. For instance, it’s a way of establishing new connections with customers, strengthening business models, generating new revenue streams, cutting costs, increasing profitability, and creating new market streams. In order to create a more concrete definition, McKinsey & Co breaks digital down into three attributes:
- Creating value at the new frontiers of the business world – Being open to re-examining your entire way of doing business and understanding where the new frontiers of value are. For some companies, this could mean developing entirely new businesses in adjacent categories, while for others it could mean identifying and pursuing new value pools in existing sectors.
- Creating value in the processes that execute a vision of customer experiences – Rethinking how to use new capabilities to improve how customers are served. This requires an understanding of each step of ‘the buyer’s journey’ – regardless of channel – and thinking about how digital capabilities can design and deliver the best possible experience, across all parts of the business.
- Building foundational capabilities that support the entire structure – The technological and organisational processes that allow an enterprise to be agile and fast.
There are two ways an organisation become digitally-enabled. It is either inherently digital (‘digital native’) or it adopts digital (‘digital adopter’):
- Digital natives: These are digital organisations that actively disrupt the traditional interactions customers have with products or services; they disrupt traditional business models. Disruption is normally between the customer and the product or service they’re trying to consume. Not only do they disrupt value but also the supply chain and how that traditional product or service is delivered. Examples include Uber and Amazon.
- Digital adopters: Much more commonly established organisations actively disrupt their own business models and business processes to generate new revenue streams or generate existing revenues in more profitable ways. Banks are a great example with the proliferation of apps and online offerings.
In the end, whether they are natively digital or adopting digital, successful digital organisations are those that have harnessed apps, data, new working practices and new digital platforms (whether their own internal platforms or through cloud adoption) to drive business transformation.
It’s not just about putting up a website and hoping for the best – there is some sort of internal transformation that needs to take place that enables the native or the more traditional organisation to adopt digital, and that is founded on digital technologies.
As part of our 2015 Global CIO Survey, we looked into the drivers of this digital decade and the rate of adoption of SMAC, Business Intelligence and software defined technologies. Download the full report here to read about the results.