Digital strategy: Digitalisation versus digital transformation?
When thinking about your digital strategy there is a key distinction between digitalisation and digital transformation. Digitalisation is taking existing processes, existing business models, existing systems and applying new technology and new thinking like oil to them. Digitalisation is adding video phone kiosks to car rental pick-up locations, it’s a grocery store using pickers at night to fulfil ecommence orders, it’s a bank building an app to let you scan checks to pay into your accounts.
Digital transformation is to rethink everything in a business around the possibilities and behaviours that new technology make possible. Hotels have now been entirely rethought around the culture of Instagram, fast-food restaurants that have all workflows and interior design built around the need to deliver to customers efficiently or allow them to order ahead via an app.
How to start your transformation journey
There are four areas all businesses should before embarking on a digital transformation journey
1. What is your role in people’s lives?
What is your business really in the business of? Are you a car maker or a mobility provider? Are you a credit card or a membership club like Amex? Are you a computer company or a maker of experiences? Why do banks really exist today and in the future? What can you do to provide more meaning and relevance in people’s lives via your digital strategy?
2. Map out new consumer behaviours and expectations
If we can see an Uber’s location in real time, we don’t accept a four-hour window for a repair person. If we’ve never waited online to pay for items, we won’t accept queues in-store. If we can text our contents insurance provider, we find it out of place when our bank makes us fax something. Technology changes our behaviours and expectations across all categories, we have to work to what people expect, not to what we can most easily achieve.
3. Consider regulations and the grey areas
Banking is known to be hard to innovate in because of firm rules and regulations, but where are the spaces to exploit? WeChat Pay can store users’ money and pay interest but is somehow not a bank. From payment systems like TransferWise to communal loans from Kiva, many disruptive services seem to explore the grey areas of rules and regulation.
4. Build a new solution around new tech
Based on a firm understanding of the role, the consumer expectations and legal framework, what new technology can you layer in to produce game-changing results? What happens when loans are collateralised or approved based on social media profiles and reputations? What happens if mortgages and land deeds are built on the blockchain? How can facial recognition and a smile rather than a signature act as the approval mechanism?
Not every industry in the world is going to change fast but waves of change are coming from mobile devices, new security protocols, new business models and companies that exploit the new and lax regulation. Banking is set for more change than most, so what would you rather do? Make the smallest changes you need to do to stay relevant, cut costs and hope for the best, or understand what’s coming, invest in the latest thinking and technology and propel yourself into the future?
Thanks to Tom Goodwin