In today’s fast-paced world, companies are sprinting towards becoming more digital. But what does “digital” really mean? Instead of thinking of it as a thing, it’s better to see it as a way of doing things.
Here’s a breakdown of what that means:
1. Exploring New Frontiers: This is all about rethinking your whole business to find new areas of value. Some companies might create completely new businesses in related fields, while others might discover new opportunities within their current industry.
2. Improving Customer Experience: Going digital means understanding every step of your customer’s journey and using digital tools to make their experience the best it can be. This includes everything from having a flexible and efficient supply chain to using data to make smarter marketing and sales decisions.
3. Building Strong Foundations: The tech and organizational processes that support your business need to be agile and fast. This involves adopting a digital mindset, encouraging collaboration across teams, and updating your IT systems to be more responsive and interconnected.
Overall, being digital is about being open to change, using data to make better decisions, and constantly looking for new ways to create and capture value.
Companies today are rushing to become more digital. But what does digital
really mean?
It’s tempting to look for simple definitions, but to be meaningful and sustainable, we believe
that digital should be seen less as a thing and more a way of doing things. To help make this
definition more concrete, we’ve broken it down into three attributes: creating value at the new
frontiers of the business world, creating value in the processes that execute a vision of customer
experiences, and building foundational capabilities that support the entire structure.
Being digital requires being open to reexamining your entire way of doing business and
understanding where the new frontiers of value are. For some companies, capturing new
frontiers may be about developing entirely new businesses in adjacent categories; for others, it
may be about identifying and going after new value pools in existing sectors.
Digital’s next element is rethinking how to use new capabilities to improve how customers
are served. This is grounded in an obsession with understanding each step of a customer’s
purchasing journey—regardless of channel—and thinking about how digital capabilities can
design and deliver the best possible experience, across all parts of the business. For example,
the supply chain is critical to developing the flexibility, efficiency, and speed to deliver the right
product efficiently in a way the customer wants. By the same token, data and metrics can
focus on delivering insights about customers that in turn drive marketing and sales decisions.
The final element of our definition of digital is about the technological and organizational processes
that allow an enterprise to be agile and fast. This foundation is made up of two elements:
Mind-sets. Being digital is about using data to make better and faster decisions, devolving
decision making to smaller teams, and developing much more iterative and rapid ways of doing
things. Thinking in this way shouldn’t be limited to just a handful of functions. It should incorporate
a broad swath of how companies operate, including creatively partnering with external
companies to extend necessary capabilities. A digital mind-set institutionalizes cross-functional
collaboration, flattens hierarchies, and builds environments to encourage the generation of new
ideas. Incentives and metrics are developed to support such decision-making agility.
System and data architecture.
Digital in the context of IT is focused on creating a two-part environment that decouples legacy systems—which support critical functions and run at a slower pace—from those that support fast-moving, often customer-facing interactions. A key feature of digitized IT is the commitment to building networks that connect devices, objects, and people. This approach is embodied in a continuous-delivery model where cross-functional IT teams automate systems and optimize processes to be able to release and iterate on software quickly.
Digital is about unlocking growth now. How companies might interpret or act on that definition will vary, but having a clear understanding of what digital means allows business leaders to develop a shared vision of how it can be used to capture value.