Digital Babylonian Confusion

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Every day, we hear that our society, our company, our sector and even ‘the world’ is becoming digital. When the source of such a declaration is probed to explain what is really meant, quite often the digital-related Babylonian confusion begins – particularly when the explanation involves the words “digitisation”, “digitalisation” or “innovation”. Three terms that all imply change, have a transformative sound and frequently land in, or originate from, the ‘same corner’ of our heads.

The transformation to digital is an exciting journey. Arjan van Os Head of Innovation Centre

The fact is that these three terms are different in every way and should not be used as synonyms. I think that today it is increasingly important to understand the difference, since a growing number of employees are involved in the ongoing ‘Transition to Digital’. In that context we all have to use the same language to understand each other and have meaningful conversations. But also precisely because challenges, opportunities and the impact of digitisation, digitalisation and innovation are so dissimilar, it is important to truly know what we are talking about in order to make a good assessment of the consequence and significance of the topic discussed.

At ABN AMRO we use the following three definitions in our coaching and educational programs. 

Digitise/Digitisation -  standardise first
Digitisation is as old as computers. Indeed, we have been digitising for decades. Automating processes, scanning documents, making processes ‘straight through’ and so on. Today it is the norm to digitise data and processes to cut costs and achieve excellence in operations. Digitisation and standardisation are, of course, best friends.

Digitalise/Digitalisation - reimagine first
Then there is that other word ‘digitalisation’.  An ideal word to intensify the confusion, as it sounds almost the same as digitisation in fast conversations. The meaning, however, extends much further and the opportunities are also much bigger. Digitalisation is about building a digital business. And building a digital business is about reimagining the role of your company in the digital reality. The purpose of your company may well be the only constant; the strategy, operating model, business model, workforce and company culture, are to be redefined.

Innovate/Innovation – understand first 
Reimagining a business means embracing the unknown; it emphasises the need to cast creative teams and start innovating. It may even mean that you have to ‘unlearn’ stuff or, even worse, turn your back on everything you feel comfortable with. It is important to understand the upcoming paradigm shifts leading to new societal, technological and industry changes, because new opportunities will emerge from these paradigm shifts that provide substantiated starting points for every digital transformation. Innovation is a critical component of every digital transformation. In order to explore future viable options and experiment with new businesses, looking for the digital potential of the company purpose, a strong innovation team and culture are important ‘must haves’. 

New business, same purpose

The transformation to digital is an exciting journey. It will probably take quite a while given the time it takes to truly understand paradigm shifts and exponential technologies and subsequently use this knowledge to reimagine a business and its context. However, the journey will guide many companies in many industries to a thrilling new business, probably very different from the traditional business they came from. Still, if this is done well, the same purpose will be served.

You may be familiar with the digital terminology mix-up, in which case this blog can help you to untangle the confusion. If you have a different point of view or wish to add to the definitions, please leave a comment.

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