18 May 2020

What is Digital Transformation?

While strictly speaking, the term ‘digital’ refers to the use of digits and especially binary digits, it has also come to mean something more over the last few years. ‘Digital’ has also become a buzzword. Not just about the use of the latest internet technologies, but also around the skills, techniques and even the culture associated with the ways modernised companies and organisations work.

In parallel, the term ‘digital transformation’ has become commonplace, describing the process of integrating not just the technologies, but also changing the operations and culture of an organisation to improve services and meet the growing expectations of customers.

What does this mean in practice?

In practice this can mean a range of things, such as reviewing existing process to see how they can become entirely paperless and simplified by utilising modern technology.  A greater emphasis is placed on customer expectation and user experience. Another element is changing culture to encourage innovation, experimentation (including embracing some inevitable failure) and to challenge the status quo. There isn’t one single blueprint for this process. Digital transformation will be different for every company, organisation or union.

There is some scepticism about the terminology. As with any buzzword, their can be confusion about what it means, and some argue it has become too widely and broadly used.  However, I like to see digital transformation as a tool for making some of the fundamental changes required to realise the productivity gains internet technology has promised.

The lag between new technologies and productivity

There is usually a longer gap than most realise between the introduction of a new technology and any significant gains in productivity. For example, the benefits of steam power were not really exploited until new factories were built around a central steam turbine. Similarly, when electricity arrived, productivity gains didn’t follow until factories were redesigned in a radically different way to the old, steam power model.

Newly formed companies often have the advantage of a clean slate, more easily adopting the ‘digital’ approach from the start. For existing organisations, ‘digital transformation’ is a process that helps change the fundamental systems and processes to increase productivity and performance. If there is a criticism, it would be that sometimes it doesn’t go far enough, making many improvements but potentially missing some radical, fundamental and painful changes older organisations may need.

I’m now working with the TUC on their ‘Digital Labs’ initiative to help unions embrace the ‘digital’ approach and modernise their organisations.  Unions are often criticised, sometime unfairly and sometimes not, for failing to modernise and embrace technology. Digital transformation offers a genuine opportunity for many unions to become more productive and to improve the experience of members.

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