“Digitization”, “Digitalization” and “Digital Transformation”. Do you know the difference?

Currently I believe most companies know they have to change, the “Kodak” and “Blockbuster” phenomenons are familiar to everyone. 

They know they have to do things differently, their customers don’t respond to the same stimulus, their employees don’t stick around for so long and things start to slow down.

They hire people with new job titles like “Digital Ninja”, “Full Stack Wizard”, “Happiness Manager” or even “Content Guru” and don’t fully grasp why or for what.

But I do think that the worst mistake is to confuse “Digitization” with “Digitalization” and “Digital Transformation”.

Let’s go through them:

Digitization”, going from analog to digital. Sometimes you achieve it without greatly changing your processes. Example: Going paperless. The gains from it are obvious – less clutter, easier to archive, easy to search – but not comprehensive.

With “Digitalization” you change your old ways of doing things for new ones through digital. New communication channels came up and you start involving them in the way you do business. You sometimes even mix analog with digital. You even can consider Automation as a tool. You increase your reach and sometimes your bottom-line. Example: Opening an Online store to sell the products you already sell physically.

Digital Transformation” is quite different, it implies changing your organization’s core mechanisms, how it approaches the market. Organizations must rethink business models and adopt ones where Agility is a necessity, Customer Centricity is key and Employee Engagement is paramount to distinguish them from the competition. Customer Journeys become personalized and multi-channel. A great product is not enough, they must make it efficiently, brand it adequately, communicate it digitally and through as many channels as needed and be socially responsible and eco-friendly in the process. Example of a company: Netflix. They started sending DVD’s by mail, and evolved to streaming; Example of an industry: How new banks are doing business: (Revolut, N26. Monzo, Starling…). They rethought how to relate and offer added-value to their customers.

You can say it was like that in the past. In a way it’s true. But now the world is a small village, brand reach is not as complex as it was in the past and the competition is fast and furious. Everything happens at dizzying speed, so being ready is vital!

Are you?