TeQflo Master Surfer 2

Digitalisation - an introduction 

Digital transformation brings great opportunities. The world is facing and is in a new industrial revolution. It is obvious that digitalisation and digital transformation have and will affect every part of society. Here we have gathered all our thoughts and insights on the subject. Here you can get an understanding of how you can utilise this in your business.

Digitalisation is when people and technology meet!

Digitalisation - Intro & Why

For those who have worked in IT or in "technology-heavy" industries, the concept of digitalisation at this point has probably become worn out. Today, the digital wave reaches industry by industry and affects our work and our lives to varying degrees. But still, for many, the concept is completely new. If you follow the news flow, we are met by headlines about digitalisation, digitalisation of the school, digitalisation of the preschool, digitalisation and elderly care.

Digitalisation is not a trend, it is a new industrial revolution, an industrial revolution 4.0, that will change the world and is already doing so at a very fast pace. Even though the pace of change we live in today is extremely rapid, it will never be this slow. Possibly a scary insight, but still a reality and something we must relate to, whether we want to or not.

On this page you will find insights and strategies for digital transformation that can be implemented regardless of industry or business. On our blog, we occasionally delve into specific industries and there you can find resources that are more suited to specific industries such as digitalization and HR, the real estate industry or leadership. Please visit and follow our blog RefleQt for even more insights that are constantly updated!

» Let us break down Digitalisation in the key components:

What is digitalisation?

Like all trendy concepts, the word is often worn out, after being abused it also loses in power and so does digitalization. But digitalization is more than a trend. You couldn't possibly have avoided running the word in any context, but what is it?

Originally, the word meant the transfer of information or media from analog to digital, such as music from vinyl records to mp3 files or scanning images.

This concept has today been limited to being called Digitization. Digitization is a broader definition of the phenomenon that has swept across the world in recent years. Concepts such as Healthtech, Fintech, IoT, AI, AR are about streamlining and improving industries, products or services using digital tools.


» Digitalisation, or digital transformation, is the journey where new technology change business models, companies and whole industries in a pace and extent that are challenging to grasp. 

During 2015-16, digitalisation gained momentum seriously. But new technology as a stand-alone phenomenon cannot change anything, not the Internet, IT, AI, VR or AR, in the calculation, man must always be included. Digitalisation or digital transformation occurs at the breaking point where human behavior meets the new technology, when the technology is implemented, is used, only then can the power of digitalization be fully utilized.

Digital transformation is a concept for the journey a company or industry makes towards digitalisation. Many global consulting companies have a tendency to blow up the concept of something big and hard. We at TeQflo believe in the opposite way, simplifying and making the trip interesting and developing.

In summary, here are our key definitions to keep track of in digitalisation:

  • Digitisation = Convert the analogue to digital
  • Digitalisation = When humans meet technology (products and services)
  • Digital Transformation = The journey from point A to point B

Below we deepdive the following areas:

6 examples on successful digitalisation

There are countless examples of companies that have made an incredibly successful transformation. Below we exemplify a number, to give a picture of how digital transformation can go. In our blog, RefleQt, we have collected even more examples and deep dives into exciting cases.

Of course, the most well-known are the ones that most people are generally familiar with. We look at them so clearly, but it can also be interesting to look at how less noticeable (but successful). Below we list 5 fairly well-known examples:

  • Uber was founded in San Francisco in 2009 and already in 2015 there were more Uber cars in the US than the classic yellow taxis in New York.
  • Airbnb: Even AirBnb has its origins in the bubbling startup world found in San Francisco. Like Uber, the business model is based on the principles of the sharing economy.
  • LinkedIn has a slightly longer history than the two previous examples. In 2002 Read Hoffman founded the company and in 2003 the social networking platform for professional networking was launched.
  • Amazon: Amazon's Jeff Bezos is a legend today. Already in 1994 in the cradle of the Internet, he launched the online-based store Amazon. Then it was "just" a bookstore. Since then, Amazon has constantly evolved and managed to reinvent its offering and expand. By constantly refining, developing and innovating, the business has followed the progress of digitalization and managed to stay at the forefront.
  • Klarna: In Sweden we have many exciting companies that have succeeded, a brilliant example is Klarna. As e-commerce increased, more secure, but perhaps more convenient, solutions for payments were also sought, such a smart solution was Klarna.
  • Tibber: Again, we have a promising scale-up in Sweden - this time it is the electricity companies that can get it hot on the ears. Tibber has combined a smart electric car charger, with green electricity and low electricity prices driven by artificial intelligence. All in all, a superior offer compared to the "competitors".

The fourth Industry revolution

The Fourth Industrial Revolution or Industrial Revolution 4.0 is a fact. Man's need for what digitalisation entails arose long before the new technology even made it reachable.

Industry_Evolution_Pillar-Page_Digitalisation

Moore's law vs the human brain

Named after one of Intel's founders Gordon E. Moore, it describes the phenomenon that the number of transistors that can fit on a chip is growing exponentially. The rate that has been in effect for many years has doubled every 24 months.

The law proved to be good for a long time but has been revised in recent years. Maybe we are right now in a period that is a bit out of a breaking point. To this day, technology has rushed forward, when it comes to chips and processors we are now down to nano-levels. So research and innovation may take longer, but when breakthroughs come, development is speeding up again.


Moore's_Law_over_120_Years

 

Although our brains have changed over time, it is still programmed in many respects just as it was more than 40,000 years ago. This means limitations and difficulties for us to change and keep up with technological developments. Man is absolutely central to the development with the consequence that Digitization is superior to Digitization.

 

User friendliness & timing impact

Digitalisation is happening all around us, but not at the same time. The timing differs between different industries, services and products. What we see is that those with low ease of use and high power are affected first. On the contrary, they are affected with high ease of use and low power last.

At the same time, don't be fooled by the fact that your industry will remain as it is today. There are countless examples of start-up companies entering into complex and niche industries. Amazon started selling books online. SpaceX handles deliveries to the International Space Station. And several start-ups are attacking the banking industry, which has led the banks in defense to acquire the companies.

Thinking about is your own industry. Is the user-friendliness low and the effect of digitalisation high? In that case, there are great chances for you to go past the competitors. Before they pass you.

 

Digitalisation vs. Path dependency

The pace and progress of Digitalisation can be difficult to grasp. However, most people understand that it is going very fast and certainly it feels like it has accelerated? It has. The Internet, mobiles and social media have contributed to faster dissemination today. Local today, global tomorrow. Below is a graph showing various technological breakthroughs and how long it has taken them to reach 50 million users.

Time-To-Reach-50-Millions-PillarPage

4 technical waves of change

 

Internet: When the internet came, the world changed. Today, we have incredible opportunities to find information, communicate and collaborate - globally.

Mobile first:
The smart phone has become the central platform of our lives with several hours of screen time each day. Furthermore, today we have in principle constant connection. Therefore, many features are moved into the mobile, which means we can live more and more mobile.

Social Media:
Communication and collaboration on the Internet changed forever with Facebook's founding. With over one billion users, this platform is by far the largest. Today, young digital lives live, while middle-aged people live physical lives with digital elements.

Gamification:
Perhaps the most unknown driving force is gamification. In short, gamification means that game elements from games are applied in other contexts such as education and sales. Is it working? Yes. Powerful? Very. Why? To stimulate the brain's chemicals (properly designed) which mainly includes dopamine, serotonin and oxytocin. Can it be abused? Yes, gamification is based on the influence of man's various driving forces. "Black hat" driving forces are used e.g. diligently by gaming companies. Fortunately, there are "White hat" (good) driving forces that we use in gamification projects.

 

Humans in the Digitalised world

Changes affect people and our natural attitude is to remain rather than change. How we respond to and relate to change varies, but often as an organization we tend to underestimate the impact of change. This is true in all areas, and to get an honest answer about how a change actually affects a person is difficult. We would rather not admit that we are uncomfortable with new technology and changes. We would like to appear as a backward and passive person. Ideally, we have a surface of being progressive, innovative and capable, even in the future.

Change can be packaged large and extensive or alternatively small and continuous (incremental). Regardless of the direction, it is important to keep in mind the above. Every change is naturally received with resistance. Regardless of how good the intention is and how positive the impact is expected to be for the business. Change leadership makes a big difference. Observe and invest in it.

 

4 groups - in which are you? 

Digital transformation (change) is also a generational issue. These four groups are described in the book “Get Digital Or Die Trying” as:


Digital_People

 

 

Decoding Digitalisation into 4 areas

Often we hear that Digitalisation is broad. That's correct given Digitalisation spans most areas of an ordinary company. Digitalisation affects business models, IT, sales, customer relations, leadership, marketing and more. Digitalisation should therefore be viewed from a holistic perspective when undertaking digital transformation as a company. The Digitalisation can also be advantageously categorized:

Internal Digitalisation: Includes simplified IT and technology. This is the infrastructure that can improve and change internal processes. E.g. business systems, integrations, hardware, licenses, etc. Internal Digitalisation drives internal efficiency and primarily affects costs.

External Digitalisation: External Digitalisation drives external attractiveness, which includes digital communication tools, sales, marketing and customer service. Unlike internal Digitalisation, the company's growth is affected by external Digitalisation. Building a presence on social media, using digital marketing, automated sales and marketing processes and customer service are examples of external Digitalisation.

Business models: Digitalisation has brought brand new and many times fantastic opportunities. Perhaps the most memorable changes happen in business models. Companies that have realized the potential, listened to customers and acted accordingly are the ones who will have the best chance of surviving in the digital future. For example:

  • Airbnb and hotel.
  • Klarna simplified payments and banks
  • Uber against taxi companies
  • Service celebrations against product companies. Sunfleet and Volvo.

Leadership: Digital masters are not only The aspect of Digitalisation that we experience is most neglected. As we mentioned earlier, people are often different in attitude to change and this attitude is important to be able to handle in order to implement digital transformation with the best possible results.

Sources:
The above learnings are mainly derived from:

  • Gilian & Hammarberg. Get Digital or Die Trying.
  • Bonnet, McAfee, Westerman. Leading Digital.
  • Gartner, Rasking, Waller. Digital to the Core.

Digital Transformation - Why so important?

Below we deep-dive:

  • Digitalisations 4 core principles
  • For survival - examples to avoid
  • Digital Masters - Business relevance and KPI impact 
Digitalisations 4 core principles

Everything that can be digitised digitalised will be digitised digitalised  

By understanding what digitalisation actually is, we can also come up with the reason why we should digitalise. The quote above is again taken from the digitization Bible "Get Digital Or Die Tryin '". The quote really captures the simple and short answer to the question, why you should digitalise. We prefer the term digitised because digitisation also includes people and thus makes digitalisation unique. Since everything that can be digitized will be digitized sooner or later, we arrive at principle 2:

All that are digitised digitalised can be copied

What is increasingly digitised can also be more easily copied.

All that are copied sink in value

So how should we relate to this bitter truth? In fact, it is not as shabby as it may sound, but it is too incredible opportunities for those who choose to embrace digital transformation.

All that cannot be digitised digitalised, will increase in value

In an increasingly digital world, human beings are becoming more important. Technology, robots, algorithms and software rarely manage to meet our human needs. Therefore, it is deeply human in value. Digitalisation is not human or technology. Digitalisation is human & technology - in that order.

 

For survival - examples to avoid

Sure it will be dramatic, but it is true. But all of them have now realized that some form of digitization must be implemented in order to have a chance in the market of the future. Blockbuster was a giant on the US movie market and saw themselves as titans. In the periphery, digitized solutions like Netflix began to move. However, investing in the future in digitalization was not as obvious. It was also the end for them Blockbuster. When the consumer quickly changed behaviors, the costs became large relative to revenues. Conversely, there are brilliant examples of how to turn digitalization into an advantage. Netflix was among the first to come out with a digital solution with global expansion. Common to the survivors is that they changed their business model and created digitized solutions to adapt to new consumer behaviors.

 

Digital Masters - Business relevance and KPI's

Westerman, Bonnet and McAfee researched a very interesting conclusion about digitalisation. The Digital Master was more profitable and more productive in sales than his industry colleagues:

  • +26% in profitability
  • +9% in sales productivity

These 2 effects are probably among the most sought after in strategies, business plans and objectives. The results were also cross-industry.

But what defines a digital champion? 2 main factors create Digital masters:

  • Digital capabilities
  • Leadership capabilities

The digital capability is about choosing and using smart, digitalised solutions based on the company's context. Furthermore, leadership was required to implement the digital tools and optimize work processes.

The researchers were able to divide the surveyed companies into four categories:

  • Beginners: Those who have not yet embarked on digitized solutions or who have the leadership to implement.
  • Conservatives: This group was also not running, but was otherwise well-run companies with good leadership. Things were done, but not digital solutions
  • Fashionistas: In this group we find technology pioneers. These companies want to test new cool solutions but find it difficult to realize the business value.
  • Digital champions: This group combined the best of Fashionista's and conservatives. They had chosen the right solutions from the business and implemented them in impressive ways. The result spoke for itself, better profitability and sales productivity. 

The four levels of digital mastery displays how well adapted a company is to the digital era that we live in.

Source: "The Digital Advantage: How Digital Leader Outperform Their Peers in Every Industry," Capgemini Consulting and MIT Center for Digital Business, November 2012.

Many companies have applied digital tools, it can be about marketing via social media, search engines and comparison sites. In this area, too, a development has taken place since the internet was in full use worldwide. Maybe a lot of systems have also been digitized such as time reporting, accounting, etc. However, as we have shown, development continues.

Not all trends and technologies should necessarily be acted upon, but external monitoring is more important than ever. Being able to decide what to act on or not can be crucial. A good piece of advice to stay at the forefront is to look at a decision support system and external monitoring tools. In reality, for most, we would recommend incremental improvement towards becoming a Digital Champion. How? You will read more about this in the next section.

Digital Transformation - How to do it?

As we have seen in the past, digitalisation is about equal parts of technology as human behavior. Digitilisation often means a change, more or less drastic. But a serious mistake when implementing a change in an organization is how people are affected. Change in itself can be uncomfortable, so implementing new tools or working methods to a group with different prerequisites also requires solid change leadership.

Below we go through 4 steps to initiate the change work that digitalization requires.

With rapid digital advancements and opportunities, a company cannot wait around. It is time to act now.

Step 1 - Preparation 

The leadership challenge and change work is usually a bigger challenge than the technology in the normal case. Therefore, important preparations include:

  • Create internal understanding why change is important
  • Perform a assessment analysis to understand the starting position
  • Develop a digital vision and line up the management team
The above 3 steps take many too easily. What often happens then is that digitalization becomes uncoordinated, personal agendas win and valuable resources and resources are wasted.

Invest in a good start on the digitalisation journey.


Are you a Digital Master or Fashionista? 

Step 2 - Focus 

Once the vision is set, the important work begins - getting started. This is often easier said than done and often we see decisions being postponed for unclear reasons. The 3 key steps to focus on are:

  • Break down the digital vision into areas and clear key activities
  • Decide how you want to control, organise and measure the digital transformation
  • Allocate budget to the digitalisation journey

Only when the activities are clear, planned and measurable will the digitalisation journey become tangible. Is it vague and difficult to understand? Keep digging until clear activities appears.

It is not uncommon for the digitalisation journey to be given to the person who has the most to do before. It is wrong from (at least) two aspects. Partly on the basis that transformation is a "journey together" and partly on the basis that digitalisation takes time. Agreeing on reasonable goals and expectations in advance are important.

Budget still governs the allocation of funds in many organisations. Approved budgets are an effective way to get mandate to implement. Other solutions are less effective, for example to squeeze projects into already allocated budgets. 
The effects are slow decisions and unnecessarily late effects.

Similarly, the budget for digitalisation should be flexible in scope. In agile or semi-agile work, opportunities and challenges are often discovered during the course of the work. Therefore, it is important to be able to navigate effectively. In summary, create the conditions for being able to make quick and qualitative decisions - proactively.

 

Step 3 - Mobilise 

Now is the time to start the actual work. A good start in the change work towards the broad organisation is fundamental - yet it is easy to neglect or budget the change budget. The following 3 steps are important:

  • Communicate your ambitions
  • Engage your co-workers
  • Setting new behaviors and changing the culture
Understanding the direction and participation in the journey there is important for all people. Understanding why and where we should go together is powerful and at the same time difficult for communication to get stuck.

Organise and engage your employees in the change. The ones most affected are key people (not just management). The more commitment that can be created, the better solutions are created.

The possibilities of digitalisation are sometimes wiped out by a lack of propensity for change. Old work processes are translated "literally" into new systems. Digitalisation is an excellent opportunity to evaluate, change and optimise your work processes - for the greatest possible value.

 

Step 4 - Freeze & Develop

Digital Masters will never be finished. There is always potential to develop - neither the world nor its competitors stand still. The following 3 steps are important in the eternal "last" phase:

  • Build new abilities and skills
  • Line incentives and rewards
  • Measure, follow up and improve - continuously

After the successful phases 1-3, much has changed in your company. But often people are the same, in terms of numeracy, skills and culture. It is now the continuing education journey needs to continue. Help your resources develop and switch in and out to ensure access to new critical resources.

Sometimes changes are implemented, but the incentives, external and inherent, remain intact. It is like conveying that the old still applies - and old behaviors remain easily. Design the rewards for your new world. And remember that younger people see the intrinsic incentives as very important while the tough external ones are hygiene factors.

The leadership challenge and change work today is a bigger challenge than the technology in the normal case. Preparations including assessment analysis, digital vision and a digital strategy are therefore recommended. The purpose is to understand the starting point and visualise the goal.

» Focus on your own playground while tracking competitors. With advancing before they do – a lot of ground will be gained – and that'll probably cover more than enough road for you to be highly successful in your sphere.


 

Next steps

Now you know much more about digitalisation, why it is important and how you progress. The next step is to:

  • Understand how a Digital Master is built here
  • Do an initial analysis of the current situation here
  • Book a meeting with us and we will listen to your challenges and talk about your opportunities

» Becoming a Digital Master won't happen overnight. Not for anyone. Embracing your company's weaknesses is a must in order to prosper and grow. The most important question you should ask yourself, especially considering your competitors, would be: do you really have time to wait?... 


   

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