People tend to think about digital transformation as fundamentally a technology change. This is important, but it should come after the relevant people and process changes that should precede it. Explore the changes that are necessary with an example of how Ford has truly transformed.
- The phrase, digital transformation, is thrown around a lot these days. But what does it really mean? What constitutes true digital transformation? I can tell you from my experience advising many companies that often investing in modern technologies is believed to be digital transformation. This is an important ingredient but it's a small part of the journey. If you don't also change the way people work and the methods they use, then your destination will be far short of true digital transformation.
Digital transformation should lead to changes to one's operating model and all aspects of the business from people practices and skills, processes, and then the technology that some mistake for the entire journey. In order to achieve meaningful outcomes and sustainably strong performance in the digital world, thinking more comprehensively is a must. How will you evaluate how far you've gone and how far you have left to go in this journey? A digital maturity assessment can be helpful.
The first step in maturing your organization is digitization which involves converting analog or physical information into a digital format. Most businesses today have digitized in some meaningful way. For example, in the early days of the internet, automakers put some information about their products online. This represented digitization. The next step in the journey is digitalization, which suggests the use of digital technologies and digitally-enabled approaches to improve business models and processes.
As recently as 2011, General Motors executives were quoted in The Wall Street Journal as saying that, "Self-driving technology seems so far "out of the playbook that it wasn't even addressable." But as these technologies advance, some traditional players move to digitalization often by creating separate digital groups within their businesses. They still use legacy skills, processes and technologies across most of their operations but these innovation labs of sorts allow them to experiment to a greater extent.
The final step is true digital transformation, which is the coordinated digitalization at scale diffused through the operating model and all aspects of the business including people, processes, technologies and metrics. For example, Ford recently spawn out a new entity Ford Autonomous Vehicles to accelerate its self-driving business and capitalize on market opportunities. It's also re-aligned IT under its Global Operations organization to accelerate integration.
This follows the spin-out of Ford's Smart Mobility which aims to help Ford become a mobility company. Ford is in full digital transformation mode. The words you use matter. It's important for you to evaluate and develop a more accurate depiction of where you are on the digitization, digitalization, and digital transformation continuum. Plot the course for continuum maturity and advancement.