Digitization, Digital Transformation and Innovation: What’s the Difference?

We’ve all heard about the buzzwords digital transformation, disruption, digitization, and innovation. But what does it actually mean? It has been challenging for companies starting their digital transformation to find sense in all of these. You just can’t be good at something you don’t understand.

What is Digital Transformation?

Digital Transformation is transforming your entire organization to be able to cope with current and future challenges caused by digital technologies.

Digital transformation is not necessarily about the technology itself. It’s about the power the technology has, to create opportunities and ways to do things that were previously unthinkable.

Solutions for these challenges often involve digital technologies but it’s not the main objective to become a ‘digital company’.


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Remember Nokia.

At the top of their game, they had the best technologies in the market, the best engineers, the best marketing, etc. Yet they have been disrupted by Apple. Why? Because Apple was better at answering the changing expectations of the market.

So it’s not about technology only.

It’s about your internal organization, your relationship with your stakeholders, your product, and your business model, and how you approach the market and the competition.

Only if you work on these 4 axes, you’re truly transforming.

Throughout the years, we’ve created “The Transformation Box” to map all the solutions of your digital agenda, and to check whether or not you’re truly transforming based on those 4 axes.

Digital Transformation Box

What is Digitization?

Digitization is when you (only) work on the 2 domains of the internal organization and customer relation. If, for example, you install a new CRM and step up your digital marketing efforts: you are betting on digitization. These are absolutely not undesirable actions, but you are not completely transforming your organization – while a lot of companies mistakenly think so.

Digitization

What is Innovation?

On the other hand, if you’re working on the areas of product & business model, and market & competition, then you’re innovating. For example, if you’re setting up corporate venturing by working together with startups, or launching a new business model (like a subscription model), then you’re going after innovation.

Innovation

Innovation, like digitization, isn’t a bad thing. It makes it possible to solve traditional, day-to-day problems and create massive opportunities in terms of product development, service innovation, and business efficiency.

But remember: only if you work on the 4 axes of the Transformation Box, we believe that your organization is fully transforming, becoming resilient and future-proof.

Don’t mistake digitization or innovation for transformation

Although it’s not wrong to choose for a phased approach of digitization or innovation, there is a huge threat in mistaking this for transformation. Today we are seeing the majority of companies starting off right, but forgetting that there is more to it than “only digitizing” or “only innovating”.

Companies that forget to push through, finally end up as an example of those who get disrupted in the end.

We are literally living through one of the biggest shifts in human history, so it’s only natural that companies need to adapt to this as well. If you can manage to start your transformation right, it will create enormous value for you. Not just in revenue and profit, but also in terms of brand equity, employee satisfaction, and sustainability.

Don’t be like Nokia.

Connect with Nick on LinkedIn to stay updated on how we future-proof organizations.

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