Digital transformation, innovation and firm competitiveness
Digitization, digitalization and digital transformation are often used as if they meant the same thing. Here is how I separate them, and the questions about competitiveness that interest me.
"Digital transformation" is one of the most used phrases in business today, and one of the least precise. A large part of my research at the Digital Empowerment Lab is about how technology changes the way firms work and compete, so I want to start by being clear about the words.
Three words that are not the same
The research literature usually separates three ideas:
- Digitization is converting something analogue into digital form: scanning paper records, moving a price list into a spreadsheet.
- Digitalization is using digital technologies to change a business process: an online ordering system, automated invoicing, a CRM that replaces a notebook of contacts.
- Digital transformation is broader. It refers to changes in the business model, the organisation and the way a firm creates and captures value, triggered or enabled by digital technologies.
A firm can digitize a lot without transforming anything. That gap is where many of the interesting research questions are.
Digital innovation
Digital innovation sits close to these ideas. It covers new products, services, processes or business models that are created with, or made possible by, digital technologies. Digital servitization, which I wrote about in an earlier post, is one form of it.
Why competitiveness
What ties these topics together for me is competitiveness. Technology is rarely valuable on its own. The question is whether, and how, it changes a firm's position: its efficiency, its ability to serve customers, its attractiveness to investors and partners.
Part of my work is analysing the impact of technology on business processes and operational efficiency. In practice that means asking questions such as:
- When a firm invests in digital technology, which processes actually change, and which stay the same?
- Is the effect on efficiency immediate, delayed, or dependent on other capabilities in the firm?
- How do we compare firms of very different sizes and industries without unfair comparisons?
- What does digital transformation look like for firms that are not technology companies?
These are research questions, not findings. Answering them carefully takes good data, suitable methods and time.
Working across disciplines
Digital transformation does not belong to one department. It involves strategy, operations, information systems, marketing and finance. In the lab I work with interdisciplinary teams, and that matters: a marketer, an engineer and an economist will look at the same "transformation" and see different things.
Where my background comes in
I spent years inside digital transformation before I studied it: running social media and digital campaigns, working with agencies, then building client relationships in business development. I saw projects that changed how a team worked and projects that only changed the tools. That experience is a large part of why I ask these questions now.
Results will be shared here once they are published.
Photos: promofocus on Pixabay, used under the Pixabay Content License. These are not my photographs.
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