Despite working in the digital space for years, I was quite stumped a few weeks ago when I was asked to define it. Sometimes you can get away by circumlocution or, to use the technically correct term, waffling. But given all the hype around digital transformation, I felt that it was a good time to try to get a working definition going. For one, it helps to cut the hype. And two, it clarifies what is not digital at a time when the label is being used indiscriminately.
I read descriptions of digital in the media and on our competitors’ sites. I listened to analysts and read books and white papers. I asked our clients what they were doing. And I spoke to the experts in Cognizant and spent time just thinking about the problem. And I’m happy to say I’m willing to stick my neck out and try to define digital in less than twenty-five words.
Of course the problem with definitions is the trade-off between pithiness, abstraction, and comprehensiveness. You can be very pithy but be too abstract—for example, “Digital is the future of business.” Or you can take a whole page to define digital, but that’s a description and not a definition. Here’s my definition, and you’re welcome to challenge it, differ with it, or adapt it as you wish.
Digital means exploiting emerging technologies to create user- and customer-centric interfaces and data-driven decisions, leading to more agile, responsive, and competitive business models.
Let’s expand on this.
Behind the scenes: But digital is not just about front-end technologies. Moore’s Law continues to drive the cost of computing down, leading to significant capabilities to process data—be it the in-memory database capability of SAP HANA or the emergence of big data—and our ability to analyse and make meaning of ever-larger data sets in continuously decreasing cycle times. Newer and more efficient Graph (Neo4J) and clustered database models (Hadoop) are supplanting the once ubiquitous RDBMS providers. And the en masse shift to cloud infrastructure and automation has created a whole universe of services—starting with PaaS (Platform as-a-Service) and now a generic as-a-service nomenclature.
The Internet of Things (IoT): To top it all, the next wave of Internet-connected sensors and devices is just beginning. Another whole wave of connected and smart objects has the potential to change everything, again, in the way we buy and consume goods and services. IoT does not have a single killer app yet, but its growth and spread nonetheless are accelerating.
It’s not what you did; it’s how you did it: The shift in the underlying methodology has played its role. The maturing and widespread adoption of agile frameworks and the toolkits to deliver them are a key construct of digital. The rapid evolution of technologies both necessitates and enables a much more adaptive and iterative approach to technology delivery.
Design thinking: Almost absurdly, all this fantastic technology is still not what truly drives the digital change we see in businesses. That honour belongs to the emergence of design thinking and service-design methodologies. Some design thinking is commonsensical, and you would think it should have been the norm rather than innovation. But the mind shift is fundamental. Industry-leading businesses are now recognising the need to be customer-journey driven. I use the word interface in a broad sense here and not just restricted to screens. The question to ask is, how do your customers, partners, and even employees interface with your business? Historically, that interface was driven by inside-out thinking. In other words, businesses decided how they wanted to run their processes and designed systems and interfaces to match those desired processes. If a bank’s preference was for the customer to be in the branch while opening an account, that’s how the processes and systems were defined. In digital, those interfaces are conceptualised outside-in. The starting point is the user. What do users want to do? How do prospective customers want to open their accounts? What are their constraints? What would make their choices easier and their experiences better? Once you start thinking outside-in, you reach a very different point in the way systems and processes are defined. And when you combine this user-centric interface thinking with emerging technology opportunities, you begin to understand why transformation is the buzzword du jour.
Data-driven decisions: Implicitly or explicitly, every decision we make (what to wear to work, for example) is made on the basis of data that we process (what meetings I have, what the dress code is, what the weather is). Complex decisions require more sophisticated data. Historically, this data has not been available to us for many large and small decisions. How much can we spend on the marketing campaign? Where should we open the next store? Whom should we hire as a program leader for a new business area? How can we implement a hot-desking policy? As a consequence, most businesses have relied on experts for these decisions, whether they are from within the business or consultants brought in for the purpose. Experts use their wisdom, which is often an implicit accumulation of data from deep experience in that area. What we are witnessing, thanks to the combination of lean thinking and instrumentation, is a seismic shift to more explicit data-driven decision making. For example, if everybody used a smartphone to access the office for a month or two, it might provide data that suggests that Wednesday is the busiest day of the week while Friday is the lightest. The latter may be visually obvious, but the former may not be. Or the data may show that on Mondays, the average time people spend in the office is actually just four hours because they are in meetings or on projects outside. Suddenly there is explicit data to influence your hot-decking policy depending on what your objectives were. This example is tiny but representative of how digital is reshaping our decision making. Now imagine this at scale and for the hundreds of decisions made every day, and you get a sense of what I mean.
Responsive business models: We are used to stability and to treating change as a temporary disruption between periods of stability, not unlike moving to a new house. Increasingly though, we find ourselves in a state of continuous change. The disruption is not a passing inclemency. It is the new normal. Think of moving from a house to a caravan, for example. The combination of technologies, design thinking, and data surfeit allow us to build a responsive or adaptive business model that is able to keep pace with a fast-changing environment. Think evolving operating model instead of target operating model. Think of the cost of change as a part of the cost of doing business, not as a capital expenditure. Obviously, industry context is vital. Retail banks and media businesses are much farther down the path of transformation than, for example, infrastructure providers are. But while the impact may vary, the change is universal. Therefore, digital is not about B2C versus B2B. It’s not about marketing or about your social media. I believe this is fundamentally about your business model being influenced by better data delivered at the point of decision making.
Agile strategy: Seen in this way, it would therefore be logical to look at your strategy as an agile and evolving artifact. Many companies still look at three-year or five-year plans which are sequential. Instead, we should be looking at rolling twelve-quarter road maps which reflect our strategies but which can be modified on a quarterly basis, keeping a vision or end goal in mind (but more about that some other time).
The point of all this is to be competitive. And digital business models which use technology, design thinking, and data optimally are far more competitive in the world in which we live. John Chambers, the CEO of Cisco, once said ,”Change will never be this slow again.” And 52% of companies from the Fortune 500 list of 2000 no longer exist. Collectively, that sums up the challenges and dangers of being resistant to change. Regardless of whether you agree with my definition of digital, a response to the change around us is not optional. Enjoy the ride!
– Ved Sen
Code Halos: Malcolm Frank, Ben Pring, and Paul Roehrig
Being Digital: Nicholas Negroponte
Dataclysm: Christian Rudder
The Mobile Mind Shift: Ted Schadler, Josh Bernoff, and Julie Ask
This Is Service Design Thinking: Marc Stickdorn and Jakob Schneider
The Lean Startup: Eric Ries
This post was originally published on LinkedIn Pulse.