Digital Transformation

Summary: "Digitizing Isn't the Same as Digital Transformation"

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In a Harvard Business Review article last year, Paul Leinwand and Mahadeva Matt Mani share why "Digitizing Isn't the Same as Digital Transformation."

While several companies’ digital initiatives accelerated because of COVID-19, many confuse this with the term "digital transformation." The former is about enabling businesses to stay in the game, while digital transformation of businesses is about building real, long-term competitive advantage to succeed in the digital age.

The article takes a look at the transformation of three companies:

Philips – pre-Covid they had decided to transform from a multi-industry, manufacturing-centric conglomerate to a company focused on health technology services and solutions. Despite Philips' business being challenged by the demand crash post-Covid, its new model of doing business has supported a quick pivot to solutions that contributed to the company ending the year with stable revenue growth.

Komatsu – they initially launched construction machinery that utilizes GPS, digital mapping, and sensors. They’ve since opened up its Landlog platform and data that allows customers, competitors, and other companies in the construction ecosystem to better coordinate their activities and improve total productivity across a construction project.

Microsoft – they shifted from pushing products into the mass market to solution-oriented teams charged with bringing together the many cross-functional skills needed to tailor services to specific customer needs.

The three takeaways from these companies are that leaders must:

  • Reimagine your place in the world, instead of focusing on digitizing what you already do

  • Create value through ecosystems, rather than trying to do it all alone

  • Reimagine your organization to enable a new model of value creation, rather than asking people to work in new ways within the confines of the old organizational model

Successful companies in the digital age recognize that the way to remain relevant comes from working together with an ecosystem of players in order to deliver the ambitious value propositions that customers want and to quickly innovate and scale up the incredible capabilities that are needed.

Find out more about how these companies are transforming and the takeaways from their journey.