What does digital transformation actually mean? And how do we digitize our business? The answers have less to do with IT and more to do with collaboration. Here's an update on interesting articles and books. But first, let's take another look at what digitalization means exactly.
What does digitization mean?
You might think that digitization primarily means applying new technologies (e.g., machine learning, blockchain, 3D printing). But that definition doesn't help. I already wrote about it in 2018./1/ I believe that the definition from then is still correct.
Digitization is about services. Services are different from products:
- Products are tangible and physical. Services are not.
- Products are first produced and then delivered. Products can be stocked. This is not possible with services. The cab driver cannot drive his regular customer to the airport ten times in advance.
The last point shows us what is special about services: they are produced at the same moment they are consumed. That's why, in the past, they were always tied to specific places, times and people. And that is changing.
We can now buy computing power cheaply and the networks for data transmission are fast and reliable. So it is now possible to unbundle services. We can remove individual steps from a chain, have them calculated elsewhere, and reintegrate the result into the process without the user noticing. That wasn't possible before. What changes now? Let's look at an example.
Disney shoots "The Mandalorian" on a virtual set
In science fiction films, people like to work with green or blue backgrounds so that a certain environment appears there later. In the case of costumes that often reflect light, each individual frame of the film must be reworked (post-production). That's 12 hours per frame./2/
In order to reduce this effort, "The Mandalorian" came up with the idea of setting up LED walls on which backgrounds are projected. (The article linked below describes the story in more detail.) This is now possible because the computing power and projection technology are good enough to display backgrounds. The pure projection would not have been enough. Several technologies (game engine, motion capture) have been combined so that the background changes appropriately during camera movements.
This is a good example of digitalization. It makes it clear how services are now delivered differently:
- The set builders build much less real scenery. You now need to create 3D models.
- We don't need extras for certain scenes anymore. These are generated in the background by computers.
- There's less need for experts to revise frame by frame.
- Producers can book experts from all over the world. You don't necessarily have to be on set.
Film production is therefore changing as a result of digitalization. Probably, we will see such effects in other areas as well. Someone solves an annoying problem in a digital way by combining different technologies. Does everyone have to become an IT expert now?
We need technology understanding and collaboration
More IT experts would be nice. But there will be a big shortage here. We need more IT skills among ordinary employees and managers.
In 2023, an interesting book by Paul Leonardi and Tsedal Neeley and a series of articles by several authors have been published in the Harvard Business Review./3, 4/
- Leonardi and Neeley have divided their theses on "The Digital Mindset" into the three areas of Collaboration, Computation and Change.
- Linda Hill and her colleagues describe what makes up mature digital organizations: a good understanding of the customer, a culture that is not data-driven but informed, a power attitude, distributed decision-making and collaborative working, constant experimentation, and a good ethical approach.
There are also talks by the authors on YouTube (search for Paul Leonardi, search for Linda Hill).
More important than programming skills is an understanding of (one's own) processes and collaboration, as well as an understanding of what technology can do and how to interact with machines.
In the above article about the production of the Mandalorian, it is clear that different people looked at the same problem over and over until they found a good solution. We can apply that to other areas:
- What are our most pressing problems?
- If we were to solve a problem like in a science fiction movie, what would the solution look like?
- Which technologies already exist today? Which ones do we need to combine?
- How do we need to restructure our processes?
- How can we experiment to know if the solution works?
These are questions for which we need the process experts in particular. Digitization needs collaboration.
- /1/ Jan Fischbach: Was bedeutet Digitale Transformation?, Teamworkblog, erschienen am 26. Jul 2018, abrufbar unter http://www.teamworkblog.de/2018/07/was-bedeutet-digitale-transformation.html
- /2/ Jay Holben: The Mandalorian: This Is the Way, Cinematographers Greig Fraser, ASC, ACS and Barry “Baz” Idoine and showrunner Jon Favreau employ new technologies to frame the Disney Plus Star Wars series. Published in American Cinematographer, Feb. 6th, 2020, https://ascmag.com/articles/the-mandalorian.
- /3/ Leonardi, Paul ; Neeley, Tsedal: The Digital Mindset : What It Really Takes to Thrive in the Age of Data, Algorithms, and AI. Boston, Massachusetts: Harvard Business Press, 2022.
- /4/ Hill, Linda, et al. "Where can digital transformation take you? Insights from 1,700 leaders." https://hbswk.hbs.edu/item/leading-in-the-digital-era-where-can-digital-transformation-take-you (2022).
This text is the English translation of the post "Was bedeutet Digitale Transformation? 2. Teil", published first here in the Teamworkblog on Oct., 17th, 2022