In a presentation last week, I shared some of the challenges Australian business leaders said they will face in the year ahead. It’s based on some research done by KPMG at the start of each year, where they ask leaders, “What’s keeping you up at night?”
In the presentation, I looked at the top four challenges, which you can see here:
I won’t go through them in detail here (you can watch the full presentation below), but you can see they all have a ‘digital’ thread running through them.
That shouldn’t be a surprise. Even if you don’t consider yourself primarily a digital organisation, digital technology is such a big part of our lives now we can’t ignore it.
But not all ‘digital’ is the same!
Often, when I talk to leaders about being more digital or going through digital transformation, they think it’s all about turning physical things (like paper) into digital form (electronic documents).
That’s one kind of digital, but it’s only the first level.
In fact, there are six levels – starting from non-digital and then becoming gradually more digitally-enabled:
The bottom level, which is actually not digital, is the physical level, made up of atoms.
Atoms make up the things you can see, feel, and touch. Every bit of paper is made of atoms. Your files, the filing cabinets, and your office itself are made of atoms. The meeting room with the table, chairs and whiteboard at the front are all made of atoms.
There’s nothing wrong with atoms, except they are difficult and costly to create, move, and duplicate. Most of the atoms we use now at work are there for historical reasons. For example, the office was necessary 200 hundred years ago because that’s where the files, secretaries, and colleagues were. Even though it’s still useful now, it’s not necessary.
The first level of digital transformation is going from the physical world of atoms to the digital world of bits.
This is where you consider taking anything that’s physical and making it digital – for example:
- Eliminate all the paper and make it all electronic.
- Eliminate meeting rooms because you’re all going to meet online.
- Eliminate offices because people are working from home or from somewhere else.
Obviously, you don’t have to be completely digital, but this is the first step.
The next level is to take those bits and put them into the cloud.
I’m talking about a private cloud here – like Apple’s iCloud or a Microsoft Sharepoint enterprise intranet. Everything is ‘somewhere out there’, and you can access it from any device, from anywhere (with appropriate permissions and security, of course).
The next level is another version of cloud, but this is an external cloud. Let’s call it open.
You make your data in the cloud accessible to outsiders (again, with appropriate security in place so you control who has access). You also give them access in a very specific way, through an API (application programming interface).
For example, many small businesses use cloud-based software like Xero, which allows other ‘plug-ins’ to access your data and enhance the service you get.
As another example, because of recent laws, Australian banks can’t keep your banking data all to themselves anymore. They now must allow other organisations to access your banking data (with your permission). So, say, a startup company could create an app to analyse your transactions and ‘coach’ you in budgeting, investing, and sound financial management.
The next level is artificial intelligence, or AI.
AI can analyse data to help you make better decisions. But it can only work on data if it has access to it. If your data is open (see the previous level), you can let AI loose on it.
There’s a lot more to AI, but understanding this alone is a good start. AI thrives on data, so give it data to grow and learn!
The final level – which very few organisations reach – is where you completely turn your business model inside out, and provide a platform for other businesses.
For example, Apple is a consumer electronics company that makes most of its revenue from selling devices. But it also makes billions of dollars a year from its App Store, which is a platform for other businesses to sell their stuff to Apple customers. Without that platform, Apple could create and sell all those apps itself, but that would be a mammoth task. Far better to provide the platform and then clip the ticket on every sale.
Where are YOU on this digitally-enabled scale?
When I talk to leaders, many say they are still on the path from atoms to bits. Others have some data in the cloud, might even make some of it open, and could even be dabbling in AI.
You don’t have to work your way all the way up to the top! In fact, I recommend you don’t. Very few organisations will become a platform organisation, and very few need to.
But as a first step in thinking and becoming more digital, honestly assess where you are right now.