Superdigitalisation is an Archimedean spiral: capacity building starts at the end
Transformation is not evolution, it is a change in form. From companies’ perspective, digitalisation builds and/or benefits from economies of scale. From people’s perspective, it draws on the network effect. In short, it’s something that happens fast.
COVID-19 is leading to an unprecedented superdigitalisation, when processes are even more accelerated. In this particularly complex environment, accelerating their superdigitalisation is a priority for many companies, and training teams becomes one of the biggest challenges. Organisations are made of people, who will be the main driving force behind any change, and as a company, we must ensure that we provide them with the right tools to succeed. In order to achieve this I hope the following will come in handy.
The phases of digitalisation
Digitalisation is a box containing multiple items. One way to understand its implications is to think of an Archimedean Spiral, which symbolises the steps companies go through in the digitalisation process.
In our experience, this process (which is better understood as one goes through it), is the following.
Point of cost reduction
For most companies, this is the starting point of digital transformation projects. Many of them, both B2C and B2B, have already gone through this stage in the last decade: going paperless, communicating by email, or messaging etc.
Point of competitive advantage
When going through the path of digitalisation, what starts with a vocation for cost-saving ends up becoming a way to create a competitive advantage. Thus, once companies have taken the first step and have managed to reduce costs, they move on to work on their digital marketing strategies in order to gain an advantage over their competitors.
By definition, any digital relationship (marketing, content, customer service…) is a two-way street, which generates data. The massive adoption of digital media by all targets and the correct use of digital marketing disciplines and digital assets generates a competitive advantage for companies, creating virtuous circles. Multiple B2C companies are in this phase. Among many others, Idealista worked on building a competitive advantage, and in 2015 Hawkers became an example by capturing customers using Facebook. In contrast, few B2B companies have arrived here.
Point of increase in revenue
For most companies, reaching this point in their digital transformation processes is twice as hard as reaching the previous one. This is because it requires a framework oriented towards the company’s platformisation. Thus, the organisation becomes an agent that generates value to its customers and allows others to generate it without its intermediation, capturing a part of that value.
If a company manages to get this far, it is because it has distilled the essence of its value proposition and adapted it to the habits of its digital consumers. We can summarise these habits in the archetype of the empowered consumer (with no channel friction to compare, assess and acquire products). Many incumbents (current leaders in a market or segment) find that more “digital” competitors enter the market directly at this stage. We can include in this group, among others, the marketplace models (retail, services…) or the new lines of retail banking and neo-banks.
Point of benefit diversification or evolution of the model
By going through the three previous points, the company will have managed to be more flexible with regards to many different areas: its vision, its income, its internal organisation… This allows it to detect, explore and take business lines in a much more agile way. Many companies in this state have moved from product to service.
Nevertheless, the reality is that few large companies have ever come this far. However, many figure out this phase of the process by incubating and/or participating in smaller companies that, by their very nature, have taken the fastest path.
Cultural Framework Point
Companies that have gone down the whole path will have employees with cultural values that have allowed them to get where they are. This is what we often call a digital culture, formed, among others, by the habit of sharing knowledge in a structured way, an asynchronous operational collaboration with a focus on transparency and a shared purpose. This is precisely the objective of digital capacity building: creating and fostering a digital culture among coworkers that will encourage and facilitate the digitalisation of the organisation.
This visual model serves the purpose of explaining two aspects inherent to digitisation:
- It is hard to move on to a later stage without having gone through earlier ones. Reaching one stage implies having already worked in the previous ones. Many times it is external talent, through a trusted partner, that makes us achieve this goal faster.
- The time, effort and complexity of moving from one stage to the next is not linear. Moving from one point to another can cost more effort (or less) depending on the circumstances of the company itself.
The superdigitalisation and the need of taking the spiral
2020 is proving to be a complex year. But this is not new. For many countries, so were 2013, 2008, 2001, 2000, 1993, or 1989. Some people say that we are back in 1984, but that is another article ;). What I mean is that, despite everything that is happening around us, life goes on and we all adapt. Right now, the digitalisation of companies is a key factor which will determine their survival in the not too distant future.
At present, companies have a momentum (strength*speed) that is formed by that of their market (probably marked by the current situation) and that of their professionals. Their drive and will is what builds value for their companies and their careers, becoming the first beneficiaries taking the spiral.
For all these reasons, if you work in a company and feel that the time has come to make the leap to digitalisation, my main reflection is that you should invest in digital capacity building: training, coaching and pilot projects. That you should work with different companies that can provide you with different visions. That they can challenge you and provide you with a vision and with support. And in my experience, following the Archimedean Spiral, that they start at the end. Paving the way and relearning together. It is for sure an enriching journey.