Digitisation, Digitalisation, Digital Transformation - getting the basics right (and why HR should read it)

I guess this is not the first “let me tell you the basics about the D-thing” article you’re reading, right?

Either way, digitalisation has become a hot topic these days. But, as much as it is trending, there is plenty of confusion and uncertainty around the subject.

Basically, every halfway renowned international consultancy and business magazine has published an article on what digitalisation is really about. They might just have helped you further, but I wouldn’t be surprised if they didn’t.

Just adding more of the same was not my intention when writing this article. So, if you would like to gain some new insights on the topic of digitalisation, especially as an HR leader, continue reading.

First things first.

We generally talk about “digitalisation” (also spelt with a “z” – digitalization).

But, we are not aware of the fact that we’re actually talking about three different things. As well as this, there are three different major steps on the way to having a successful business in the digital age.

Essentially, this is just adding to the confusion that this topic causes.

Let me give you some insight.

THE D-THING (The basics)

When companies talk about the “digitalisation” of their business, what they actually end up doing is “digitisation”.

This is especially the case for “legacy” companies – a traditional business which has a good stand in the market. This includes telcos, insurances, banks, public services, and so on - all of whom often face a loss of customers and a steep decline in revenue.

Let me give you an insightful example.

The other day when I opened a new bank account, the following happened to me:

Bank employee: So, what do you do for living?

Me: I help HR leaders working in legacy companies which are going through a digital transformation process to create a digital-ready executive workforce.

Bank employee: Ah! A consultant for digitalisation!

Me: sort of…

Bank employee (about to hand over a pile of printed documents hesitantly with a guilty look on his face): I know it’s an important topic. But, we haven't come this far in terms of digitalisation yet. We are still printing.

Printing instead of sending the electronic document via email. Using tablets. Setting up databases. Using apps.

Digitisation simply means creating a digital version of analogue and physical things.

The goal of digitisation is mainly creating an efficient way of preserving and processing data without loss of quality.

Digitisation simply means creating a digital version of analogue and physical things.

This is how far most companies come with “digitalisation”. They actually stop at digitisation, buy some software, and think the job is done. Nope.

(HR people might think at this point: but what does this have to do with HR? Please read further, and you’ll discover exactly why.)

THE D-THING (for the advanced)

Digitalisation can be described as what you do with the digitised data to gain a specific benefit.

While digitisation is often just done for the sake of it, digitalisation serves a specific purpose within a company.

Digitalisation helps to improve functions and processes or perhaps gain insights with the use of the digitised data. It is turning raw data into valuable information and actionable knowledge which helps the company perform better in what it does – and in the very end, it allows them to deliver increased value to the customer.

"Digitalisation helps to improve functions and processes or gain insights with the use of the digitised data."

A good example of digitalisation is to engage with customer in a more meaningful way through the use of technology.

Take this recent example:

As I changed the dates of my return flight from France back to Zurich, I contacted my airline via Facebook Messenger - asking them how to proceed about the original return flight (which I had to cancel) and how I could change it to a new one on a different date. They replied within 10 minutes, being really nice and helpful and calling me by my first name - solving my issues within two minutes without me having to provide tons of information. It may sound strange, but it actually made me feel special and important. I had the impression that “Leslie” (who I chatted with), likes to do her job and really wanted to help me to the best of her ability. This experience was one of the major reasons why I booked my flights with this airline again.

Many companies think about concepts of customer experience and engagement in terms of efficiency. However, it is actually the way information is exchanged between human beings. So, the use of technology and software is used by people to target people.

Therefore, the main focus of digitalisation is not to buy new software or to technically upgrade, but to revolve around the human being. This is where HR takes a major role in the whole process of digitalisation.

"The main focus of digitalisation is to revolve around the human being."

Those few companies who managed to surpass the digitisation hurdle and do quite well at it actually have a hard time reaching the key to success in the digital age:

The digital transformation process.

THE D-THING (Step 3 – Master level)

Digital transformation can be defined as transforming and profoundly changing whole organisational processes, products and services, or perhaps even the business model itself. The digital transformation includes digitisation as well as digitalisation processes. This means using digitized data with a specific purpose in a meaningful way.

But, in addition to this, digital transformation needs to be done in a very strategic way - depending on the mission and vision of a company.

"Digital transformation can be defined as profoundly changing whole organisational processes or even the business model itself."

To me, Philips is for sure one of the very few companies to have successfully digitally transformed their business. Philips new lighting concepts for private homes as well as public places such as airports and car parks brings value to the customer and helps to save the planet by conserving energy.

But, there is another crucial factor to digital transformation: human factor is key on all levels.

Going through a transformation process in a business, whatever it is about, needs the right people with the right skillset and mindset to manage, support, and carry forward that change. It needs a company culture and a workplace environment according to that.

"With digital transformation the human factor is key on all levels."

When it comes to digital transformation, People & Culture, Learning & Development, and any other HR related department should be treated as central. Science clearly shows that HR is strongly linked to the overall operational performance and success of a business.

But, anyone who thinks that introducing an innovative employee app, a VR onboarding process, and setting up digital labs will do the job is deadly wrong. Employees of the company as well as the executive workforce need the right digital skills.

No, that’s not fixed with “IT-Training”, Coding-seminars, and learning how to switch a tablet on an off.

“Digital skills” are skills that enable a person to understand, use, and shape digital transformation. This means having the capability to act aligned to the company’s vision, live the values, and execute the strategy.

“Digital skills” are skills that enable a person to understand, use, and shape digital transformation.

Finding, retaining, and training executives and leaders is one of HR’s main contributions to digital transformation.

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Having a hard time with digital transformation processes in your company?

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