3 stages of Digital Transformation: where are you now?

Why do so many good companies fail in their efforts to leverage digital transformation to grow and stay ahead of competitors? Digital transformation is on the minds of many leaders these days, but what are the practical steps for you to gain success from it? It all starts with knowing where you are in the DX journey.

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Digital transformation is no longer just a buzzword. It is essential for companies to build sustainable resilience and agility in this fast-changing world. However, digital transformation is not a quick short-cut, it is a journey of 3 stages:

• Digitisation, Digitalisation, and finally, Digital Transformation

Many companies fail in their digital transformation because they simply rushed to the last stage. This article will introduce these 3 stages of digital transformation and what are the differences between them. Most importantly, Binomial will provide unique insights for you to solid each step along the journey and successfully reach the finishing line.

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Stage 1: Digitisation

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Digitisation means converting non-digital records and information into digital format.

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At the stage of digitisation, companies usually adopt some peripheral digital technologies such as POS or digital marketing tools. Also, they might invest in isolated experiments like loyalty programs to prepare for the launch of new products. Typically, only the boss knows the next step or future strategy of the company.

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Binomial: Digitisation is a good start of digital transformation. But the challenge of this stage is less in the reception of bits and bytes, and more in knowing what to do with data. Thus, if business leaders want to jump to the next stage, a clear business strategy is of great importance and necessity from the very beginning.

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Stage 2: Digitalisation  

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Digitalisation includes the conversion of processes or interactions into their digital equivalents.  

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At the stage of digitalisation, companies understand better what technologies can do and start to reorganise and optimise business activities by using digital tools. This stage also requires more investment in people, to retrain them to make use of digital processes. Examples include automated equipment monitoring, teleconferencing, and computer prediction services.

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The key difference between digitisation and digitalisation is that the former deals with information and the latter refers to process and people. However, business models still remain the same in these two stages.

Binomial: It is more practical for most SMEs to further explore the stage of digitalisation, when considering affordability, security and adaptability. If you still want to head for the last stage to gain transformational growth, make sure you have prepared a clear business transformation strategy, so that you know how data and technologies can help you achieve it.

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Stage 3: Digital transformation

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Digital transformation refers to an innovative and disruptive business transformation, where strategic decisions are made with the support of digital technologies.

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At this stage, companies can well leverage customer-centric design thinking to dig out customer insights and then strengthen customer engagement. They focus on innovating the overall business approach to build strategic competitive advantage and gain sustainable high growth.

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The biggest difference between the third stage and the first two is that digital transformation starts from business transformation, rather than technology.

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Binomial: Not every business that seeks for digital transformation will gain transformational growth. Simply heading for the last stage can be counter-productive, especially for those who have not prepared a clear vision and data-driven strategies that centre around customer values and customer journey.

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In a nutshell, leaders should carefully consider which stage is most appropriate for the current state of their company when undertaking digital transformation. Whether pursuing incremental or transformational growth, leaders should have a unique strategic thinking, design thinking, customer-centric approach to drive actual plans and actions at each stage of digital transformation.

Binomial is an innovation and creative consulting firm. We combine practical growth strategies, design thinking, and agile execution for your company to succeed in digital transformation.‍

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