This is my third blog post covering the topic of Digital Transformation. Read the first and second ones too.
At this point, almost every large organization has some kind of a Digital Transformation program in place. It’s trendy, it’s sexy, and it’s what everybody else seems to be doing. It’s also a shortcut to get support and funding for those old aspirational projects that were filed in the “some day” folder: just call it “digital” something. After all, almost anything that at some point uses a computer system can be called digital, but at the end of the day, our traditional idea of being digital is just a bunch of ones and zeroes.
Ironically, the industries that pretty much “invented” digital are often the ones struggling the most to “get” the new digital.
- The music industry introduced digital music in the early 1980s with the first releases of albums in Compact Disc format, but it has never fully recovered from the MP3 revolution and it’s having even a harder time dealing with streaming these days.
- The film industry followed almost an identical path, but the theatrical nature of releasing feature movies provides them some protection, as going to see a movie in its opening weekend is still a very analog experience.
- Even though digital cameras are relatively new consumer devices, digitization of images started more than 60 years ago. However, as mobile phones and wearable technologies take over as the primary devices to capture images, photos and video, traditional image and photograph companies may be following the steps of Polaroid and Kodak soon. Devices that are always with us are becoming the de facto scanners, cameras, and camcorders.
- Banks were one of the first organizations to move from the physical analog world to bits and bytes. We don’t even think about it, but when we perform card payments, money transfers, and pay bills, we are just moving binary data around, instead of actual atoms. Real cash is rarely used for large operations. Many banks are having a hard time grasping the next step of digital transformation, as companies like Apple and Samsung enter the payment arena and virtual currencies like Bitcoin make us rethink even the concept of the good old general ledger.
So, what are the main differences between the old and the new digital? In essence, it’s a matter of movement, speed, and distribution. Those ones and zeroes are now much more fluid, moving from where they are created to where and when they are needed.
The iPod looked for a few years like the new king of music. Rip your music from CD’s to that pocket device with lots of storage, and you were good to go. Then we started realizing that there would never be enough storage for us to keep all the music we wanted, because we wanted EVERYTHING. But we still exist in a physical world, where we are limited to two ears and a short attention span: most of us can only consume one song at a time. It was never a question of storage, but a question of efficiency. Streaming meets that need much better than having 1,000 CDs digitized: our iPods had collections that were outdated from the moment we ripped our music collection. There would always be songs we wanted missing there, no matter how much time or money we spent curating it. The old FM radio had the core of it figured out: streaming is the natural way we perceive the world through our senses. Storage, be it in vinyl, CDs, or MP3 files was just the best way we had to serve our need for content before technology allowed us to move things more efficiently.
This also applies to the way we deal with our finances. Much of our financial processes have a lot of inefficiencies built into it that resembles dead storage in our iPods. We deposit money in our accounts, and it stays there as static songs that we rarely listen to. Payments using a physical credit card is an incredibly cumbersome process: our grandchildren will be amazed that we put up with plastic cards, PINs, paper receipts, physical signatures, and monthly statements for so long. For financial companies to better understand the inefficiencies in the way they deal with their customers’ wealth, they may need to start thinking about money as analog, physical entities that should move in continuous and efficient flows, so that they can maximize the opportunities while smoothing the user experience.
We can establish similar parallels with all other industries that are in earlier stages of this digital transformation journey: government, manufacturing, services, retail, you name it. The good news is that the music and entertainment industries went through it first, and the hospitality sector seems to be the next on that list. There are plenty of lessons to be learned from players like Netflix, Spotify, Airbnb and Uber, and we should all make sure we understand how “the new digital” will impact us, and adjust accordingly.
