Unpacking Business Digitalisation
A perspective on the opportunities for digitalisation.
Background
I co-developed and co-teach an adult programme on Business Digitalisation (currently being refreshed), and have spoken about the intersection of Data Analytics and Business Digitalisation in various forums. A recurring question I often get is: “Where should organisations prioritise their business digitalisation efforts?”
In Nov 2023, I wrote an article on The Problem with Digital Strategy that was very well-received. In fact, it was selected by the editors of Medium as a story to highlight to their larger reader community. Clearly, there was significant interest in this topic. And so I dedicate my 24th weekly article as a follow-up to provide additional clarity on business digitalisation prioritisation.
(I write a weekly article on bad thinking and bad practices in data analytics / data science which you can find here.)
Business Digitalisation
Let’s level-set our understanding of the terms bandied about in Digitalisation. I’ve shared before that there are 3 sequential phases:
- Digitisation: conversion of analog forms of data into digital formats.
- Digitalisation: re-engineering of existing workflows to remove ‘friction’ by leveraging data in digital formats.
- Digital Transformation: expanding or pivoting the business into new business models, leveraging new capabilities created through digitisation and digitalisation efforts.
One phase must proceed from the previous. And Business Digitalisation is just the phase of Digitalisation applied into the corporate enterprise; where it is in service of achieving better business outcomes.
Pointing that Laser
The prioritisation of business digitalisation initiatives can be logically deconstructed into 2 main objectives — achieving significant monetisation, and sustaining monetisation. Focusing on customer-facing solutions will achieve the former, while focusing on internal / employee-facing solutions is the expectation of the latter. Advice: start on customer-facing solutions, and follow-through and close the loop with the end-to-end internal solution.
As shared above, the main thrust of business digitalisation is to remove ’friction’. These frictions can be classified into 3 types — activity friction, cognitive friction, and experience friction. These frictions cut across both customer and internal-facing solutions.
Activity friction are those involving actions and interactions between the user and the solution, e.g. logging in, clicking to navigate or attaching documents. Activity friction can be addressed by process streamlining and automation; matured tools readily exist for such endeavours.
Cognitive friction are those involving mental processes and understanding, e.g. foraging for information to make a decision. Cognitive friction can be addressed by data analytics (including AI); generally not off-the-shelf tools and requires the engagement with subject matter experts.
Experience friction are those involving contextual ease of use, e.g. using laptop vs mobile phone, having colour blindness, or even having to re-authenticate after having just used the solution. Experience friction can be addressed through customisation (in the case of device usage) or personalisation (in the case of colour blindness). Tools exist to solve for these, but they require thoughtfulness to identify the universe of applicability.
There is a simple prioritisation logic to addressing these 3 types of friction. The famous entrepreneur and podcaster, Scott Galloway (aka Prof G), made this point very well – the key to a successful product or service is to focus on giving time back to the user; time is the most ‘monetisable’ resource (I’m paraphrasing). Using this logic, it should be apparent that solving for activity friction should give back the most time, followed by solving for cognitive friction, followed by solving for experience friction.
Advice: take a solution and start with reducing activity friction, further enhance the same solution by reducing cognitive friction, and then round it off with reducing experience friction. This will allow for a continuous extraction of value.
Conclusion
I grew up listening to that famous adage — “If it ain’t broke, don’t fix it.” But this is inherently a nonsensical statement in an increasingly digitalised world. In such a world, we have an obligation to continuously shift our perspective to see ‘friction’ in everything. When there was no mobile phone, we didn’t acknowledge the frictions in communication. And now with mobile phones, there are new kinds of friction associated with the physicality of the device, the interaction modality with the device, etc. The bar continuously moves up, and the trick is in being able to see those friction points that others take for granted. There is never an end state for Business Digitalisation; it is iterative, it is incremental.
