Digital X: When we say, ‘Digital this’ or ‘Digital that’... what exactly do we mean?
When do we use ‘digitisation’ instead of ‘digitalisation’? When do you say ‘IT’? These questions may seem a bit nerdy, but if you are leading an organisation, you should keep reading. According to new research, the alternative could be frustration and lost investments.
We are in the middle of a digital renaissance and our world is undergoing radical shifts in business and society. A new phenomenon has now emerged where the term "digital" is added to things like strategy, innovation and transformation.
In many cases digital is used in the same breath as IT (information technology) or as a replacement for the IT label. A phenomenon now called Digital X. But is this merely a change in words, or does it signify something deeper?
New research from Copenhagen Business School delves into the heart of the ‘digital’ matter. The paper published in the Information Systems Research journal takes a closer look at what is really different about ‘digital’. In doing so, it not only highlights distinctions between the IT and digital concepts but also provides actionable guidelines that should enable a reflective use of the digital label without reducing it to a fancy all-encompassing buzzword.
Why does this distinction matter so much?
Practically, managers can avoid frustrations and wasted investments due to attending to digital phenomena with incompatible logics and assumptions that may have been valid with IT. For example, many digital transformation efforts fail because managers approach them as though they are another IT transformation project.
"One company we studied learned a hard lesson when they first delegated their company’s digital strategy to the IT department. Usually, an IT strategy aligns with the organisational strategy of the company, while the digital strategy is a core business strategy. It must be closely integrated with the corporate strategy and requires more oversight and heterogeneous competencies than a traditional IT strategy." says Abayomi Baiyere, Associate Professor at the Department of Digitalization.
Scientifically, this would enable knowledge building. There is an inkling among academic and practitioner communities that ‘digital’ and ‘IT’ are not mere synonyms, but beyond the hype, something fundamentally different is being signalled when the digital label is invoked.
"We need to recognise that 'digital' isn't just a catchy buzzword. It represents a qualitative shift, a new combination of the social and technical, giving birth to possibilities once inconceivable,"
The importance of this distinction becomes more apparent when the researchers explain ‘digitisation’ and ‘digitalisation’ as two related aspects of digital. They suggest that ‘digitisation’ focuses on using technology to change existing things/processes into a digital form. For example, the conversion of a book to a digital form or the conversion of paper registration forms to online registration forms.
While with digitalisation, ‘digital’ means using technology to unlock new possibilities and create novel value-creation opportunities. For example, although Amazon did not invent the internet or the art of selling books, they reimagined what was possible based on the technology to create an online bookstore.
“While digitisation is akin to following a user manual, digitalisation is about imagining new possibilities. So, the question digitisation answers is “what can this technology do”, while with digitalisation, the question is “what more/else can this technology do”. In a nutshell, remember that ‘digital’ isn't the same as ‘IT’. When you invoke ‘digital’, it should be to signify that there is a fundamental difference being signalled,” adds Baiyere.
Unlocking digital understanding
For managers, the paper offers a cautionary note. It advises against equating ‘digital’ with the assumptions of ‘IT’ (or any other traditional “X”), as this approach might result in incompatibility, frustration and wasted investments.
In a broader view, the paper prompts us to grasp that ‘digital’ is a doorway to fresh ideas and innovative blends of social and technical aspects. “This paper is a roadmap for scholars, managers and all readers to fully understand the power of ‘digital’. It is not just about words – it is about paving the way for real progress, smart choices and exciting new opportunities,” concludes Abayomi Baiyere.