Digitalization is omnipresent and has a fundamental impact on the world. On us as individuals, on societies, countries, belief systems and industries.
Proco Global are excited to have partnered with industry expert, Armin Prommersberger for this report A practical survival guide to Digitalization exploring the rise of digitalisation and digital transformation. With over 25 years experience across a range of industries, Armin has a passion in music, computers, design, cars, technology and predictive analysis in the virtual domain. In a world where everything becomes data he is motivated by the emotional experience of products.
Receive a complimentary copy of our A practical survival guide to Digitalization report by clicking the link below to download the full report.
An brief introduction to Digitization, Digitalization and more
Each one of these overused terms describes a certain phase on the journey ahead of the Automotive industry. Here are some basic definitions to make sure we understand each other.
Digitization is the phase when analog elements get replaced by their digital versions. In Automotive a good example is “drive by wire” where a physical steering column gets replaced by a system based on digital signals that now controls where the car is steering towards. There is no more direct physical connection between the steering wheel and the front wheels. This phase does not require a whole industry or company to change its ways. Digitization is mainly driven by the desire to further improve an existing functionality when the traditional solutions have reached saturation. Digitization can be a very isolated phenomenon or singular event, thus can also be project-like in nature.
Digitalization is the phase when an entity redefines itself holistically going from a physical or hardware centric model to a software driven approach leveraging digital means. Digitalization is more like a concept that tries to answer questions fundamental to an entity’s purpose.
One success factor of companies on top of the Digitalization in their sectors is that they have the skill and vision to take Digitized elements, see the bigger opportunities on a system level and can convert it into a clear target for their organization to move towards. One company that has managed to master already various Digitalization cycles is Disney.
– Digital Transformation
Digital Transformation is the process encompassing the journey from Digitization to Digitalization. It is actually more a change process than anything else and will deal mainly with psychological aspects of an organization going through a tectonic shift first. In this phase new business models are developed, new ways of working are established, fundamental processes are replaced, and people are trained. The transformation will be executed in phases as it will eventually affect the whole company. It is a journey that will need adjustment along the way, it requires resilience, courage and speed. It must become a movement that everyone joins as otherwise you run the major risk of introducing latest tools and methods while the previous culture and traditional ways of working prevail and thus render the Digital Transformation efforts obsolete.
– Digital Disruption
Digital Disruption means a radical change event that can be triggered internally or externally. Internal: Some argue Digital Transformation does not work, as it takes too long due to the involved emotional dynamics of change. Instead of time-consuming transformation roll outs there is an alternative model for instantaneous change, embracing the risk of breaking things on large scale for the potential payback of a quick adoption. There is merit in this approach, yet its probability of success depends on specific boundary conditions that need to be conformed upfront to minimize the risk. It also requires a huge amount of autonomy in decision making across all stakeholder categories.
External: Digital Disruption can also be a forced event from the outside like a new entrant into a mature market, whose approach is so different but promising that it forces instant adjustment of the incumbents to remain relevant. One prominent late example is the rise of the smartphone and the resulting obsolescence of the previous dominant category of feature phones and the former market leaders. In industries with long product cycles the impact felt at scale comes with a certain latency which portrays an inadequate feeling of stability.