Innovation Alphabet

Digitalization

In a nutshell

“Digitalization” is the generic term used to refer to the digital transformation of the economy. But it is by no means a trivial or obvious process. It is a total metamorphosis of the company, characterized above all by a change in organizational mindset and a completely new approach to business. The use of data and digital technologies impacts the conduct of work, transforms the interaction between business and consumers, and creates new revenue streams.

A bionic heart as the Digitalization quickcard header image A bionic heart as the Digitalization quickcard header image
similar yet different

Digitization vs Digitalization vs Digital Transformation

Terminology can be confusing. Suddenly we’re talking about different things but calling them (almost) the same. That’s why it’s better to start by defining how these three concepts vary in different aspects such as their objectives and outcome.

• Digitization can be considered foundational. It represents the basic connection between the physical world and technology, since it consists of converting something non-digital into a digital representation or artifact (e.g., scanning a paper document and saving it as PDF) without significantly improving it.

• Digitalization means leveraging digital technologies to improve process flows. Therefore, digitalization implies digitization. But it also increases operational efficiency, reduces costs and minimizes human errors. An easy example is from the banking industry: online banking systems allow real-time transfers without the need to go to the bank. Digitalization improves an existing business process but doesn’t change or transform it.

Digital Transformation is literally business transformation enabled by digitalization. It has critically changed the way businesses operate and the way new businesses are developed. Companies integrate digital technology in every area of their business and create new value to their customers. Netflix, for example, has removed the need for physically collecting DVDs to have a movie library.

Industries

• Digitalization in the banking industry
Credit group BNP Paribas has gone digital to maintain its leading position in the market. With the development of NiCKEL in 2017 – a payment account for everyone, regardless of income – the bank is bypassing modern players such as Revolut and N26 by transforming the relationship with financial services and giving customers full control of their money. In addition, to increase transactions via mobile apps and reach more than 4 million users in 2018, BNP Paribas has expanded its resources, offering new digital services such as instant payments via smartphones.

• Digitalization in the automotive industry
In 2017, SEAT launched the Breaking Fab innovation program. It intended to attract talents by inviting startups, students, designers, and investors to solve manufacturing challenges. Riding the wave of digitalization, the automotive company has established a software development center that aims to improve efficiency through the technological conversion of the whole enterprise.

Source: Linkedin

• Digitalization in the footwear industry
Created in 2013 by two digital and marketing professionals, Muroexe designs its models based on customer requests obtained through surveys. Taking advantage of the “Design Lab” section of the website, the company creates new shoe lines, improves products, or launches new ideas to design innovative models.

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Business Functions

• Digitalization in support of sales
It may sound strange, but in 2004 LEGO was on the brink of bankruptcy. There was an irrevocable decision to be made. The company decided to focus on digitalization and diversify its business model. The sale of toys was joined by movies, video games, and applications – all products related to digital. One of the applications developed, for example, is Lego Digital Designer, with which users can design custom constructions.

• Digitalization in support of customer experience
French cosmetics company L’Oréal has been able to take advantage of technology to create new digital realities in order to support the customer experience. One of these is Virtually Makeup app, software that allows users to test makeup on their face without smearing it thanks to the use of Augmented Reality tools. The Style My Hair app promotes the same effect, but on hair. The user can choose the most suitable color before going to the hairdresser and coming out punctually disappointed.

• Digitalization in support of innovative models
With DriveNow, the sharing mobility service promoted by BMW and Mini, the German automotive group has embraced digitalization, revolutionized its business model and promoted sustainable mobility.

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Check out more of the Innovation Alphabet:

3D Printing

3D Printing

“3D printing” is a process carried out by an electronic device which, instead of resorting to the canonical ink, it molds almost any kind of material: from concrete to living tissue, most usually plastic, but also metal. And the operating principle is similar to that of a traditional printer. The creation of three-dimensional models can lead to the redesign of a company’s production capabilities.

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5G

5G

5G is the new frontier of cellular telephony. It was designed to improve (or completely replace) previous generations of mobile networks. The 5th generation features lower latency, ensuring flawless performance of business applications and many other digital experiences – thus enabling the new cultural generations to furiously play Fortnite away from home.

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Advanced Analytics

Advanced Analytics

The term “Advanced Analytics” refers to the ability to autonomously or semi-autonomously analyze data and content to identify correlations, develop analyses, predictions, and recommendations. It is not just a matter of collecting information and then organizing it into watertight compartments: the ultimate goal is to identify a dialogue pattern from a data-driven perspective.

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Agile

Agile

Agile is an approach to software development designed to respond to change. Teams quickly analyze the context in which they operate, identify uncertainties faced, and figure out how to adapt to always move forward. Interaction between individuals comes before processes and tools; collaboration with the customer is more important than negotiating contracts.

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Ansoff Matrix

Ansoff Matrix

The Ansoff Matrix is a marketing planning model that arises from the intersection of new and existing products and markets. It derives four possible strategies for expanding the company’s market, which are built around four variables with a changeable factor of risks and possibilities: existing product, new product, existing market, new market.

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Artificial Intelligence

Artificial Intelligence

Artificial Intelligence is not strictly defined. Basically, it is a computer system able to make decisions in an independent and flexible way. A good AI application can perform everyday tasks better than an average person (e.g., identifying other people from their photos on social media or beating the best chess player). Nothing to fear, then. Unless you are a chess champion.

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Artificial Scarcity

Artificial Scarcity

We often tend to desire what we cannot have. Or what we are in danger of losing: Artificial Scarcity is a strategy that flaunts a limited number of items that do not correspond to actual availability. The goal is to stimulate the perception in consumers that the stock of items is about to run out and thus create a need based on the “fear of being cut off” or the intention to buy the item in order to resell it at a higher price.

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Attack Surface

Attack Surface

The term attack surface refers to the part of a system that may be subject to attack or breach by hackers. The smaller that surface is, the easier it will be to protect it. Indeed, the Internet is an ocean of deep, dark waters: those who navigate it must be aware that they are exposing themselves to a flood of digital risks. Yet, ironically, we do not need a big boat to shelter us.

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Augmented Reality

Augmented Reality

Augmented Reality is an ever-evolving technology that overlays multimedia information on top of our common sensory horizon to gain a deeper understanding of our surroundings. No, it doesn’t allow you to step out of the Matrix dream simulation, nor can it be accessed by swallowing a red pill. But neither is it the disturbing experience of the Playtest episode of Black Mirror.

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Balanced Scorecard

Balanced Scorecard

In business, as in life, you need balance. The Balanced Scorecard is a holistic tool for strategic management. It offers, in fact, the possibility of assessing corporate performance in its wholeness. An overview that embraces four perspectives: the business/financial side, customers and stakeholders, internal processes, and learning and growth.

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