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What Is Digital Business?

What Is Digital Business?

For the past two years, I’ve conducted a half dozen or so major research projects on digital business. At the outset, I looked for a definition that we could present to participating executives that would ground the research in something tangible. There wasn’t much out there. Even MIT's Center for Digital Business hadn’t pinned this down. So we created our own definition as “the transformation of business models, products and/or operations from the use of information and communications technologies.”In a digital world, slow IT equal missed opportunities

OK, but wow, that was vague — transformation from what - and to what? Do a search today, and you'll find a lot more of the same.

Having completed all this research — survey results from thousands of business leaders around the world and interviews with close to a hundred executives, analysts and academics, my thinking has shifted. Today I define digital business as “the ability to exploit information at speed.” Certainly this is enabled by information and communications technologies, but it’s all about the information — it doesn't matter which part of the “SMAC stack” (social, mobile, anlytics, cloud) you're talking about.

Let's break it down. First, the word “exploit” is important. The capabilities alone don’t add up to much if they’re not channeled to deliver real business value (new revenue, greater efficiency, growth in customers or markets, repeat business, etc.).

Second, it’s about information. Digital businesses are creating new business models, understanding and engaging with customers in new ways, launching new kinds of products and improving operations by exploiting information. This includes information contained in companies’ own systems but analyzed in new ways as well as the “Big Data” that is available from an ever expanding universe of sources. It is information gleaned from web analytics, government and commercial sources, and sensors in physical equipment. The information is everywhere, but most companies are still in the early days of understanding how to exploit it.

Finally, digital business is real-time business. Being able to acquire, analyze and act on information won’t get you far if your customers have to wait. The leaders move fast. They’ve made it a priority to design their organizations and technology environments for speed.

Do definitions matter? I think so. They help focus our attention and our efforts. As Ade McCormack wrote recently, a “lack of common understanding as to what digital means is resulting in thousands of meetings taking place daily, where nobody in the room shares the same definition. Possibly it is this confusion that is causing the greatest market disruption?” I don’t know about that, but I guarantee it's slowing things down.

My definition of digital is based on what I’ve observed first-hand in organizations around the world — what they're trying to accomplish, how they’re approaching it, what their experience is. Of course, your definition may be different from mine — and that's fine — as long as you and your fellow business leaders have one!

Has your organization agreed on a definition of digital? If so, I’d love to hear it! How do you define digital business?

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  1. Maryfran Johnson16 Dec 2015 12:23:48

    Abbie, nice job of nailing down this definition a bit more, well, definitively! Love the verb choice of ‘exploit’ too. :-)
    I’ve been asking similar questions of CIOs in a wide variety of industries about what “digital transformation” actually means to their specific businesses. They make clear distinctions between internal and external applications of business change on this scale (one focused more on what customers/clients experience; the other more around internal efficiencies/productivity improvements).
    By far my favorite so far comes from Schindler Group CIO Michael Nilles (who is also CEO of Schindler Digital Business, which absorbed all of IT under the digital organization). In CIO magazine’s final cover story last month, Nilles said digital transformation wasn’t about a specific technologies (or even the entire IT stack). Rather, he said, it’s about a “game-changing adaptation to your business model to stay at the forefront of your industry.” Whatever aids and abets that adaptation (most of which will likely be various technologies and services, of course) is what ultimately counts.

  2. Thanks, Maryfran! I like Michael’s focus – very strategic/competitive – but couldn’t that apply at any point in history? I’m not sure what’s uniquely “digital” about it. Pinning this stuff down is hard, but worth the try!

  3. Great definition of Digital Business. As they say, it’s not the big fish that wins the day, but the fast fish. And if you think Digital Disruption is something in the future think about the fact that the world’s largest taxi company (Uber) owns no taxis, and the largest movie house (netflix) owns no movie theaters, you realize it’s already here.

  4. This is a great post, Abbie. And I love this definition. And I completely agree that so much swirl goes on trying to nail down what digital business is, much less digital transformation. Until true alignment is there, everyone can bloviate and sound important while signifying nothing.

  5. Everyone has their own definition of Digital business. Your have defined digital business splendidly. There isn’t any single way to express it.

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