Digital Enterprises Are Like CDs: What Kind Are You?

If you pay any attention to the technology blogosphere, you may have seen the return of a word that feels a little retro: digital. McKinsey, Capgemini, Accenture and others don’t mean the 1980’s “digital” of calculator watches, they mean a rapidly shifting business landscape driven by empowered customers and enabled by technologies like social, mobile, analytics, and cloud (often referred to as SMAC by acronym-loving technologists).

Digital Enterprises use these new technologies to engage more customers, simplify their operations and change for their own completive advantage. As companies seek to become digital, I’m seeing three classes of digital enterprises emerge. When audio CDs first appeared in the 1980’s, the music on each was classified by how it got into a digital format:

  • DDD CDs were recorded, mixed and transferred digitally. 
  • ADD CDs were recorded analog, then mixed and transferred digitally.
  • AAD CDs were recorded and mixed analog, then transferred digitally.

I look at today’s digital enterprises through the same lens:

  • DDD Enterprises are native digital. These companies were born out of the Internet, social media, etc. Organizations like Amazon, PayPal and Google are digital to their core, both in how they use technology and how they engage customers. They often helped create the empowered customers and market disruptions that are making digitalization so important for other companies. They must continually monitor and respond to market shifts—DDD organizations that cannot compete may find themselves in the “MySpace Hall of Fame”—but the game is being played on their home turf.
     
  • At the other end of the spectrum, AAD Enterprises will only ever be digital on the periphery. For many organizations, a little bit of digital (a website, a mobile app, a basic social media presence) is good enough. They can attract and maintain the customers they need, many of whom may appreciate the “warmth” that comes from a more analog experience. These organizations should make tactical decisions to act digital when useful, but not invest in transformation.
     
  • Most organizations are ADD enterprises. Their leaders know that the next generation of customers will demand a level of engagement they currently are unable to provide. They understand that they must digitalize their processes “end-to-end” if they want the efficiencies that come with simplification. They realize that digital will fundamentally transform their industries and they must change to stay alive. Unfortunately, for many of these organizations, “ADD” takes on another meaning. Without focus and prioritization, they jump from one digital initiative to another, building up technical debt in the form of new application silos and never achieving the cultural change necessary to become truly digital. These organizations need a strategic approach to digitalization, and enabling technologies that ensure success in execution.

Some audiophiles claimed that DDD provided a clearer audio experience then ADD, and so forth, but in reality, the codes simply told the story of how the CD got made. The quality of the music on each was a factor of the musicians and engineers and producers that created it. The same is true for digital enterprises: DDD, ADD and AAD Enterprises can all deliver incredible customer experiences (and an incredible bottom line). Understanding where your organization fits into this paradigm will help you prioritize how, when and where you engage digital technologies.