2 | MIT CISR Research Brieng, Vol. XVII, No. 10, October 2017
aonal excellence—all the digizaon in the world won’t on
its own make a business a digital company. Becoming digital
involves a very dierent kind of transformaon.
DIGITAL REFERS TO A CUSTOMER-CENTRIC
Today, companies are confronng new business opportunies
presented by a host of powerful and potenally game-chang-
ing technologies like social, mobile, analycs, cloud, and the
Internet of Things (SMACIT), as well as cognive compung,
biometrics, and various emerging technologies. The capabil-
ies of these powerful, readily accessible technologies intro-
duce so much speed and connecvity into businesses that
they enable not just an opportunity to improve operaons,
but enrely new value proposions. A digital company inno-
vates to deliver enhanced products, services, and customer
engagement. Because digital emphasizes innovaon and
speed, it involves a dierent kind of transformaon. Unlike
the pain associated with digizaon, a digital transformaon
is more oen excing , thrilling—and a bit unnerving!
The benets of a successful digital transformaon include
growth in revenues and margins, undying customer loyalty,
and the ability to aract top talent (and thus connue to
grow). If they fail to become digital, companies risk their
products becoming commodized as their competors oer
To become digital, leaders must arculate a visionary digital
value proposion. This value proposion conveys how digital
technologies and informaon can enhance the company’s
exisng assets and capabilies to create new customer value.
Being digital is not just introducing mobile apps for custom-
ers. It is taking advantage of the opportunity to redene a
business—and possibly even an industry.
Companies deliver their digital value proposions in the form
of digital oerings. We dene digital oerings as informa-
on-enriched customer soluons delivered as seamless,
personalized customer experiences. Digital oerings are rev-
enue generang. Companies can implement digital oerings
by starng with a small, simple product or service—just like
a digital start-up. Companies maintain a compeve edge
by connuously introducing new features and services that
enhance the value proposion of that oering, while also
developing related oerings.
Digital companies rely on their operaonal backbone to
en sure security reliability and scale of their basic transacon
processing, the eciency of back oce processes, and
ac ce ss to ma ste r d ata . But an operaonal backbone will not
support the requirements for speed and innovaon associ-
ated w it h d i gi tal o eri n gs . Thus, companies embarking on a
digital transformaon need to architect a second plaorm—a
digital oerings plaorm—to provide access to reusable
digital business components. These components will include
both technical capabilies (e.g., aut he n ca on , c on n ec v it y )
and business capabilies (e.g., customer onboarding, perfor-
mance dashboarding) that the company will require when it
creates a new oering.
Successful companies in the digital economy will be both
digital—to provide customer value—and digized—to provide
scale and eciency. Although companies sll struggle to dig-
what that means and how to do it are now well estab-
lished; it’s just hard to do it well. How to be digital, in contrast,
is less well established. We have highlighted the contrasts
between the two types of transformaons in gure 1.
Dening a digital value proposion that oers soluons cus-
tomers are willing to pay for is more art than science. Schnei-
der Electric oers an example of how a company progresses
from digized to digital.
FOR DIGITAL SUCCESS
Schneider Electric SE is a 181-year-old €25 billion global
specialist in energy management and automaon. A series
of more than two hundred acquisions between 1999 and
2008 expanded Schneider Electric’s porolio from tradional
electric distribuon and industrial control products to incor-
porate its new focus on high-tech intelligent energy manage-
ment and automaon soluons.
Although these acquisions posioned Schneider Electric
to oer new, digitally enabled value proposions, they also
3 MIT CISR research has found that only 28% of established companies have
a value-adding operaonal backbone. Ibid., 15.
4 Schneider Electric’s digizaon transformaon is described in A. Karuna-
karan, J.G. Mooney, and J.W. Ross, “Accelerang Global Digital Plaorm
Deployment Using the Cloud: A Case Study of Schneider Electric’s ‘bridge
Front Oce’ Program,” MIT Sloan CISR Working Paper No. 399, January
2015. The company’s digital transformaon is the subject of J.W. Ross, C.M.
Beath, and K. Moloney, “Schneider Electric: Connecvity Inspires a Digital
Transformaon,” MIT Sloan CISR Working Paper No. 417, May 2017.
To become digital, leaders must arculate a
visionary digital value proposion that conveys
how digital technologies and informaon can
enhance the company ’s exisng assets and
capabilies to create new customer value.