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  Last Updated: March 18th, 2001




Models of Digitalization of Companies

Any model of digitalization is based on adapting the company to a new environment where the exchange of information (bits) is more important than the exchange of physical goods (atoms). So the optimal level of digitalization depends on the kind of company.

Further the traditional companies, we can differentiate two kinds of companies according their level of digitalization:

A) Those who digitalize processes. They have focused on reinventing their productive processes all around their value building process. They reduce their costs, improve the speed and improve qualitatively the production processes (including the product design, research and development, procurement, production, storage and distribution, marketing, sales, customers services and human resources).

B) Those who digitalize all the business model. Those companies that don't digitalize just their value building processes, they also adapt a new business model based on a superior understanding of their customers and on the identification of future opportunities of creation of value. To adapt a high degree of digitalization a company needs to adapt all their business model.

That new business model is defined to any company on three steeps:

1- The analysis of the customers of the company and the global market. Analyzing on detail what are the changing preferences of the customers, and identifying what are the "opportunities of revenues" emerging on the market. That analysis is based on a change of perspective from the traditional analysis "from inside to outside" who typifies the customers and analyzes how to offer them the products of the company to a new analysis "from outside to inside", analyzing how to change the products of the company to be adapted top the customer. This capacity of anticipation is really important, and it has to be developed all over the live of the company.

2- The definition of the new business model have to be based on the new possibilities of hyper-connection of the new environment who better adapt to the value capture of the identified profits zones making so more easy to keep the customers, improving the creation of value to the customers and keeping alive the capacity of anticipation.

The main points to define this new business model are as follow:

* To define the news ways of creation of value for the customers. So companies must forget the old vision of companies as "providing products" and adopting a new one as "providing solutions"
* To define a new model of revenues adapted to the new model of value creation (through commissions, referral fees, advertisements,...)
* To define how to use the presents advantages of the company on the market to win on the Internet.
* To define how to create circles to reinforce the primacy position of the company in the new online environment.

3- The realization of the value creation. The best business model of value creation is inefficient without a business organization adapted to support it. The main factors that have to be adapted on the organization to the new business model are the following:

* The people. The human capital of the company have to be capacitated and motivated to the new roles.
* The structure. To define what are going to be the new roles, responsibilities and communication channels.
* The processes. Adapt the production processes, hiring processes, purchasing,...
* The leadership. To adapt the strategic vision, decision processes and objectives.

Any case, the organizational changes have to be done specifically for every company according what are the main factors defining their business models.

Finishing this analysis we can conclude that the stock market value of the companies that have adapted this new business model have grow exponentially, while the companies with a traditional business conception of conquering new markets through increasing his percentage of participation have just had an arithmetical grow on their stock market value.

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Raúl Fernández Jimeno. c/Dolors Modolell, 9, 3r 3a B. 08960 Sant Just Desvern. Barcelona-Spain Telf:+34 93 371 4444