Digital Transformation and Disruption: What Do They Really Mean?

If you’ve been paying attention to business trends and buzzwords in recent years, you’ve probably heard a lot about “digital transformation” and “digital disruption.”

Are these just meaningless concepts and temporary phrases of the day, or can we clearly define them and actually glean meaning and value from them?

The answer is “yes,” but it requires cutting through a lot of misunderstanding and hype to get to the real story and lessons to be learned.

Let’s start by taking a look at digital transformation and digital disruption and what they mean in a broader business context.

Digital Transformation Defined

Digital transformation involves the profound transformation of business activities, processes, competencies, and models through digital technologies. It means strategically capitalizing on the changes and opportunities enabled by digital technologies and their growing impact across society and the markets we serve. It also means doing this now and in the future, as business and market conditions change.

With a continual focus on leveraging digital technologies and connecting the entire business ecosystem of people, teams, technologies, and data, companies can improve processes and performance across the entire organization while delivering better customer experiences and adapting to rapid changes in the market.

Digital Disruption Defined

Digital disruption is when an industry, a way of doing business, or a market segment is significantly challenged by established companies or newcomers using digital technologies and strategies to create solutions, business models, and approaches that significantly alter customer behavior and market conditions. This inevitably forces other existing players to change their strategies, which is why digital transformation within many companies is driven by digital disruption.

The example we always hear about is Amazon and its disruption of the retail industry. Amazon’s entire business model was built on the use of digital technologies and strategies to be more agile, innovative, customer-centric, and efficient. Its aggressive, digital approach has profoundly impacted consumer behavior and expectations, business models and strategies, and even the existence of many retail players.

The Impact Across All Industries

 Digital transformation and disruption aren’t limited to any one industry. For example, as we’re seeing in manufacturing and many other industrial businesses, companies are leveraging the Internet of Things (IoT) to create hybrid cyber-physical systems and processes. They’re using sensors and networks to connect and share data from machines and physical objects. They’re using this information and insights from their systems to inform and optimize human decision-making, management, innovation, and customer service.

As this optimization helps them make better decisions, achieve greater efficiency and cost-effectiveness, and deliver improved customer service, they become digital disruptors. They work smarter and outperform their competitors. The rest are left behind to languish in legacy business models and processes, or they’re forced to adapt by transforming digitally.

In the industrial space, we call this digital transformation Industry 4.0, representing the fourth industrial revolution in history. But the same principles apply to any business. There is no industry immune to digital disruption and none where digital technologies can’t transform a business and help it achieve better results.

A good example is how digital transformation is impacting agriculture. Over centuries, modern farming has helped us move from manual and animal labor to machinery, resulting in much greater crop yields and the ability to feed billions of people. However, by 2025, there will be two billion more people to feed in the world, with less farmland available than ever before.

This means the agriculture industry will have to find a way to grow more crops for a growing population, using fewer resources and doing it in an environmentally sustainable way. Fortunately, digital transformation is providing a means to achieve this demand.

For example, Syngenta, a global seed and agrochemical company serving global farmers, is using digital technologies to optimize food production, supply, and research and development.

It has connected its processes, technology platforms, and digital assets to better integrate all of its operations, improve customer service, and better manage and predict agricultural output and activity with real-time data.

A good practical example is a mobile app it developed for field agents to use when they visit farmers and growers. It gathers data on what farmers have been growing, their farming experience, the conditions of their farm, and the market for their crops. This data and information helps Syngenta’s field agents gain more insight into the growers and the specific issues they face.

These insights empower Syngenta to provide farmers with the right variety of seeds or chemicals to help grow and protect their crops and maximize their yield. Data is analyzed with machine intelligence to make predictions and plans for growers, giving them insights they wouldn’t otherwise have.

Mobile apps, tablets, and big data don’t usually come to mind when we think about farming, but they’re becoming an integral part of the agricultural industry. Hopefully they will help farmers feed the entire world in the years ahead.

It’s an important lesson to keep in mind, particularly for industries or companies who naively think that digital disruptions and transformations don’t apply in their sector, or they won’t materialize for many years.

The business graveyard is filled with companies that adopted this dangerous mentality and paid the price with their extinction. This is because digital transformation and disruption aren’t really about digital technologies; they’re about people and customers.

The Human Element

Despite the technological aspects of digital transformation and disruption, the human value and element remain crucial.

As Charlene Li, an expert on disruptive technology explains, “Disruption in the end is a shift in power in relationships. Disruption, as a human phenomenon, is caused by shifts in, among others, the way people use technologies and about changes in their behavior and expectations.

“These changes can be induced by new technologies and how they are adopted or leveraged by disruptive newcomers. However, the change can also have a broader context that has nothing to do with technologies. Yet, in some cases, digital technologies could be leveraged to address those changes in behavior or expectations/needs and so forth.”

For example, while a disruption may be caused by non-technological factors such as changes in customer behavior, human innovation, or economic changes, a digital transformation may be the most effective response.

In the case of Syngenta’s effort to help farmers feed a rapidly growing world population, we can clearly see how a digital transformation can be the right solution. It helps solve a traditional, non-technological problem with the application of digital technologies.

This is because all the core drivers of disruption and transformation are ultimately interconnected. For example, Google began with a grandiose and deliberately impossible mission “to organize the world's information and make it universally accessible and useful.”

With this goal in mind, the company began by developing the Google search engine, which introduced new features and improved search algorithms that helped users find web-based information faster and more effectively.

Google didn’t invent the Internet or search engines, but it introduced a new human innovation that disrupted both. Google became the most widely used search engine in the world, and user behavior changed profoundly as a result. This led to customer-induced disruption as websites, marketers, and anyone with a stake in web-based customer interactions was forced to adapt their approaches and processes as a result.

This customer-induced disruption led to significant economic changes, as optimizing for Google search results and later advertising on Google’s search engine became an increasingly crucial aspect of marketing, e-commerce, and brand building.

When the smartphone and tablet arrived on the world market, they became a technology-induced disruption. As users adopted these devices by the hundreds of millions, it forced Google to adapt and evolve in its own right. It developed applications for these devices, created an entire operating system for them, and has since become a manufacturer of these devices under its own brand.

Along the way, Google and its parent company, Alphabet, have transformed from an information company into a multi-faceted global business involved in everything from software development and hardware manufacturing to self-driving cars. Throughout it all, people and customers have always been the real driver.

After all, you can “organize the world’s information and make it universally accessible and useful,” but to whom?

People and customers.

Brainstorming Your Digital Transformation

The human element and the interconnectedness of technology, innovation, people, and society are the place to start brainstorming a digital transformation.

•  Where and how do technology, innovation, people, and the wider social ecosystem interconnect and impact your business?
•  Have you experienced disruptions induced in any of these areas?
• How can you potentially leverage digital technologies to respond to those disruptions?
• Are there ways you could disrupt your industry or competitors by using digital technologies to transform and optimize your business?

These are big-picture questions, but they’re the kind you need to ask if you want a business to be successful in an increasingly digital world. In the end, disruption and transformation don’t mean business as usual. They mean doing things differently.

What are you thoughts?