Digital Transformation: What is it really?

Digital Transformation. We hear these words regularly in our conversations, on social networks like LinkedIn, in analysts’ reports and in any business or social networking events. I am sure, you’d have come across this too. The more I read about it and more I talk to people, it makes more confusing. For many, it’s implementation of a web content management or web experience management system; for some it relates to marketing automation, CRM or social media; for some it’s about analytics while for others it’s about using “cloud” technologies and for some it’s an ERP implementation, however old this may sound to you. So, I decided to do some research online about “digital transformation” and clarify what is it really?

Upon doing a quick online search, I found few links talking about digital transformation. I looked at what Wikipedia has to say and here it is:

“Digital transformation refers to the changes associated with the application of digital technology in all aspects of human society.[1] Digital transformation may be thought as the third stage of embracing digital technologies: digital competence → digital usage → digital transformation, with usage and transformative ability informing digital literacy. The transformation stage means that digital usages inherently enable new types of innovation and creativity in a particular domain, rather than simply enhance and support the traditional methods.[2]

In a narrower sense, "digital transformation" may refer to the concept of "going paperless".

Digital transformation affects both individual businesses[3] and whole segments of the society, such as government,[4] mass communications,[5] art,[6] medicine[7] or science [8].”

Now, I like “Digital transformation refers to the changes associated with the application of digital technology in all aspects of human society”. If you read it carefully, it’s a very broad term. Hence, combining it with “digital transformation affects both individual businesses and whole segments of society” makes a lot of sense. Do you agree too?

Technology Disruption

Technology has disrupted the way we live, work and operate businesses. It’s nothing new but rapid advancements in technology, vast amounts of data and insights has accelerated it so much so that many organizations that once dominated businesses at one point are no longer relevant or worse some even no longer exist. According to a report published in American Enterprise Institute, 88% of Fortune 500 companies from 1955 are gone. This poses a great challenge for CEO’s, CXO’s and Business Owners that if they do not adapt to newer technologies, what will happen to their business? The answer we all know.

What is Digital?

As a result, everyone wants to go digital. The first step is truly understanding what it is. Karel Dörner and David Edelman published an article on this subject in Mckinsey “What Digital Really Means”. According to them, “for some executives, it’s about technology. For others, digital is a new way of engaging with customers. And for others still, it represents an entirely new way of doing business. None of these definitions is necessarily incorrect. But such diverse perspectives often trip up leadership teams because they reflect a lack of alignment and common vision about where the business needs to go. This often results in piecemeal initiatives or misguided efforts that lead to missed opportunities, sluggish performance, or false starts.

Even as CEOs push forward with their digital agendas, it’s worth pausing to clarify vocabulary and sharpen language. Business leaders must have a clear and common understanding of exactly what digital means to them and, as a result, what it means to their business”. And they go on to describe more in detail.

Recently, I was watching CNBC where CEO of Tata Consultancy Services, Mr N. Chandrasekaran was presenting annual returns and answering investors call. And the interviewer was keep asking, so Mr Chandrasekaran what percentage of your business is “digital”?  He replied by asking what do you mean by digital. We derive all revenues from software and technology services. Moreover, all businesses will be “entirely digital in coming 3 to 5 years’ time” and there’ll be no such boundaries. What struck me was the clarity he had on the future business and how he is preparing his organization to face that.

Coming back to Digital Transformation, Jason Bloomberg published a very good article on Forbes “Digital Transformation by any other name”. He cited Altimeter Group and Brian Solis on digital transformation. Altimeter defined digital transformation as a movement through a customer-centric lens:

The realignment of, or new investment in, technology and business models to more effectively engage digital customers at every touchpoint in the customer experience lifecycle.

From the onset, we learned that digital transformation means different things to different people, and that’s okay; we’re all learning. What’s important to realize however is that investing in new digital technologies, such as social, mobile, big data, cloud, etc., doesn’t in itself equate to “digital transformation.” It’s about uniting individual technology efforts around a common vision supported by an updated, integrated infrastructure to effectively compete as a unified business in connected markets.

You’ve heard it before…people, process, technology. But without vision to see how markets are shifting and leadership to identify, organize and drive new opportunities, digital transformation can become yet another victim of technology-first efforts that miss the human mark.

Often leaders forget to keep very reasons for existence of their business and no, it’s not their products and services but their customers. Businesses exists because of customers, customers exist because of products and services that fulfill their needs or delight them, these products and services are delivered by people (employees) and developed through use of various processes and technologies. Not surprisingly, we find people at the beginning and at the end of products/services. Technology is a great enabler. Ron Miller wrote a great article on TechCrunch “Digital Transformation Requires Total Organizational Commitment”. It combines multiple facets of people, customer, technology, processes and change management and without total organization commitment, it’s likely to end in a disaster. However, it doesn’t have to start big and can be started small and rolled out across organization.

- Bhagwat Pant

PS: I hope you like this article and if you do, kindly feel free to like and share.

Further readings:

The Nine Elements of Digital Transformation: MITSloan Management Review

Nine questions to help you get your digital transformation right: Mckinsey & Co

THE DIGITAL TRANSFORMATION OF BUSINESS: Harvard Business Review

The OPPOSITE Approach: 8 Success Factors of Digital Transformation: Brian Solis, Altimeter Group

Digital transformation in the age of the customer: Accenture Digital and Forrester Consulting

Disclaimer:

I do not work for any of the firms mentioned above and not endorsing/promoting their business/services in any way. All information mentioned above is intellectual property of their owners and curated here for easier reference for people looking for information on “digital transformation”.

Image Credits: Brian Solis, Timo Elliot