I'm often asked what digital transformation is. Put simply, it’s a specialised type of business transformation, one which is enabled by technology. But of course, there’s more to it. In this blog, we’ll look at what digital transformation is, why organisations do and should undergo transformation and then learn how successful transformations are orchestrated appropriately using a modern and holistic approach.
What digital transformation is and what it isn’t
As mentioned earlier, digital transformation is a type of business transformation and it’s driven by technology adoption. But it’s not all about technology. To be successful, companies must focus on the big picture of business transformation, not just the implementation of the technology.
To successfully implement digital technologies and drive new value, you have to do the business transformation well. It often requires a different mindset than that needed to lead or manages the current business.
That’s why business transformation is focused on value creation and creating a new future, without the constraints of the past. You rethink how the business works, innovate with empathy, and use the technology, people, processes, and value proposition required to transform the business.
What are the challenges of digital transformation?
A main challenge is the ambiguity of the term. Digital transformation can be seen as a bit of a buzzword nowadays, so it can be a somewhat misleading term . It can be mistaken for many different things and because of this, leaders in an organisation that’s transforming might think they agree with the direction of travel when they don’t.
This is the cause of many a failure in digital transformation initiatives.
For example, to some, it can be seen as ‘digitising’ your business by way of:
- A web store presence and modernising to sell more online
- A new mobile app
- Driving marketing through social media or a specialised technology, such as Artificial Intelligence (AI), the Internet of Things (IoT), automation and robotics
But that only covers the “digital” part of the term. What about the transformation?
The term “transformation” can be mistaken for pure change, which is about a better version of the past, delivering more old value and is vulnerable to disruption. In contrast, transformation is about the future and delivering new value, most often through a new or changed business model, and positively disrupting your industry.
I like to use George Westerman (MIT) quote : “When digital transformation is done right, it’s like a caterpillar turning into a butterfly, but when done wrong, all you have is a really fast caterpillar.” which I think sums up the conundrum of digital transformation projects.
Clearly agreeing on the definition and defining the desired outcomes in realisable value can help elevate businesses. Confused? Don’t worry, we’ll talk more about that later.
By this point, you might be thinking if digital transformation is so challenging, why would many businesses want to take on such a big undertaking?
How business and digital transformation add value
Transformation is essential because of the rate at which companies are being disrupted and it’s at an ever-increasing pace. Mostly by digital technologies, which has increased massively in the last 10 to 15 years.
According to John Chambers, former Executive Chairman and CEO of Cisco Systems, “At least 40% of all businesses will die in the next 10 years if they don’t figure out how to change their entire company to accommodate new technologies.” And he’s right.
To survive, companies need to be continually reinventing themselves, enabled by new technologies.
These transformations also must balance economic, social and technical aspects. Disruption is a force that is changing the corporate landscape like no other.
In a quickly evolving digital world, organisations are not just being driven by the pace of technology. There are other forms of disruption, such as a global pandemic or the impact of global warming, sustainability, the movement of large numbers of people across continents.
New megatrends can come from this in areas like consumer behaviour, change in ways of travel and what we consume. With recent disruptions, companies frequently find themselves competing with players who were outside their industry.
This explains why innovation, technology and business transformation is so essential for many businesses to survive, and is becoming an ongoing endeavour, rather than every five or 10 years.
I think we’re hitting a pivotal point in which many new technologies are maturing and converging, many other disruptive forces (such as environmental, social and economic) are driving a tsunami of megatrends trends, and the disruptive impact on businesses is showing. That’s why it’s a vital time right now to work out what you need to do and how to transform to stay relevant.
Inspired? Here’s how you can get started on your digital transformation journey…
As pointed out earlier, transformation is challenging, complex and about three-quarters of those that try, don’t get the outcomes they desired. Part of the reason is the ambiguity surrounding the term but another notable point is that many organisations - despite being able to get the business to where it is today - are unlikely to get the business where it needs to be tomorrow.
The capabilities, mindsets and ways of operating to run a successful business are not the same as the capabilities, perspectives and methods required to change or transform the business successfully. Want to find out more? We have a guide where we cover the recommended steps to successful digital transformation.
Click the button below to download it.