What is digital transformation? And what is its true end goal?
Despite the prevalence of this term, the definition of digital transformation is still a bit fuzzy … and its end goals are even fuzzier.
Since this is undoubtedly one of the most dominant B2B marketing themes today, it’s a good idea to take a few minutes to really understand this concept.
Below, we’ll look a bit deeper into:
The definition of digital transformation
What types of changes digital transformation typically entails
Whether “digital transformation” is just a buzz word
The end goal of digital transformation … if there is an end goal
Some may not be familiar with the term digital transformation, so let’s start there.
Digital transformation defined.
New technology is exploding around us, disrupting industries, changing marketplaces, and transforming business.
Left and right, businesses are forced to adopt digital technology and modify their business practices.
“Digital transformation” is the term that many use to describe these organizational changes.
And many experts and business professionals strongly advocate undertaking digital transformation efforts.
Because those that don’t will get left behind.
However, the exact definition of digital transformation will vary slightly depending on who you ask.
“Digital Transformation is application of digital capabilities to processes, products, and assets to improve efficiency, enhance customer value, manage risk, and uncover new monetization opportunities.” –From an article by Bill Schmarzo on CIO.com
“Digital transformation is the integration of digital technology into all areas of a business, fundamentally changing how you operate and deliver value to customers. It’s also a cultural change that requires organizations to continually challenge the status quo, experiment, and get comfortable with failure.” –The Enterprise Project
“Digital transformation is a foundational change in how an organization delivers value to its customers.” –From an article by Clint Boulton on CIO.com
“Digital transformation is the changes associated with digital technology application and integration into all aspects of human life and society. It is the move from the physical to digital.” –Techopedia
And so on.
However, to get a deeper understanding of digital transformation in the real world, let’s look at how it’s applied.
Digital transformation in practice.
Digital transformation often refers to organizational changes that involve:
Tools and technology. Adopting new technology is perhaps the core process driving digital transformation. But integrating and implementing new software can have many other impacts, from cultural changes to strategic changes.
The way people work and operate. New software and technology introduces new business processes, new workflows, new workplace dynamics, and so on. On top of this, employees must learn to use that software, which has given rise to the “digital skills crisis.”
Corporate cultures. Cultures, in some cases, must change. The most successful cultures are those that are more digitally literate, knowledgeable about technology, willing to learn, and willing to change.
Business strategy. In a volatile, evolving economy, businesses must also be ready to make strategic changes. Borders and Blockbuster are two examples of companies that failed to adapt to changing economic conditions quickly enough – and they paid a steep price.
Fundamental changes to the nature of the business and its mission. In other cases, a business may need to completely change its core mission, products, and marketplace. When the entire world is going digital, it’s not a good idea to invest in “analog” technology – such as typewriters, fax machines, or rotary telephones.
The nature of any digital transformation project will, of course, depend on the business and its circumstances.
But the common thread among all of them is the integration of digital technology and the organizational changes that result from that technology.
Is digital transformation just a buzz word?
Yes and no.
On the one hand, the word has become so over-used that it is bandied about simply as a buzz word and a marketing term.
Some feel that there is no such thing as digital transformation – that it’s just another type of change that has been labeled and leveraged by marketers.
And that is true.
However, on the flipside, there’s no denying that the digital revolution is very real.
To participate, survive, and succeed in the digital age, businesses must adapt and evolve.
But in which direction?
Is adopting new technology enough?
Or should businesses change their strategies to meet the demands of a new digital ecosystem?
What’s the end goal of digital transformation?
The answer to this question again depends on which definition you are using.
Let’s look at some example definitions:
Modernizing the IT function
Maximizing existing business process efficiency through digital technology
Implementing new technology, while also maximizing the productivity and ROI of that technology
Modernizing IT, while shifting the business focus towards customer-centricity
In each of these cases, when the stated objectives are met, that organization will have reached the “pot of gold” at the end of the rainbow.
Some popular perspectives on digital transformation.
The digital revolution still hasn’t ended.
In fact, we don’t really know when it will end.
There are likely even bigger changes around the corner … the likes of which we’ve only seen in science fiction movies or books.
Regardless, here are some perspectives on digital transformation that I think would be useful to any business professional:
To me, the most logical goal of digital transformation would seem to be “full digitalization.”
Yet despite the large number of companies promoting digital transformation as a solution, almost none of them discuss “full digitalization” as the end goal.
An Oxford think tank, however, does, defining it as:
“An organization that has a ‘digital vision’ and has embedded digital technology throughout the workplace (with full access to employees). In addition, key decisions are driven by data rather than speculation, with data updated in ‘real time.’”
Accenture claims that we are moving into a “post-digital” world and that “the post-digital era is upon us.”
Eventually, when digital becomes the norm, “the playing field will even out” and businesses will need to find new ways to win in the marketplace.
Today, technological innovations can still help businesses gain an edge.
But what do you do when every business is fully digitalized?
New battlefields will be customer-centered and real-time, fueled by a workforce that uses technology in new, productive ways.
Kaizen means improvement in Japanese.
When used in a business context, it refers to the idea of continual improvement across the entire depth and breadth of an organization.
We live in an era when lifelong learning, continual organizational change, and constant digital disruption are the norm.
That will probably not change in the years to come, making concepts such as kaizen more important than ever.
To stay relevant, competitive, and profitable, businesses should never stay still.
They will need to continually learn, improve, and adapt.
There are certainly many other perspectives on digital transformation, how to approach it, and what its end goal should be.
Or whether it’s even a valid concept to begin with.
But it’s quite clear that we are living in a fast-paced, continually-changing world.
For any business professional, it’s useful to consider all approaches and ideas, then pick the one best suited to your situation.
After all, how you view of the digital revolution will impact your digital strategy, organizational change projects, and profitability in the years to come.