What Is Digital Transformation?

Digital transformation, for many, is a big black box. Confusing, fuzzy, often puzzling.

I have a lot of conversations with business people and when we talk about this idea of digital transformation, I get everything from blank stares, to vague nods, to that thing dogs do with their heads when they hear a balloon leak.

And for good reason. There’s a lot of confusing, jargony, puzzling language around digital transformation on the internet. Here are a few examples:

“Digital transformation is the profound transformation of business and organizational activities, processes, competencies and models to fully leverage the changes and opportunities of a mix of digital technologies and their accelerating impact across society in a strategic and prioritized way, with present and future shifts in mind.” Source: https://www.i-scoop.eu/

Wow. Ok. Pedantic much?

“Digital transformation is the process of shifting your organisation from a legacy approach to new ways of working and thinking using digital, social, mobile and emerging technologies.  It involves a change in leadership, different thinking, the encouragement of innovation and new business models, incorporating digitisation of assets and an increased use of technology to improve the experience of your organisation’s employees, customers, suppliers, partners and stakeholders.” Source: http://www.theagileelephant.com/

Man that’s a lot of words. Still fuzzy, but we’re starting to get warm with “improving the experience.”

“Digital transformation is the integration of digital technology into all areas of a business resulting in fundamental changes to how businesses operate and how they deliver value to customers.” Source: https://enterprisersproject.com/

Shorter is better, but WHAT fundamental changes? Shouldn’t those changes be net positive? Shouldn’t they make things better?

Author Greg Verdino says,

“Digital transformation closes the gap between what digital customers already expect and what analog businesses actually deliver.”

While I absolutely agree and believe this is fundamentally true, this only speaks to the result of digital transformation, not what it actually is.

To me, there are three simple principles of digital transformation.

• The core idea of change.

Native digital businesses like WhatsApp, AirBnB, Amazon, iTunes, Uber, Lyft, Facebook etc. don’t struggle with digital transformation because they were born digital. They never had to change.

They’re also among the biggest disruptors of the 21st century. More on that in a minute.

• Thinking digital first.

This is the answer to “What change?” It’s changing a business’ approach to how they do business…workflows, processes, assets, all of it.

• Making things better. For everyone.

All this transformation doesn’t mean much if it’s good for employees and bad for customers. If it’s good for stockholders, but bad for partners. Better means net positive for everyone involved.

So, I submit what I think is a simpler, possibly more powerful definition of digital transformation:

Digital transformation is the change to a digital-first approach that improves the experience of doing business for everyone.

By definition, this means that digital transformation only applies to non-digital-native businesses. And this means they’re playing catch-up.

As Jacques Bughin and Nicholas Van Zeebroeck noted in HBR, that while digital disruptors often enter markets with a digital-based business model, only a handful of incumbents have done so. “In effect, incumbents are losing because they’re playing defense. For companies looking to successfully ward off digital disruption, they have to play offense.”

Digital first does not mean, “Oh yes, we’re totally digital! We have ALL of our documents in Word and Excel!” For a great primer on the elements of digital transformation, read MIT Sloan Management Review’s piece.

In an upcoming post, we’ll examine an example or two of digital transformation, and how it’s positively effecting business and people.

What if today, right now, we had to start your business all over again, but this time, we started thinking digital first? Can we reinvent your business with this approach?

Even better, can we do that so that everyone benefits?

I bet my career daily on the fact that we can. Together.