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What does Digital Transformation Truly Mean?

Updated: Mar 8, 2022


Digital

Searching for Digital Transformation on Google fetches over five hundred million results, a good number of which aim to define the term. Following are my thoughts from a vantage point of having strategized and executed digital transformations in leading organizations. Over history, firms have had to transform many times, from the invention of money to the advent of electricity, and through the industrial, railroad, communication, and internet revolutions. Generally, transformations have occurred roughly every 50 years, and thus transformation is an iterative process; a journey that firms must embrace and understand that it is about continually getting better and not an end state. While few firms help shape new consumer preference categories, a vast majority must adjust, each time, reimagining their business model around those newly formed preferences – designing products, interactions, business processes all revolving around the customer.


Digital transformation is the latest iteration of business transformation, with firms adapting to new consumer preferences focused on digital channels. These preferences in the past two decades have largely tended to be at-the-glass (mobile, web) experiences. While digital twins have existed for some time, there is still a marked separation between the physical and virtual worlds. With the advent of Web 3.0 and Spatial Web, we are entering a different era of experience where these boundaries will continue to get blurred. Consumer preferences will shift from at-the-glass to inside-the-jar experiences.


In many firms, digital transformation conversations begin with discussions around Cloud, Agile, DevOps, AI, ML, Data Science, etc. While these are key building blocks, they are only a means to an end. They are the How, not the Why or the What. This is akin to picking up the hammer before knowing where the nails are, and in my humble opinion needs to change. Every company that aims to drive digital transformation ought to ask Why they need to change and What the customer will gain as part of that change. If they choose to go directly to the How they could call their efforts digitization, or digitalization, not digital transformation.


To truly embrace digital transformation, deliberate analysis of consumer needs, planning, and execution is important.


Start with Why:

Every firm must ask these questions before embarking on a digital transformation:

· Will this create a fundamental shift in customer experience for the good?

· Will this create net new opportunities for the firm or its customers?

· Will this create significant operational efficiencies for the firm?

· Will this create marketplace differentiation?


Define the What:

· Based on the Why, create the manifestations that reach customers best. These could be products, platforms, services, experiences.


Apply the How:

What must the firm do to bring the What to life effectively and efficiently? Some objective questions to ask here:

· Which enablers will get us there? Agile, Cloud, DevOps?

· Is a cultural transformation needed before you digitally transform?

· Should we build, buy, partner, or a combination of the three?


In summary, transformation is a continuous journey, and successful firms will constantly transform themselves in a way that will fundamentally alter the value they offer their customers. If done well, transformation should not feel like a project or a program, it’s business as usual. My suggestion is start with the Why.


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