"Digital Transformation" is not "Change to go digital"

What if your investments in Digital Transformation initiatives could lead to breakthrough performance in the digital era?

Let’s discuss what is really at stake when you engage in transformation.

According to the “2014 State of Digital Transformation” report, published by Altimeter, the most commonly agreed on definition of digital transformation is: “The realignment of, or new investment in, technology and business models to more effectively engage digital customers at every touch point in the customer experience lifecycle.” Taking this definition into account, 88% of organizations are engaged in digital transformation efforts. Let’s inspect the implications of this definition, with regard to what is at stake when a company undergoes digital transformation.

WHERE IS TRANSFORMATION IN THE CONTEXT OF “DIGITAL TRANSFORMATION”?

Altimeter’s definition of digital transformation speaks the language of change, not transformation. It points to adapting, or realigning, one’s organization to the trend of digital users, namely the “digital customer.” While this definition is most likely intended to evoke something bigger than “change”, it still is describing change.

At Insigniam, what we have been calling transformation for the last 30 years is different than change. We embrace transformation as the act of recreating who the organization is being to its market, independent of its past. If there is such a phenomenon as “digital transformation” that goes beyond the notion of change, it could be the transformation of an organization, accomplished by leveraging the power that digital technologies make available, to better fulfill the organization’s purpose.

AN ENTERPRISE IS CONSTITUTED OF A NETWORK OF CONVERSATIONS

As discussed in an earlier Insigniam blog post, one can look at an organization as being constituted of a network of conversations. Its reputation, business processes, marketing positioning, strategy, and client service, along with every interaction each employee has, internal and external to the organization, are all conversations. The natural path towards digital transformation leads us to “digitalize” these types of conversations, i.e., apply digital tools to accomplish them. Active presence on social networks, internal “facebooks,” direct chat with client support, virtual marketplaces, brand digital activation, and electronic newsletters are all fantastic communication techniques; however, they are just another expression of change and adaptation, not transformation. As such, they are missing the opportunity that both transformation and the digital era can offer.

THE PROMISES OF DIGITAL TOOLS BLIND US FROM SEEING THE OPPORTUNITY OF TRANSFORMATION

“This new ERP will solve all our problems in the future!” Sound like a good ol’ song? The modern remix of the tune is “Being the first to adopt these new digital technologies will make us win against competition and be the company preferred by our clients.” What if the primary source of your industry leadership had nothing to do with your level in the digitalization game? Consider that your level of digitalization is not a primary factor in why your clients choose to buy from you. You might object that not going digital will leave you behind.

Sure, but digitalization, alone, will not make the difference over competition; rather, it will leave you in the catch-up game. Here are some fundamental questions to ask yourself, when embracing what the digital era makes possible for your organization as an authentic, in-depth transformation initiative: “Who are we as an organization in the future? What unique value are we going to provide? With whom are we going to talk in the future? Who are our employees going to be?” In the process of answering these questions, you will start to take into account potential expectations, behaviors, and technologies that the digital era induces. Further questions will emerge: “What does it look like to serve individuals, whose brains have developed in the digital age, and who do not learn in the way we are learning today? What does it look like, to include connected communities that share interests with our own? What does it look like to bring the outside in for our R&D?”

WHOSE ROLE IS IT TO LEAD A DIGITAL TRANSFORMATION?

In several organizations we have been working with lately, executive committees put digital transformation on the agenda of key initiatives, or define it as a key strategic axis. They then delegate the development and execution of the different components to IS experts, digital marketing, communication, and others. The more recent appointments of Chief Digital Officers (CDO) show that such a fragmented approach missed expectations. Similarly, framing the CDO as a super technician – a Chief Digital Technology Officer – will again miss the mark. The primary role of the CDO, precisely due to their knowledge of digital technologies, should be to push the Executive Committee to carry out the digital transformation at the right level of thinking, by helping them put aside all they know about digital, and thus avoid being trapped in the solution-oriented, “change” mindset.

In the upcoming three posts of this series, we will inquire into the specific applications of digital transformation to innovation, bringing the outside in, and knowledge sharing.