Digital Transformation vs. Digital Adaptation

Digital transformation and digital adaptation are related but distinct concepts in the context of how companies respond to and leverage digital technologies.

Understanding how the two differ can help you in the perspective you will need to take to look at future iterations that will be needed within your company and how you need to engage with them individually.

Digital Transformation

Digital transformation refers to a comprehensive, strategic process where a company fundamentally changes its operations, culture, and customer experiences to take full advantage of digital technologies.

This often involves:

1. Re-imagining Business Models: Redefining how the company creates value, including new products or services and novel ways of delivering them.

A McKinsey & Company blog post on transformation notes companies should focus on specific domains such as customer journeys, processes or functions that generate significant value for the business. It should be guided by a road map, which details the solutions and resources needed to deliver change under defined priorities.

2. Integrating Digital Technologies: Implementing advanced technologies such as AI, big data, cloud computing, IoT (Internet of Things), and blockchain across all areas of the business.

McKinsey notes reliable, current data are crucial to successful digital transformations:

Data architecture should produce data that are easily accessible by teams across an organization, and should be continually assessed and updated.

Strong governance is required to enable this capability. The core element is the data product, which structures various pieces of data into a coherent unit that can be easily consumed by a range of teams and applications.

Seattle-area Construction Company Uses Robots and AI at Building Site

3. Cultural Change: Fostering a digital-first mindset and encouraging innovation, agility, and a willingness to embrace change.

This requires strong and consistent executive leadership.

Okay, easier said than done. This part is not about technology, but about people, and people are the ultimate drivers of implementation.

Gallup recently released results of a study on employee engagement at organizations dealing with disruption (not necessarily digital transformation) vs. organizations that are not. Employee lack of engagement and burnout are, not surprisingly, higher at organizations in disruption. And managers are not excluded.

Gallup post on disruptive organizational change

Managing in Transitions (blog post)

4. Process Overhaul: Redesigning workflows, decision-making processes, and business strategies to be more efficient and data-driven.

A few major issues may be neglected when thinking about well-resourced enterprises, but greater challenges will exist for smaller to mid-size companies regarding resources needed:

• They promote a talent bench of engineers in-house. For companies that have not seen themselves as tech-centric in the past, it will require, foremost, a redefining of HR priorities for recruiting, hiring, training and retention. This will be a major issue upfront for all companies, but especially those with fewer resources and operations that are already less tech sophisticated. There will not be enough outside talent to hire so companies need to think through how to up-skill current staff as part of transformation.
• An operating approach that spreads resources across numerous teams across all functions of the business to allow for scales on a company-wide basis. Again, this poses a major resource question about time, people, talent and money.

Three approaches are outlined by McKinsey:

• A digital factory
• A product and platform model
• An enterprise wide agility model

5. Customer-Centric Focus: Enhancing customer experiences through personalized, seamless interactions across digital and physical touch points.

While a company may derive some cost savings in operations with changes, the customer has to ultimately derive value in any offering physical or digital.

Projecting customer adoption in advance is always a challenge with new ideas brought to market. How aggressive a company leadership will be, and how good they will be at selling the vision of transformation and continual iteration will have great impact on their ability to move forward or be left behind.

Digital Adaptation

Digital adaptation, on the other hand, is a more incremental and less radical approach. It involves:

1. Adopting New Tools: Implementing digital tools and technologies to improve existing processes and operations.

We all have done it at some level of individual change with use of computers, internet research, use of multiple apps and voice assistants.

With the burst of publicity focused on ChatGPT late 2022, many are now experimenting with AI use and companies are actively promoting AI integration into services like LinkedIn or Microsoft Co-Pilot with Bing and Office 365.

2. Incremental Improvements: Making gradual changes and optimizations to enhance efficiency, productivity, and customer service.

3. Selective Integration: Integrating digital technologies in specific areas where there is a clear benefit, without overhauling the entire business model or operations.

The introduction of numerous Software as a Service (SaaS) products and services over the last 20 years has allowed for specific applications and processes in operations of businesses, not necessarily on a coordinated or integrated basis, but with general overall improvements on a smaller scale.

4. Skill Development: Training employees to use new digital tools and adapting to new ways of working.

This is more of a focus on existing staff and their development, within limits, vs. the fundamental talent re-definition mentioned above as part of a transformation.

5. Responsive Changes: Reacting to digital trends and market demands as they arise, rather than proactively reshaping the business.

Key Differences Between the Two

• Scope: Digital transformation is holistic and wide-ranging, affecting the entire organization, while digital adaptation is more targeted and specific.
• Intent: Transformation aims for a fundamental change and long-term strategic advantage; adaptation focuses on immediate improvements and operational efficiencies.
• Approach: Transformation is proactive and visionary; adaptation is reactive and pragmatic.
• Impact: Transformation can lead to significant disruption and innovation; adaptation tends to result in more gradual, continuous improvement.

Digital transformation involves a fundamental rethinking and restructuring of a company’s core operations and strategy to fully embrace digital opportunities, whereas digital adaptation involves incremental changes and optimizations using digital tools to improve existing processes.

Preparing yourself

To give you a better feel for how an organization needs to prepare in more detail, and show how you can fit into the changes, I recommend: "The Digital Mindset" by Paul Leonardi and Tsedal Neeley. Book summary from Harvard Business School

Additional Reference Information

AI, Machine Learning Basics; Impact, Applications, Implications | LinkedIn (blog post)

The Economic Potential of Generative AI (option to download 68 page report)

For Marketers, AI Current Trends Affecting Search (EXACTA Media Blog Post)

How AI Guardrails Are Being Used in Government

To note, as part of writing this post I experimented some on generating an outline of the topic via ChatGPT then integrated other resources cited in the body of the post, which help frame some of my own observations.

I used the image generator to create the "hero" picture for this post. Not a personal favorite, but I want to show you what it came up with via the LI blog tool.

I believe using Generative AI only, or almost exclusively, to create content neglects needed depth in content and appropriate context for most topics but welcome thoughts from readers. This is one step in a learning process.

About me

I have been a career sales professional in B2B sales. This has included managing my own territories, selling jointly with others and managing sales teams.

My career started in Seattle with the Puget Sound Business Journal, but a significant portion of my professional time was in California, split between Los Angeles and Orange County, before a return to Seattle.

You can reach me via InMail or at [email protected]

Also

I am owner and community manager for the LinkedIn group?Seattle Sales, Marketing and Advertising Professionals, which has 4900+ members: (4) Seattle Sales, Marketing & Advertising Professionals | Groups | LinkedIn

Also one of the first million members of LinkedIn (2004). I have been an active blogger on the platform since 2014, when the option was first offered.