Why I don’t like the term ‘Digital Transformation’

Strategy in the driving seat

It’s ironic that I’m starting a short series on digital transformation by explaining why I don’t like this industry standard term. Wikipedia says digital transformation is “the use of new, fast and frequently changing digital technology to solve problems”. Technopedia says it’s “a term most often associated in the business world where companies are striving to keep up with changing business environments brought about by customer demand and technology”.

Neither definition really works for me. I think of digital transformation as a way that an organisation can gain sustained competitive advantage through the smart use of technology. But in so doing, an organisation’s strategy (or long term plan) must be the driving force for change. Without a clear, shared and understood strategy, any form of transformation (digital or otherwise) is likely to fail. Strategy must always lead and change using technology must follow, totally aligned with the strategy.

This leads to the root cause of my objections to the term. Digital transformation makes it sound like ‘digital’ is in the driving seat, and by its magical powers can transform a business for future success. This could not be further from the truth. Digital technology is one way of achieving one or more strategic objectives, but it can never do that alone! Cultural changes - which are always harder and take longer to accomplish - will also be needed to fully exploit the new technologies.

Change with information technology is not new

Porter’s excellent Competitive Advantage published back in 1985 cites technology and information as ways of creating and sustaining superior organisational performance. But Porter recommends caution in technology choice, offering analytical steps and tests for ensuring alignment of technology with strategy. 

This fits well with contemporary advice in Beyond Default by David Trafford and Peter Boggis. They consider technology as an external (endogenous) navigational force which must be understood and exploited by those who want to compete in an increasingly digital world. They also see “being digital’ as a capability which can either anchor an organisation to their current trajectory (conditioned by their past), or be developed to pull the present onto a better target future.

Both books offer organisations excellent advice to make smart technology choices which align with long term plans and achieve strategic objectives.

Digitise, digitalise or transform

The terminology is also tricky, and there are several web resources that attempt to demystify. One of the more useful I’ve found is Amancio Bouza's explanation, summarised below.

I like to illustrate the terms with a concrete example of an organisation moving from paper based capture of employee timesheets to a digital workflow. If the timesheets were filled in on a paper form which is photographed on a smartphone and emailed to head office, this is an example of digitisation. If there is an online way (web or app based) of capturing and submitting time worked, this is digitalisation. If this online capture is fully integrated with forecasting, billing and project management systems, this is an example of digital transformation.

What’s in the basket?

Digital transformation will leverage a basket of different information technologies. Some of these will be mature, some less so. It’s vitally important for an organisation to take an informed business decision about that technology to leverage when, in the context of their long term plan / strategy.

This decision should be taken after fully understanding the following factors about technologies under consideration:

Technology choices should always be made based on sound business judgement, avoiding the latest fads, fashions and never doing technology for technologies’ sake. 

In future posts I will describe a structured approach to digital transformation which ensures that the right technology solutions are used at the right time to drive sustainable competitive advantage in the context of a long term plan / strategy.

I would much appreciate comments on this blog post, or feel free to contact me directly if preferred.