Digital Transformation: In Search of a Definition

My own digital transformation began when Napster hit the scene in 1999. I can still remember the thrill. A world of music had opened up to me and my newly digital-music-enabled computer. A music revolution had begun and I remember thinking, this is it. Digital has arrived!

Back then, digital was a thing. And it remained a thing for many years; a thing people went to IBM for because IBM does technology and that’s what digital’s about, right? Back then, yes, but not anymore. Today, digital is an enabler of things, only some of which actually relate to technology.

As I was getting my fill on Napster, I was clueless about the digital transformation to come. Now, as the managing partner of a management consulting firm that builds and helps implement inspired growth strategies, I live and breathe it. Still, the majority of those who aren’t in my day-to-day shoes continue to wonder…

What the heck is digital transformation?

That’s the question posed by Simon Chan in his article of the same name. It’s a fair question and a complex one at that. In my experience, people seem to have an easier time grasping what it isn’t versus what it is, so let’s start with that.

Digital transformation is not a website or mobile app. It is not social media or e-commerce. It is not process automation or data analytics.

If you knew that already, you’re ahead of the game. If you didn’t, don’t worry. If it wasn’t such a tricky concept to grasp, Chan wouldn’t have written the article in the first place and I wouldn’t have been compelled to join in the conversation.

Digital transformation (DX) has become a nebulous term.

It seems to encapsulate everything that has anything to do with both business and IT, and as Chan rightly points out in his article, that’s way too broad. In an effort to zero in on what digital transformation actually is, Chan defines three words that are key to pretty much every DX conversation – digital, strategy and transformation.

Here, paraphrased, is a summary of what he has to say about each:

Digital refers to communication between electronic devices. It reflects how phones, computers, printers, tablets, etc. communicate with one another using binary code, i.e. ones and zeros. No surprises there.

Strategy is harder to define. It means different things to different people, but Chan settles on it being the accumulation of three things: 1) Taking a stance; 2) backing up that stance with objectives; 3) taking action.

Transformation is way more than change. It’s profound. It’s radical. It’s a complete and utter makeover that touches all parts of an organization.

It’s with his definition of digital transformation that Chan really starts to speak Level5’s language. As we convey quite passionately in every DX conversation we have, and in our white paper Navigating the Digital Disconnect, DX is about broad organizational change. And just as transformation must touch all parts of an organization, so must digital transformation.

So why all the digital transformation confusion?

As Chan points out, there are several cooks in the kitchen. While all DX initiatives should be run by the CEO, that’s rarely the case. The CMO, COO, CIO and CFO, as well as the average Joe, are all coming at it with their own perspectives. For the sake of simplicity, Chan drops their varying approaches to digital transformation into five buckets:

Bucket #1: The customer experience, driven by the CMO
In light of the customer shift towards digital versus physical (retail) channels, marketing teams are heavy players in the DX movement, leveraging web sites, mobile apps, social media, CRM systems, marketing technologies and more to find new customers and retain existing ones.

Bucket #2: Operational efficiency, driven by the COO and CIO
DX isn’t about transforming a company’s digital and technical assets. It’s about using those assets to change all aspects of a company, including operations. Technology plays a valuable role in the breakdown of departmental siloes and in the promotion of better communication and culture.

Bucket #3: Cost management, driven by the CFO
Digital transformation is also a vehicle for cutting costs. The virtualization of data centres, Cloud computing, remote working tools and methods, artificial intelligence – these and other digital initiatives can help significantly reduce costs associated with work premises, human resources, IT equipment and more.

Bucket #4: Shift in business model, driven by the CEO
Finally, the CEO! Chan describes this bucket as “a profound business model shift, which permeates every living cell of the company, resulting in changes to structure, capabilities, policies, processes, people, technologies and culture.” It’s what ultimately enables a company to increase market share and compete in new markets.”

Bucket #5: DX as a world view, driven by the average person
Here, Chan’s talking about the big picture. How do the changes that are associated with digital technology impact society? Business aside, what will the impact of those changes be from a political, economic, social, theological, psychological, legal and environmental point of view?

By presenting these five buckets – or segments – Chan has done a great job of conveying, in simple terms, just how broad-reaching digital actually is. If I could add just one thing to his commentary, it would be the importance of cross-pollination between these segments.

You can no longer focus on one or two segments and say you have undergone a digital transformation.

In a recent white paper Navigating the Digital Disconnect published by Level5 one of our panel members shared with us that real digital transformation is often messy, that’s because the journey is a bit chaotic and organic, as your organization uncovers the journey that aligns with your strategy.  This is why the CEO needs to own the DX journey, and the C suite – CMO, CFO, CIO, COO, and every member of their respective teams – needs to be aligned if you’re using digital as an enabler to ownable, competitive advantage.  With that many players in the sandbox, you need a leader… that’s where your CEO steps in – and a DX coach.

At Level5, our partners are all great coaches, we’re all operators, have walked in your shoes and understand messy and chaotic digital transformation journeys.  We view your brand as ‘the value of a promise consistently kept’™, and we can help you with the challenge of consistently keeping promises in a world changing at the pace of digital.  Want to learn more? We’re passionate about what we do and welcome every opportunity to talk about it…reach out, with no obligation of course. You’ll find our contact information here.

By: Claude Ricks, Managing Partner

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