Digital transformation is the continuous process of change caused by digital technologies. While the focus is often on enterprises being impacted by digital transformation, it also affects people, science (education), and governments on another level.
Digital transformation is a product of the digital revolution, which describes the process of the mechanical industry being replaced or enhanced by digital technology from the late 1950s to the late 1970s when the Information Age began. Shahyan Khan writes that digital transformation can be considered as “the total and overall societal effect of digitalization”.
Etymology
The word ‘digital’ comes from the Latin ‘digitālis,’ from ‘digitus’ for digits (fingers or toes). While the original meaning of digital was anything that is performed with fingers, the more up-to-date definition points to systems that run on binary numbers. This is mainly everything that comes with a chip.
‘Transform’ can be split into ‘trans,’ meaning to cross over or change, as well as ‘form’ which could be considered as ‘shape.’ So put together, transforming means to alter the shape of something.
What is digital transformation?
Digital transformation is nothing new, but as technology improves more rapidly nowadays, progress in adapting to new technologies is often delayed by cultural, operational, or even technical roadblocks. Organizations now strive to strengthen their digital transformation agility to be ahead of the competition by introducing new digital business models, products, services, and other kinds of digital value-added.
From a strategic point of view, rather than focusing on short-term tactics, companies should try to create and innovate, more than merely copying what other successful enterprises already did in this field. Any such digital transformation might face unique challenges within the organization (staff and leadership) and outside of it (users, clients, partners, etc.). From another angle, digital transformation might also be required to keep running the business and operations by upgrading legacy systems to a modern state.
What drives digital transformation?
The demand for digital transformation is mostly caused by customer expectation changes following a general shift in culture and lifestyle. For instance, retail companies now urgently seek to introduce innovation at the point of sale but also extend their offering to a new kind of audience with an online shop. Moreso, users might demand an Amazon-like, simple, and convenient shopping experience.
Governments’ laws and regulations trigger another aspect of digital transformation. New bills are introduced and have to be adhered to. There is usually no wiggle room here. Both of these aspects are often engaged retroactively – after – it became a necessity to run the business to either avoid loss of revenue or other types of penalties.
How to be more proactive about this?
Innovative companies might try to act more proactively to disrupt the market with new products that are convenient solutions to their prospects’ problems. That includes both B2B and B2C businesses. An essential requirement to do that is a good understanding of the current state of science and investment in R&D activities.
Further, they might deploy a dedicated service internally that runs structured processes (such as Design Thinking) to drive innovation. Alternatively, they might work with external advisors or agencies to figure out the “next big thing” together with their help.
Summary
In a world of buzzwords and hashtag abuse, digital transformation might be used as a marketing term for everything and nothing. Much like “AI,” it simply sells well and looks good when put on a product or press release. I hope that this article contributed a little bit to add some clarity as to what digital transformation is about. Of course, I make no claim that this is the only correct definition of digital transformation. Still, by combining theory and practical experiences, I found this applicable. If you have thoughts to share on the subject, I’d love to know them. Please use the comment section below for that.
I’d also like to thank Thomas Kofler for his significant contributions to digital transformation, agile developments, and Design Thinking. He also designed the German version of the graph we used above and translated it into English.
Photo credit: Woman on laptop feature image (Electronic Frontier Foundation) / Digital Transformation infographic by Thomas Kofler (English version by Christopher Isak)
