The term digital transformation is the name of the continuous process of change caused by digital technologies. While there is often a focus on enterprises being impacted by digital transformation, it also affects people, science (education), and governments on another level as well.
The digital transformation is a product of the digital revolution, which described 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”.
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, the progress to adapt to new technologies often is delayed by culture, operational or even technical roadblocks. Organizations now strife 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-add.
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.). On 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?
Mostly the demand for digital transformation is 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 experience of shopping.
Another aspect of digital transformation is triggered by governments with laws and regulations. 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.
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 to put it on a product or press release. I hope that this article contributed a little bit to add some clarity as to what digital transformation really is about. Of course, I raise no claim that this is the one and only correct definition of digital transformation, but combining both theory and practical experiences, I found this to be 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 on subjects such as digital transformation, agile developments, and Design Thinking. It was also him, who designed the German version of the graph we used above and translated into the English language.
If you’d like to dive more into the subject, feel free to check out these books below, which of course hold more information than you could put in a web article like this.