Now that digital transformation has become accessible to companies of all shapes and sizes, only the most intelligent strategies will survive.
If I had to sum up the global business landscape over the past two decades in a single word, I would choose “disruption.”
The internet’s coming of age ushered in an era of upheaval across nearly every industry, resulting in the toppling of countless giant, well-established corporations by small, digital-centric upstarts and entrepreneurs.
In response to the siege of change, many of these larger organizations began investing in “digital transformation” initiatives, which sought to radically overhaul existing business models in response to evolving trends and emerging revenue streams.
As this term gained popularity and, more recently, matured into a bonafide buzzword, it’s become widely misunderstood and misused.
What Is Digital Transformation — and What Isn’t?
When most people talk about digital transformation, what they’re really talking about is digital optimization.
Digital optimization is the augmentation of existing services, strategies, and other assets through digital tools and media.
Conversely, digital transformation involves a top-to-bottom overhaul of the entire business — or at least major segments of it — through the lense of emerging digital capabilities.
Unlike transformation, optimization is typically siloed — i.e., it involves investing in a new technology or strategy to enhance value or efficiency in one, specific area at a time.
This practice is beneficial insofar as it can help streamline existing processes, increase reach or capacity, and improve the customer experience; however, it also means you continue relying on the same business model while consumer trends evolve around you. This approach tends to leave companies flat-footed and, therefore, easier to topple.
With digital transformation, you’re looking at the big picture. It’s about understanding where the new opportunities are, what needs to change in order to capture them, and how those changes you make will impact other aspects and areas of your business.
My point here is that yes, technology and digital transformation certainly overlap, but they’re not interchangeable terms. AI-driven chatbots, mobile apps, digital advertising, cloud computing — all of these things can play a role in a company’s transformation, but they do not inherently drive it.
Digital Transformation for All
When it comes to rewriting the playbook, many companies simply don’t know where to begin.
Huge, multinational organizations often go on hiring sprees, bringing in new C-level execs, IT teams, UX experts, brand strategists, product developers — you name it, they’re paying for it.
That may work well for the Microsofts and Toyotas of the world, but what about for the rest of us?
The beauty of the “Internet 3.0” — the phase of the internet’s development we’re currently transitioning into — is that it’s leveling the playing field.
Cloud storage, computing, and network costs are going down, which has aided the proliferation of advanced analytics, social, and AI-driven technologies. Now, smaller companies can use these tools, coupled with innovative tactics like design thinking and agile development, to drive impactful transformation at a relatively low cost.
Until recently, when a major disruption occurred in a given industry, the only survivors, aside from the disruptors themselves, were those companies with deep enough pockets (and enough foresight and flexibility) to invest in massive organizational overhauls. Countless mid-sized enterprise organizations and small businesses were lost in the shuffle.
The good news is that today, remaining relevant and successful doesn’t require a large-cap designation or being in the right place at the time — you just have to keep your finger on the pulse and never get too comfortable.