What is digital transformation?
While working for a Fortune 500 industrial enterprise in the building materials sector I thought digital transformation was just a buzzword to market IT services. Then I went work for Valence Group Inc., a digital transformation company. Within the first few weeks, I discovered several companies in the building products sector that had already undertaken digital transformation initiatives (their words, not mine!). To skeptical large-enterprise executives still unsure what digital transformation means, let’s answer “what is digital transformation?”
An organization’s journey to change business models and processes and build an agile culture for adopting new and emerging technologies to improve customer experiences and operating results.
Let’s break this definition into its key parts:
First, digital transformation is a journey. Many traditional IT projects (including ERP) have a defined work plan, budget, and a cut-over date whereby a new technology tool is deployed with a high-impact one-time splash complete T-shirts, a project codename, and promises of synergies. Digital transformation is not just a one-time deployment, nor should it attempt predict the one tool that will deliver the end-state of technology to the enterprise. Through digital transformation your organization should be prepared to leverage new technology today and in the future.
Second, the purpose of the journey is to build an enduring agile culture. With roots in software development where teams adapt quickly to customer and market demands to deliver functioning software, the agile mindset can work across your entire business. The agile culture you build through digital transformation can become your company’s agile approach across your entire business. After all, companies are becoming digitally enabled enterprises or being left behind the competition.
Third, digital transformation is about adopting new and emerging technologies. Today, we can identify leading-edge digital initiatives as leveraging blockchain, augmented reality, and a few other emerging technologies. Seven years ago, these technologies were unknown. Seven years from now something new will transform business yet again. Digital transformation initiatives include technology deployment within an organization, but digital transformation is not about one specific technology. It is a journey to an agile culture to adopt and leverage new and emerging technologies, whatever these technologies are today or seven years from now.
Finally, the purpose of digital transformation is to improve customer experiences and operational results. In a pre-digitally-transformed business, the technology culture is centered on an IT team (cost center) keeping the infrastructure running and managing a back-log of new projects. Post-digital transformation, the agile culture extends across all functions and line leadership. Technology investments are considered at the same time as other assets like forklifts, production facilities, and warehouses, and by the same leaders. The technology tool set includes new and emerging technology that are leveraged for the specific purpose of improving customer experiences and operational results.
Our definition of what is digital transformation comes from a twenty-year foundation in building products and as a senior executive in a fortune 500 industrial company. It is more business-centric and less techy than some with the focus on culture and improving operating results. After all, aren’t all investments in people, equipment, and facilities ultimately about improving a result? Digital transformation should not be any different.