Digital transformation, everyone talks about it, wants to sell it wants to do it, but what is it really.  The term digital transformation has become a catch call, a term used to get budget, an easy handle to talk about the next iteration of what we have done before.

COVID has increased interest and investment in digital transformation.  The question is what kind of digital transformation.  The concern is that companies get the right kind of digital transformation.

The current definition of “Digital business transformation” is the process of exploiting the latest digital technologies and practices to create a robust new digital business model.  The emphasis is on transformation as a process using the latest technologies.  Not all that different from what companies have done in the past.

The current working definition, shown above, is practical and pragmatic.  It is also narrow and limiting.  Narrow in the sense that they see digital as being something different from what came before – analogue.  Limiting as it concentrates on substituting digital technologies for prior IT centric technologies. 

The focus remains on business process automation, applying intelligence and doing old things in new ways.  Digital in this sense remains a noun, something you can buy, apply and become.

Digital transformation in this sense is a series of digital transactions, different yes, but not fundamentally different from what existed before.  It’s an established playbook with a new cover.

The familiarity of this definition appeals to many.  In this way of thinking, companies become digital through their investment and installation of digital tools and solutions.  They use the latest technology to do things faster and cheaper, which is equated to being better.

Digital transformation tomorrow – a next generation not a reiteration

A different definition centres on creating new combinations of the information based and physical based resources.  Those combinations created new avenues for creating value, realizing revenue etc.  Avenues based on seeing, thinking and doing things differently.  It is a definition argued in the eBook “The Digital Edge.”  link to PDF copy.

Current definitions of digital transformation treat digital as a noun.  A noun means it’s a thing, you can buy, install and operate.  Digital is an adjective created through applying information and connectivity to anything. 

That definition creates an open and expansive definition.  Open in the sense that anything can become digital.  Expansive in recognition of all the things that you can do when things become information intensive and connected.

In this sense digital transformation is as much a way of thinking as it is a way of working.  Consider the use case of touch-less delivery.

Digital as a noun describes the things you need to buy and install:  a mobile phone app, location services, improved inventory visibility, new shopping bag materials, etc.   Buy these things and you will get touch less delivery capability just like someone else who buys the same things.

Digital as an adjective creates a different view. Like a noun, there are the things you need now, but more importantly it leads you to think beyond the operational process. Touch-less delivery creates new information about when, where and who wants the products, what are the trends, how do I enhance inventory placement, what changes do I need from my suppliers etc.

The difference matters.  A noun-based approach gives you the ability to have people buy things overcoming their concerns about infection.  It’s a new sales and service channel without necessarily resulting in more revenue. 

An adjective-based approach goes beyond that to think about how better to manage inventory, suppliers and consolidation to be different in ways that matter to my customers, my suppliers and most importantly to my competitive advantage.

Why the definition of digital transformation matter now?

Digital transformation is in demand.  The Covid-19 crisis shows a company’s digital gaps and seams creating the need for investment.  In April 2020, Microsoft’s CEO Satya Nadella observed “We have seen two years’ worth of digital transformation in two months.” 

It was part of Microsoft’s First Quarter earnings report.   That transformation is about people buying stuff, using the cloud etc.  It is concerned with the consumption of digital nouns.  That is fine, but there is so much more possible if we only us a different definition.

Mark McDonald, Ph.D., is a Vice President and Fellow Emeritus in Gartner for General Managers Program. Read Full Bio