I know you’re wondering about the strange choice of image accompanying this blog, but let me come back to that.
While there are some distinct differences between Business and Digital Transformations, as time goes on, they are not only converging but also going hand-in-hand. It’s almost impossible now to envisage a business transformation without the introduction of automation or new technology and tools to support the changes.
Let’s look at some definitions…
Digital Transformation, according to the enterprisersproject definition (a definition I like), is “the integration of digital technology into all areas of a business resulting in fundamental changes to how businesses operate and how they deliver value to customers.“
Business Transformation, according to Wikipedia, is making fundamental changes in how business is conducted in order to help cope with shifts in the market environment or to address organisational pains in ways that fundamentally alter the paradigm of the organisation.
Business Transformations are typically about radically changing the business model, even to the point of re-thinking the organisations raison d’etre or reason for being. This can be things like moving to selling online instead of through traditional physical stores or moving completely to a consumption-based revenue model.
What have they in common?
- They are both strong and definitive statements by the organisation that fundamental change is coming
- They both go way beyond incremental change and continuous improvement
- Both are an opportunity to re-think and arguably more importantly, completely re-imagine how the business operates
- A people-centric change management approach is imperative to the success of both
- Both are multi-year endeavours
- Both aim to unlock money, whether by savings or new revenue
- Both cause significant disruption and change
- Both can involve organisational restructuring and resource re-alignment
- Every employee plays an important role in the success of both
- Both are intended to drive an improved customer experience through ease-of-doing business
How are they different?
- Business Transformation talks to the ‘What’ and ‘Why’ the organisation will change, Digital Transformation talks more to the ‘How’.
- Business Transformation seeks to unlock new market opportunities, drive new growth and create new revenue streams, whereas Digital Transformation are often about unlocking new efficiencies, greater cost savings and better employee productivity and satisfaction through agile processes, digital tools and collaboration platforms.
- Business Transformations are more about cultural shifts and Digital Transformations often require mindset shifts.
- Business Transformations are often driven by external market conditions, competing against disruptive startups or new go-to-market models. Digital transformations are led by technological innovation and society’s relentless push for easier customer experiences and speedy response.
So you can see, they have more in common that they do different.
But is it a Business Transformation or Digital Transformation your organisations needs? It’s probably both. You could argue digital transformations are an important element of business transformations. Can you do one without the other? In some cases – yes! A Digital Transformation on its own is hugely beneficial, if you already have a sound and future-proofed business model, however, a business transformation without a corresponding digital transformation is unlikely to achieve its full potential.
But remember, if both are needed, Business Transformation must start first, otherwise you are just putting lipstick on a pig 🙂