One of the biggest problems with ‘digital transformation’ is that everyone use sthe term differently.
At times, ‘digital transformation’ is used to describe a set of social conditions. At other times, it refers to something we have to do. Still at others (and more commonly) it is something we must consume. Simon Chan has lamented that the term has ‘morphed into a bit of a beast. A “catch all” banner for the marketing of any IT related products and services.” But this ambiguity is not something that evolved over time.
It was there from the start.
According to Chan, the term ‘digital transformation’ was first coined by the Capgemini Consulting group in the first edition of its Digital Transformation Review. I read it. Truth be told, I wasn’t expecting anything of substance from a rag like this, but it turns out to be a truly remarkable collection.
As a collection of essays, it illustrates the novelty of the concept of ‘digital transformation.’ It demonstrates how, in 2011, people from various perspectives were just starting to grapple with it. It is also remarkable because each author, in their own way, describes digital transformation as a kind of force that is driving change, and to which people and businesses alike are forced to respond.
But there was equivocation around the term even from the very beginning. In “Transform to the Power of Digital: Digital Transformation as a Driver of Corporate Performance” Bonnet and Ferraris of Capgemini (clearly pitching their firm’s consulting practice) also think about digital transformation as an activity … as something that businesses must either undergo (passive) or do (active). For them, digital transformation is a journey that involves adapting a business to meet the challenges and opportunities of a rapidly transforming world: “The journey toward digital transformation entails harnessing its benefits — such as productivity improvement, cost reduction, and innovation — while navigating through the complexity and ambiguity brought about by the changes in the digital economy.” Importantly, Bonnet and Ferraris note that digital transformation should not be an end in itself, and that digital transformation is as much about people as it is about technology.
In addition to describing (1) a force to contend with and (2) a set of activities to be performed, this same collection of essays also frames ‘digital transformation’ as a set of capabilities that businesses can acquire through the consumption of specific technologies. According to Andrew McAfee, for example, transformative technologies fall into three categories: (1) tools to promote data-driven decision-making (i.e. analytics), (2) tools to increase self-organization (i.e. communication tools and social media), and (3) tools for orchestration (i.e. ERP systems).
What can we learn from all this?
‘Digital transformation’ doesn’t mean any one thing. It means a lot of things. It can and is used to describe a lot of different things. I worry when a term permeates business jargon so quickly while also lacking clear definition. Such things are primed for hype, and are easy fodder for ‘marketers.’
(yes, I realize that I’m a marketer…it’s complicated)
At it’s most benign, ‘digital transformation’ is a kind of throw-away word that either gets in the way of, or excuses people from, talking about real issues like the specific ways that particular technologies may help or hinder the achievement of well-defined business objectives.
Terms like ‘digital transformation’ can also be super handy when people are looking for ways to appear knowledgeable when they are actually looking to avoid a more meaningful conversation.
At it’s most damaging, however, ‘digital transformation’ is a term that can be used by marketers, consultants, and industry analysts to generate a sense of dread on the part of prospective customers in order to construct their products or themselves as heroes. I expand on this in another post.
I worry when ‘digital transformation’ is thought about as either an activity that businesses must perform, or as a thing that businesses must consume, because in both cases the result is the commodification of a solution to a problem that is poorly defined.
But I don’t want to throw out the baby with the dishwater.
The concept of ‘digital transformation’ DOES have value if it is used to refer to some of the ways that technology has shaped the social and economic world. It has value because it highlights systematic changes in the purchasing decisions of businesses as they increasingly mirror the kinds of expectation that we have as consumers.
The concept of ‘digital transformation’ has value because it at least gestures toward a set of emerging challenges that businesses must address.
‘Digital transformation’ is a call, and businesses must respond if they are going to survive. The response will differ from business to business, and it will involve a hybrid strategy that incorporates both digital and analogue solutions.
But there MUST be a response.