The technology world is awash in talk of “transformation.” The most common form that this conversation takes is one of “digital transformation.” This notion has been given great credence by doer and pundit alike and has garnered not only a great deal of attention but also an avalanche of resources. The idea is simple and powerful: Modern organizations need to have a digital backbone, irrespective of whether their main products and services are digital or physical. As David Sable puts it, “Digital is everything but not everything is digital,” neatly summarizing the essence of digital transformation.
Business leaders -- both those with deeply technical backgrounds and those with non-technical backgrounds -- have embraced this idea with zeal. The promise of “digital” is like the call of a siren. This promise extends beyond creating efficiency and reducing cost -- the usual suspects in previous discussions on “transformation.” Digital transformation or “Digitalization” also allows for rapid iteration, market-ready innovation, and reduced time to value. Digitalization can theoretically allow different parts of an organization to coalesce into a singularity, connecting the silos that prevailed in the analog world. Indeed, the possibilities are endless, especially when we add artificial intelligence (AI) and automation into the picture. Or so the story goes.
The marketing literature, however, rarely represents the real world.
While hyperbole plays a large role in the divergence between promise and practice, we must seek answers elsewhere too. Why, with all the seemingly limitless potential of digital transformation, are so many organizations still stagnating and inertial? Why, with all the promises of digital transformation -- and all the resources throw against it, were so many organizations caught flat-footed by the Covid-19 pandemic?
The key to understanding this lies beyond the realm of technology per se; it lies within the realm of culture and, ultimately, with people. Transformation is not a clean, linear process that easily conforms to a playbook. Having worked with scores of organizations on elements of transformation, I suggest that there are five main categories of risk:
1. Defining Transformation requires a clear set of goals. To seek “Digital Transformation” without a clear statement of what the organization should look like is like sprinting toward nothing.
2. Technology is not a panacea or a “silver bullet.” Technology is accelerative but acceleration has no direction necessarily. Technology can create havoc just as it can create opportunity.
3. Transformation requires deep pain before it is curative. The bugaboo of modern organizations is the requirement to keep “all well” even in the short term. Great organizations accept deep pains, even losses, as they retool and recast themselves.
4. Transformation requires cooperation. Even in a family, you cannot change the dynamic without asking all members to accede to the same rules and goals. In the absence of cooperation in the warp and woof of the organization, transformation is an academic exercise at best.
5. Transformation is about people. Ultimately, organizations are groups of people who create value by offering their work in return. Transformation is neither about technology nor about diagrams produced by MBAs. It is about harnessing the power and the flexibility of people.
Risks 4 and 5 are the real opportunities. Now, none of this diminishes the importance of technology and its accelerative effects. The advancements in technology have certainly made heretofore unimaginable scenarios possible. But only people can avail of these opportunities and capitalize on these scenarios. In the argot of today’s technology world, transformation is about “People + Machine.” The machine alone is, well, just a machine.
Enterprise Guide to Digital Transformation