Where did the term “Digital Transformation” come from and what is it really supposed to mean?
The consulting firm Capgemini, (in partnership with the MIT), coined the term “digital transformation” in 2011. They defined the phrase as: “the use of technology to radically improve performance or the reach of businesses.”
The phrase went viral after it was coined and thousands of organizations used it to describe their strategic plan. A Google search of the term returns over 650 million hits. Apparently, every organization is “digitally transforming.”
From a technology perspective, 2011 was a very long time ago; the iPad was brand new, an entrant called Uber just launched its mobile platform, Instagram was only months old, Tesla had yet to release a production car, and Netflix was still mailing DVDs. Organizational decision-makers were still scratching their heads about all this tech stuff. A phrase like “digital transformation” was needed to shake up traditional business thinking.
The Problem with “Technology First” Approaches
The original definition emphasized a goal of performance improvement or business development enabled by technology; not technology itself being the goal. The authors didn’t intend for the phrase to detract from a clear goal. (Read also: Digital Transformation Without the Judgement.)
But in many cases, especially in public sector organizations, labelling a strategic plan as a Digital Transformation has diluted the concept of a clear and compelling goal, and has created a focus on the wrong thing: the technology.
The term Digital Transformation is dangerous because it sends the wrong message.
How many of us have purchased an exercise apparatus (a bowflex, peloton machine, a bike, etc.) with the excitement about finally getting in shape and carving out those six-pack abs?
Some of you may have achieved your fitness goals through use of these types of tools. If you did, good for you. You knew that those machines were merely a means toward a clear goal. You were committed to changing your priorities and lifestyle processes, which you likely would have done with or without the new exercise tool. For those of you who acquired these same tools and didn’t achieve those results, was it the Pelaton’s fault that your waistline didn’t shrink?
Jared Lane points out in a Forbes article: “A notion that has undone many organizations is that digital transformation is an exercise focused on technology. In their hurry to jump on the digital transformation bandwagon, many organizations are now obsessed with what technology they use and how to meet implementation timelines — all without any focus on business outcomes. Technology is not a magic pill that can solve inadequacies in processes.”
Technology Enables … Everything
In virtually every workplace with very few exceptions, core processes are (or should be) technology-enabled. So why, when launching a new strategic plan or business development approach are we still using the deceptive term digital transformation to describe it?
Technology is a means to an end but it isn’t the end goal (just like the Peloton didn’t do the work by itself to provide you the health benefits). It isn’t the technology that is the catalyst for a particular transformation, it’s the clarity of a compelling goal and the passion of the audience that is the spark. We don’t use superfluous terms like “Soap Enabled Washing” or “Car Enabled Driving,” is there a reason why we are redundantly emphasizing the use of technology in our strategic initiatives when it’s a given?
Technology Has a Magnifying Effect
What the authors of the digital transformation term were actually trying to convey is that when you have a clear and compelling goal, one that engages passion and conviction in the workforce, and a process to get you from here to there, technology can create a game-changing disruption. This disruption is so significant that it can completely transform an industry. On the other side, when shaky goals and bad processes are digitized they also have a magnifying effect. As Bill Gates said,
“The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency.”
Technology is multiplicative, it doesn’t know whether it’s multiplying a positive or a negative. So, if you have bad customer service at the front counter, and you add technological enablement – voila! You’re now able to deliver bad service faster, and to more people than ever before!
The term ‘Digital Transformation’ implies a potentially perilous approach of focusing on technology first. (Read also: 5 Myths of Digital Transformation.)
In my career as a technology professional, I’ve seen my share of project successes and failures. The key differentiator between success and failure is the clarity of the desired outcome right from the start of the initiative. I had a colleague who used to say:
“Projects fail at the start, most people only notice at the end.”
Looking back at the successful initiatives which I was a part of, they possessed several common key ingredients: the clarity of a compelling goal, the engagement of people, and a discipline for designing enablement processes. With those ingredients in place, a simple, and reliable enabling tool (the technology), developed using clear requirements acts like an unbelievable accelerant.
Digital Immigrants Are in Charge
Keep in mind that many of today’s generation of organizational executives and decision-makers (often baby boomers and GenX’ers) were in the working world before the advent of the Internet. It’s provocative to say but the technological fluency generally tends to be very low at this top rung of leadership (The lack of rudimentary technical skills have become even more evident in the age of Zoom meetings).
Recall that the term Digital Transformation was coined to help shake up traditional business decision-making. Paradoxically, the term has largely had the wrong effect on this generation. (Read also: The Human Element of Digital Transformation.)
Within this lack of technical acumen lurks something more foreboding: an impression that a direct path to technology, without first articulating a clear and compelling goal, is a shortcut to a quick outcome. Some would argue that this is actually a prevalent sentiment amongst today’s decision-makers.
In decision-making situations, it seems it isn’t uncommon for executives to adopt an intuitive approach to technology-enabled strategy rather than evidence or a best-practice approach. Complex adaptive systems are poor places to develop intuition. I would argue that low technical fluency is a major risk for organizations. There is a growing chasm of basic technical competency and it’s drastically affecting business acumen.
As Clarke’s third law states,
“Sufficiently advanced technology is indistinguishable from magic.”
Clarke was right, if you don’t know the rudiments of how a technological tool works and how it will enable your goal, it can appear an awful lot like magic. A technology-first approach invariably leads not only to a failed strategic initiative, but it actually contributes to a phenomenon known as technical debt.
Technical debt is the byproduct created when there is a rush to implement a technology tool and push the truly important work over to operations. Technical debt is a quantifiable phenomena. Like most forms of debt, technical debt needs to be serviced or it creates its own priority in the form of reduced organizational effectiveness and productivity.
Like most forms of debt, if left unaddressed it starts to cripple the organization in the form of wasted productivity working with poorly implemented technologies. It’s can also be a major cybersecurity risk.
Digital Transformation vs Digital Transmutation
For many organizations, digital transformation has become a “Digital Transmutation.”
A colleague of mine used to say, “Technology is so dumb that it only does exactly what you tell it to do.”
“Technology is so dumb that it only does exactly what you tell it to do.”
Organizations can be subscribed to the best brand name technologies but there is often puzzlement when those brand name tools don’t meet the need. So, if you’re using the best-in-class technology but are failing to meet your business objectives, is it the technology’s fault? It’s no use yelling at the hammer because it didn’t turn the screw very well.
In an article on CIO, the “key culprits of a derailed digital transformation” are identified as the expectation of wholesale (“big bang”) change, the failure to effectively loop in the entire business and using cost cutting measures as a business driver.
On the other hand, the Harvard Business Review points out that using a “digital transformation mindset” has resulted in positive change for some organizations. The success was pinned to using technology to help reach the goals that had already been decided on;, but keeping the design of the organizational change as the guide, not allowing the tech to drive the change.
“Digital Transformation” has Outlived its Usefulness
The late Marshall McLuhan, Canada’s great communication theorist and philosopher said,
“The ‘message’ of any medium or technology is the change of scale . . . that it introduces to human affairs.”
It’s time to change our language and drop the buzz terms. Let’s be clear about the outcome that we’re seeking. Let’s accept that the”transformation” is about changing personal beliefs and organizational culture. Let’s keep in mind that technology is a cold “form follows function” enabler, the transformation part is about the people.
Here are some tips to avoid the technology-first Digital Transformation Pitfall:
What you call your initiative is important – as noted, projects start failing at the beginning, it’s often only at the end that everyone notices. Consider what you name your projects. For instance, rather than calling a project “Salesforce Implementation” or “ERP Renewal”, consider naming it to reflect your goal e.g. Student and Alumni Engagement Initiative, Customer Experience Improvement Project, etc.
Keep your eye on the Objective – projects can be complex. It’s easy to get lost and lose the forest for the trees. When in doubt, take things back to first principles. Re-confirm the project goal and seek input from the team as to whether the direction the project is heading is truly focused on the outcome being sought.
Sequence Matters – for almost any initiative the general sequence should always be:
Goal (what is our objective?)
People (who needs to be involved, and who will own and manage the process?)
Process (what process will the people use to achieve our goal?)
Tool (how will the technology tool enable the people to use the process towards meeting our goal?)- a broken process is still broken
Iceberg principle – the digital part isn’t where most of the work is – focus the bulk of attention on creating a clear goal, galvanizing stakeholder support and establishing processes. If you’ve followed the sequence, the technology part will be the easiest step (truly, it will).
Measure – your strategic initiative is ramping up, how do you know you’re achieving your goal? A key step at the onset of your project, when defining the objective, is outlining how you’ll measure. I’ve seen plenty of projects delivered on time, on budget, and on time that completely failed to meet the intended objective.
Be prepared to tweak and alter – even the most successfully executed strategic initiatives require refinements.
There is no finish line – there is no such thing as ‘one and done’. Define early how the outcome of your project will continue to evolve and improve long after the project has wrapped up.