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Digital Transformation: Breaking through the noise
by Olivier Blanchard | August 30, 2016
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Digital Transformation: Buzzword or not?

I was having a conversation with a group of B2B business executives earlier this week about hype cycles and buzzwords, and naturally, our discussion steered itself towards “Digital Transformation.” I knew what their question was before any of them came out and asked it: Is Digital Transformation really a thing or is it just a phase?

It’s a fair question, and as it turns out, an important one because it points to a failure on the part of solutions vendors, early adopters and leaders in the technology field when it comes to making the case for Digital Transformation’s importance, relevance, and as it turns out, legitimacy. The question didn’t come from a place of ignorance. These executives were smart, well informed, intellectually curious, and no strangers to technology. Their smartphones were up to date. Their laptops – those of them who weren’t using tablets – were not indicative of the types of also-in, risk-averse IT cultures I still occasionally bump into. We hadn’t yet talked about the potential that Augmented Reality brings to industrial design and accelerated collaboration, but they were familiar with Hololens and Magic Leap. We hadn’t yet talked about the shift to Mobile First, or how AI was finding its way into CRM and big data analytics, but they were actively looking for ways to become more mobility-focused, and ways of doing more with data, and curious about where AI was going, particularly in areas of natural language and customer service bots. In other words, these were sharp, savvy, technology-aware professionals asking the right questions… and yet, here they were, asking me if “Digital Transformation” was just a buzzword riding yet another hype cycle.

As ever, the greatest difficulty whenever stating the obvious, is to not appear that you are stating the obvious, so I very thoughtfully nodded and answered as honestly as I could. To the “is Digital Transformation really a thing or is it just a phase?” question, my answer was “both. It’s both.” Because that’s the truth of it: “Digital Transformation” is a buzzword. It is the unfortunate victim of a hype cycle pushed by legions of “influencers” and technobusiness pundits looking for the next wave of topics to tweet about. And yes, as a result, the term has been commoditized, bastardized and overused by pundits, salesmen, cheerleaders, and influencers alike, and looking at the number of times it is mentioned online on any given day, it can be difficult to separate signal from noise, useful commentary from keyword-optimized content, and analysis from sales pitches.

But the flip side of that discussion is that once you cut through all of that clutter, Digital Transformation is also a real thing, and it is every bit as important as that little voice in the back of your head suggests. That’s because even though Digital Transformation, as a term, as a specific topic, is relatively new, the greater principle of what it describes is not new at all. We already all know it as adaptation, as progress, as evolution. We could just as easily have called it “Digital Adaptation,” or “Digital Progress,” or “Digital Evolution,” and it would mean the same thing. It might even be easier to understand. Business Darwinism is, after all, at the heart of competitiveness. Every competent executive understands the risks associated with falling behind the times, and the opportunities that innovation, adaptive velocity, and operational agility bring to the table. It’s fairly simple: Imagine being a company today without a website, without a mobile strategy, without Cloud-based services to help you manage transactions, CRM, data storage and data analysis. Imagine how poorly that company would perform against its competitors. Now jump ten years forward and imagine that same company without access to AIaaS (AI as a Service), or Virtualization and AR to help design products and customer experiences, and manage inventories and fleets and shipments. Imagine its manufacturing operations trying to compete against the rest of the market without any IoT capabilities or process automation.

We know what happens to companies that fail to adapt to change. Business graveyards are all around us: Ten years ago, that Dunkin Donuts on the corner used to be a Blockbuster Video. That Trader Joe’s over there used to be a Circuit City. The cool retro office building you’re sitting in, it used to be a cotton mill, back in the day, and the architectural firm across the street used to be a pickle factory. Times change. Technologies change. Businesses either adapt or die. We all know this. Well… most of us anyway. The problem is that the term “Digital Transformation” appears to lack that specificity, that clear sense of purpose. “Transform” how? “Transform” why? Because of shiny new objects? Because technology is cool? On its face, that doesn’t seem like a compelling enough reason to upend a business and invest precious resources into a massive change management endeavor. It sounds like change for the sake of change, and that isn’t a particularly compelling argument.

“Adapt” though, I understand. “Progress” and “Evolve,” I understand too. But “Transform?” Too vague. It lacks a clear sense of purpose. “Transformation” tends to evoke mythical creatures and Kafka, not vital business strategy. It is entirely possible that we have done ourselves a disservice when we collectively adopted the term “Digital Transformation” to describe an adaptive business process driven by technology, disruption, and innovation. It has muddied the waters enough that in the absence of a declarative point, of an obvious purpose, it has opened the door to confusion, indecision, and even doubt. We need to fix that somehow.

As soon as I brought up “Digital Evolution” and “Digital Adaptation,” the discussion shifted. Inside of thirty seconds, we were back on track, talking about how to use technology to solve business problems, to improve outcomes, to lower costs, to accelerate product launches, and so on. Instead of talking about whether or not “Digital Transformation” was a legitimate topic of conversation, let alone a priority for businesses as they look towards the challenges and opportunities of the looming decade, we were talking about how virtualization could help accelerate product design, how IoT (the Internet of Things) could help manage inventories and logistics, how AI (artificial intelligence) could help turn Big Data into real-time user-centric, granular insights. We talked about how to use gamification and AR (augmented Reality) to improve employee training, development and retention.

Just like that, by reframing the topic by just one hundredth of a degree, we found ourselves actually talking about Digital Transformation instead of talking around it.

The lessons I get from this are basic but worth listing, I think:

  1. The words we use matter.
  2. Just because you understand or see something clearly doesn’t mean that other people can understand and see it as clearly as you do.
  3. There can often be invisible gaps between what you are talking about and what other people hear.
  4. No matter how thin those gaps are, if you don’t bridge them, they might as well be miles across. Always connect the dots. Especially s an analyst. Leave no gaps behind.
  5. Purpose will define something’s worth better and faster than any other type of explanation.

Since we’re on the subject of words and wording, here’s the operative word: Velocity.

As I write these words, we are already well into a massive technological revolution that will reshuffle the global business deck over the course of the next few decades. Personal computers, the web and cell were just the warmup round, the slow-moving prologue. Big Data, Cloud, Mobility and smartphones were the fundamental chapters. What’s coming next (AR, AI, IoT, smart automation) is going to bring an acceleration to change, at scale, that will make everything that came before it seem like child’s play. The rate of change is not going to be like what we have seen since the turn of the millennium. Companies don’t have ten years to adapt to every single new piece of technology. Innovation and disruption cycles filled with new tech are going to come fast and hard, and organizations that are still working in a 2008 operational state of mind in regards to technology adoption will not be able to weather this storm. They just won’t. The mindset has to change, and operational agility right along with it, and adaptation isn’t going to be happening at a comfortable pace for anyone.

On the bright side, adoption of these technologies should be a lot easier than it has been up to now, but again, the velocity of change, and therefore the velocity of adaptation is going to be the principal challenge for companies over the next five years.

All of this to say that Digital Transformation isn’t just a technology play. It is also a velocity of change play, which means that the real Digital Transformation secret sauce lies in a company’s ability to build a highly adaptable, operationally agile organization for every new technology layer to naturally fit into.  That is a topic that often gets missed by Digital Transformation pundits. In an effort to be the first to cover new technologies and products, they fail to or forget to connect the dots, to also lay out the operational foundations of Digital Transformation. We don’t intend to make that mistake here. We are going to spend a lot more time discussing how to build adaptive, agile, innovation-friendly organizations that will play well in a world of technological disruption, so stay tuned. We have many more insights coming.

 

Olivier Blanchard – Senior Analyst, Futurum Research

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