Digital Transformation
Introduction
Digital transformation is a critical strategic process for incumbent firms in traditional industries today. It involves using new digital technologies to significantly improve business operations, customer experiences, or create entirely new business models. It’s not a one-time event but an ongoing journey for organizations.
Definition of Digital Transformation
Digital transformation is defined as the use of new digital technologies (such as mobile, artificial intelligence, cloud, blockchain, and the Internet of things (IoT) technologies) to enable major business improvements.
These improvements can include: • Augmenting customer experience • Streamlining operations • Creating new business models
The term “transformation” is used instead of “change” to emphasize that this process goes beyond just functional adjustments and requires a comprehensive set of actions.
It is fundamentally more about strategy than technology, requiring senior leadership to capitalize on new business model innovations that optimize customer needs. Our fieldwork also revealed that the term is used inconsistently across industries to describe various strategic and organizational activities.
Scope of Digital Transformation
The scope of each digital transformation is contingent on the strategic renewal of an organization’s:
- Business model
- Collaborative approach
- Culture
Genuine digital transformations are an ongoing process where new digital technologies are integrated into the everyday organizational life.
Perspectives on Digital Transformation
Discussions with senior strategy consultants show varied perspectives on what digital transformation entails.
It’s seen not only as technology adoption but also as a cultural orientation or mindset. This mindset emphasizes the importance of fast and flexible decision-making to compete in uncertain environments. Participants also highlighted the need for new awareness and bringing fresh ideas into traditional organizations, focusing on speed, customer-centricity, and agile decision-making. Ultimately, digital transformation is also described as a capability-building process needed for companies to survive and succeed in the digital age.