Digital Transformation: what is it & why is it (not) dead?
Updated: Nov 15, 2022
In this chapter of the series we talk with Jo Caudron and Emily De Baets about Digital Transformation, a topic that has been widely discussed for the last years, or even decades, but still remains very relevant, although we do see an important shift, away from the pure technology-approach.
Jo Caudron and Emily De Baets, partners at Scopernia, where interviewed about the challenges and solutions companies face today and in the future. Based on their many years of experience in the domain of Digital Transformation, they have now introduced the concept of Impact Transformation and are building their consulting work at Scopernia around this broadened topic.
What is Digital Transformation?
That is a very important question because it is a concept around which there is a great deal of confusion. We have developed our own definition, which we have been using for years and which also evolves a bit over time.
Digital transformation is actually a necessary business transformation, set in motion by digital disruptions.
The "digital" in the word digital transformation is only the cause, the trigger and what really matters is that you understand how digital can change the world, can disrupt it, and how you will adapt your own business proposition, your solutions, your product, from which totally new solutions and services can emerge.
So it's really much more about changing the business at the core with digital as the trigger.
So what exactly is the difference between Digitalisation & Digital Transformation?
Well, the difference is quite significant.
A lot of organisations claim they're doing digital transformation, but actually, they're just digitising. That is, they're making what they already are, the processes they already have, everything they already do, the relationships with customers they have, the relationships with suppliers, ... well they are making those digital. They make the existing situation digital.
Why do they do that?
Because they have to: they are keeping up with the times, customers expect it, but also because it is more efficient because internal processes that run digitally can run more qualitatively. Customers expect digital and mobile touchpoints, websites and social media. You go with what the expectation is from the outside world and you start optimising yourself internally as well. That's digitalisation.
What digitisation does is make an existing situation digital. What digitalisation does not do, is transform.
So a bank that digitises strongly, still remains the same bank, it sells the same products, often to the same people, in the same way, but through a digital channel. Although a lot of money goes into digitalisation under the guise of "it's transformation", it's not. Often those organisations are digitised in totality, even including the mistakes of the past.
As mentioned in the definition, what digital transformation is really about is that the core of what you offer also changes, and in digitalisation that is almost never the case.
Perhaps one final point to that. That is that digitalisation is not wrong. You absolutely need digitisation to make your organisation more modern and to keep up with the times, and that digitisation is also a prerequisite for being able to transform the core afterwards.
Why is Digital Transformation dead, according to you?
That is of course a bit provocative, digital transformation is far from dead.
But why do we say that?
Because if we go back to the definition, it is about transforming your business to the core, because there are digital disruptions that make that necessary.
Well, there are more than just digital disruptions today. There are social disruptions as well.
There are changes in what people want and do, and sometimes that is triggered by digitalisation, but often it has to do with different behaviours, different habits or different expectations.
But also by necessity, for example, due to climate change or due to the recent geopolitical evolutions and tensions that we see. So besides those digital disruptions, which then lead to an essential change, there are also social and broader disruptions.
Hence, we say, if you look to the future and you want to make a transformation strategy, it's insufficient to just take into account those digital forces. That's why we initially spoke of "Societal Transformation" in order to broaden the concept, but have since shifted to the concept of "Impact Transformation" because that actually covers the scope much better.
What is the difference between Digital Transformation & Impact Transformation?
Impact transformation actually goes much further and broader than digital transformation, where you can say, that Impact Transformation has two dimensions:
That Outside-In dimension has to do with the fact that an organisation constantly has to adapt to an ever-changing environment. On the one hand, this is related to evolutions such as technology and digitisation, but it goes much further than that; it is also about a changing climate, changing consumer behaviour, changing demographics, economic crisis, and so on. It is important for organisations today to adapt to many more trends than in the past and purely digital transformation, in order to survive.
On the other hand, there is also an Inside-Out dimension that has to do with organisations that also want to have a positive impact on the environment and that really want to create value holistically. Not only for people but also for society and the planet, with the goal of not only surviving but even thriving in the future.
Actually, the concept of Impact Transformation has also been kind of cast by us in a mantra that we call "Doing Good by Doing Well", where that "Doing Good" has to do with the positive impact and "Doing Well", with being economically profitable, being able to create profit. We believe that the two can reinforce each other.
Today the perception is that it's one or the other. Either an organisation has a sustainable mission, and then it looks like that organisation may not create a profit. Or the perception is "we want to create profit as an organisation, but then we can't be sustainable, because that's mostly a big cost."
What we believe is that the two can perfectly go together and reinforce each other. If you make a positive impact as an organisation, you can also create profit from that. If you reinvest that profit in the organisation, you can again make more impact. More impact can also lead back to more profit, and so we get a very nice, mutually reinforcing dynamic, where the two can actually go together perfectly.
And if I can add to that. When you transform and you make a strategic plan for that, you also have to define objectives. In the first 10 or 15 years of digital transformation, the most important objective for an organisation was to be a future-proof organisation, performant, still relevant in the market, profitable and good for shareholders.
So if you do that transformation exercise today, make sure that the objectives you define are still financial in nature, but also in addition absolutely driven by sustainability objectives. Combine the two in your plan that you make for your shareholders but especially for all your stakeholders.
Did we spark your curiosity? Read more about Impact Transformation and why we need it.