Is 'digital transformation' just another buzzword?
Just like any industry, business is affected by fashion. The latest trends that everyone’s talking about dominate the headlines of the business press and internal memos. Remember when the Blackberry was ground-breaking innovation in mobile working?
The way we work has genuinely and significantly changed over the past few decades, and it is true that the pace of change is increasing. Disruption has become the norm. New unicorn companies are starting up on a regular basis, and retail stalwarts we once thought immovable are swiftly having to adapt or die.
‘Digital transformation’, ‘agile working’, ‘Industry 4.0’ - these phrases are certainly being talked about. But is digital transformation a genuine real business challenge, or simply the latest corporate buzzword?
According to INSEAD professors Nathan Furr and Andrew Shipilov writing in a recent Harvard Business Review article, digital transformation “simply means adapting an organization’s strategy and structure to capture opportunities enabled by digital technology.”
Businesses that are born digital don’t need to transform
The new businesses born in today’s agile, digital world don’t need to transform. These companies are growing up digital. But for older businesses, adopting digital ways of working can be a huge challenge. Digital transformation isn’t just about using cloud servers. It is about new products and services, new ways of being in business and new ways of thinking. However, Furr and Shipilov argue that digital-only rarely requires radical disruption of the value proposition. Instead, they say “it usually means using digital tools to better serve the known customer need.”
It is not just about technology but about how people use it
Larger, multi-national organisations may have bigger budgets to cope with digital changes, but the scale of the task is that much greater too. Changing business processes across global business units requires a huge investment of both time and money. But it can reap huge benefits, allowing greater global collaboration within organisations and effective use of remote and virtual team working. This means training people to be comfortable forming relationships in the digital world, where things like body language are much harder to read.
You could argue that digital transformation is purely a case of moving with the times. Years ago, we all managed to do business, communicating by phone, fax or post. When email first arrived in the 1990s, we found a whole new way of communicating. Did we call it digital transformation then? Or did we simply adopt new technology and marvel at the speed at which we could now communicate written messages and do business? In today’s digital world, our ways of working are catching up with what technology allows us to do. It doesn’t necessarily mean a radical rethink, questioning and rewriting everything we have done before. But it may mean mindsets need to change to embrace new ways of working.
Developing skills and strategies
Michael Wade, Director of the Global Center for Digital Business Transformation, an IMD and Cisco Initiative, firmly believes that digital transformation is a reality and that “organizations are struggling in the digital era.” The Centre organises workshops, networking events and provides insight and research to stimulate debate around digital business transformation. IMD has created a Leading Digital Business Transformation Executive Education programme, specifically designed for business leaders who are developing a strategic roadmap for digital business transformation in their organisations.
Organisations are certainly becoming more digital, just as our lives are becoming more digital
But I have realistic expectations for how quickly new technology will be adopted. You could argue that digital transformation is a process that has been going on since the first computer was designed in 1945, or the first mobile phones were introduced in the 1970s. Early forms of virtual reality were invented in the 1950s, yet for large parts of society, VR has yet to make a significant impact. It’s exciting to think that one day we could have proper AI characters in our business simulations, but I don’t think true artificial intelligence is far enough along yet to be used today in our business learning experiences, even if our clients’ internal systems were able to cope with it.
In the meantime, we’re developing new simulations such as our Agile Build simulation which helps participants develop the capabilities they need to manage the change of digital transformation, adapting quickly to new challenges and communicating effectively with stakeholders. By encouraging leaders to experiment in a digital context we can help them develop the skills they need to succeed. These skills are more useful than ever in today’s digital world and leaders will continue to need them when facing the next business challenge to become a buzzword.