Digital transformation is one of the hot topics in the business world. I was talking to a client that read my blog post on how change has evolved and he asked me “How come it is digital transformation and not digital developmental or transitional change?”.
I found the question very interesting and in this post I will explain why we talk about digital transformation. To do so it is useful to run a parallelism between digital natives and digital immigrants individuals.
- Digital natives are those that were born after 1980 and that have grown up using technology as a normal way of life.
- Digital immigrants are those that grew up in an analog world and that had to learn how to use digital technologies. Only 15 years ago the iPhone or the iPad did not exist, snapchat was unknown and the internet was just at its infancy.
In the same way we can make a distinction between digital native organisations and digital immigrant organisations. The digital native organisations were set up and grew in a digital environment (e.g. amazon, Facebook, Uber) and their strategy, culture, processes and procedures are not “contaminated” by a legacy that was shaped in the analog world.
On the other hand, digital immigrant organisations have to change the way they operate and their culture because of the impact of digital technologies. These technologies have had an impact on all sectors, from Financial Services to Luxury & Fashion, from Retail to Travel. As digital technologies have brought a new way of working and interacting with the customer (e.g. let’s think about the impact of e-commerce on the fashion world that is eating heavily into the brick and mortar based business model), organisations have to significantly change the way they operate and the assumptions that have been the basis of their modus operandi for decades.
Let’s consider Financial Services. The traditional model is based on branches that were the heart of the business: the customer went to the branch to deposit and withdraw money, to talk to the financial advisors about mortgages and investments and so on. With the advent of digital technology the branches will very likely become redundant as the majority of customers interact with their bank online, via apps and online banking. Fintech is disrupting the sector significantly (see my Fintech series for more information about it).
In order to be competitive a simple tweak in the strategies, processes and procedures is not going to be enough. What is required is a transformation of the mindset, culture and the way the organisation is operating in order to stay competitive. That’s why we talk about digital transformation as it is a change to the core of the business that pervades all the areas and functions in the company, and that encompasses also the company strategy and culture
It is not an easy task, but it is possible to do it right and to achieve great success. Just because a company is a digital immigrant it does not mean that it cannot compete with digital native companies. The key is a change in culture and a strong leadership willing to take the leap.