Wait! What is Digital Transformation anyway?

posted May 6th, 2020 by Ed Bayo

In May 2020 we launched our Bitmaster “Digital Minds” (Term 1) covering our Smart digital transformation model, with tools and methods to lead digital transformation projects. Terms 2 and 3 are in the pipeline and we are very excited about the progress until now.

But let’s go back a couple of months.

When we first started developing our digital transformation model, I walked up to the rest of our small team made up of three software engineers and myself. I asked them a very simple question: “what is digital transformation”? Instead of getting a highly scientific answer, our three software engineers just sat there looking at me somewhat perplexed until they almost all cried in chorus, “digital transformation? Oh that’s just a buzzword” (to be fair, I must admit they actually said it was Bullsh**). “It doesn’t really mean anything”, they said.

I laughed. And I must confess, I was actually expecting that kind of answer, too. After all, the team was made up of pure software gurus that were basically fluent in Java as if it were their mother tongues. They weren’t simply digital natives: they were digital geniuses.

So then, we decided to find out what other people say about digital transformation. When we started googling, it became clear that, most people actually didn’t really know what it meant to become digital. Sure, digitization means you take something that is analog, like our clock on the wall, and turn it into something digital. Ok, my grandmother knows that too. But ten to fifteen years ago, over 90% of all transactional information was already digital. So that couldn’t be the real reason for the hype, we thought.

As we kept on searching, going through articles, blogs and white papers (even of renowned companies) we would often find formulations that were akin to this:

“Companies need to digitally transform. AI, machine learning, internet of things, robotics, automation, smart factories, blockchain” … and the list goes on… “will all change our future.” So it became clear that, for most people, digital transformation was simply a long list of things they didn’t understand.

One more funny thing I noticed was this eerie discussion about whether you call it industry 4.0, or digitalization or digitization or digital transformation. There were whole theories on what the difference between these terms was.

And the more my team and I kept on researching, the more we would end up laughing out loud (I must say, we really had a great time doing some first research).

So it quickly became clear that digital transformation was not about that big list of technology that few people understood. 

But then, if digital transformation was not about the technology, then what was it all about?

So we went a few steps back.

It became clear that doing business today is not equivalent to the way business had been done 20 or 30 years ago. Today, digital business means the following:

Summarizing, our definition of digital transformation is the following:

Digital transformation is the process of transforming your value proposition to meet the needs of a digital customer; and it means transforming your entire organization accordingly to meet that new digital value proposition.

It is clear that most companies (as of today) are unprepared for a full digital transformation.

There is need for transformation on the revenue (value selling), as well as on the operational (value creation) side. On the revenue side, we are talking about new digital products and services, digital marketing and a digital customer experience.

On the operational side, digital transformation means leveraging on data to understand the customer, to improve and automate and to constantly innovate based on intelligent insights.

Once these goals are clear, then we can start talking about technology. We can use IoT (which by the way was heavily labeled as a buzzword by my dear software engineer colleagues) to constantly monitor production and processes; we can deploy AI (ditto) to create descriptive, predictive and prescriptive data models to trigger operational events or to improve the customer experience; we can use blockchain in our supply chains, and we can create new digital products and services along the way, by fostering an innovative startup-like mindset.

That’s the way we see digital transformation. And we have developed a full set of tools and methods to help you along the way.

Now that this is (hopefully) clear, let the digital journey begin.

The Author.

Picture of Ed Bayo

Ed Bayo
Ed is Galacta’s founder. Prior to Galacta, Ed spent over 10 years in management consulting and training, leading and designing transformation projects, including digital transformation.