06 Jun 2016
Digital transformation sometimes feels like one of those terms that seems to have as many meanings as there are people using it.
But what was striking about the Chief Digital Officers’ Forum I went to recently was the number of speakers who seemed to be talking digital transformation when what they meant was creating new digital products and services. Simply adding new digital services to your existing business model is not digital transformation, it’s what we used to call NPD. One of the 5 Ps of marketing…anyone remember product?
The irony is that digital transformation has so far proved pretty much impossible. I can’t think of any established business that has ripped up its business model and replaced it with a new one, and still kept its doors open. The challenge is just too great; it’s like dry-cleaning your suit while you’re still wearing it.
The only businesses that are digital by design are those that started that way. I have trouble thinking of a single established business which has become wholly digital. If you can think of one please let me know via Twitter.
What we’re actually seeing in most so-called digital transformations is digital adaptation. At the end of the process the vast majority of companies won’t have transformed from analog caterpillars into digital butterflies, they’ll just be better suited to their new digital environment.
Yes, they’ll be offering new products through new channels, which should help them to compete better against their digital-by-design challengers, but how many will have fundamentally changed the way they do business? Selling online, click and collect, one button buying…all great but all simply new services.
There are many reasons why digital transformation is so difficult, but the principal one is that it means a complete change in the business model and way of working. It’s easy to say the customer is at the heart of your business, but if you don’t start out that way then I believe it’s hard to plow that furrow retrospectively.
Look at the new breed of online banks, accommodation brokers and transport companies – they have all begun from the point of view of fixing something that was broken in a way that totally re-imagines the offering and the way of purchasing it. How can businesses with hundreds of years of process, history and accepted methods of doing something ever change in a way to offer something similar?
Some would argue they don’t need to adapt and can carry on as they are and that’s true. What they can’t claim is that by seeking to adapt to the new digital reality that they are digitally transformed. They are taking on the trappings of digital. The people, the business model and the culture is still fundamentally analog.
In my day job at AAR, helping brands find new digital partners, I often see the brief being described as digital transformation but I think this too is a misnomer. It shouldn’t be on the brief and it shouldn’t be on agencies’ credentials.
Agencies of all types are always keen to tell me they are digital transformation partners but I think they are using the term incorrectly. Whilst agencies can do many wonderful things, changing their clients’ culture isn’t one of them. Agencies are great at new product and service design. But if you want to change your corporate culture or your ways of working, you probably need to be talking to some kind of management consultancy.
I’m seeing a rise in clients asking for partners to think about this kind of stuff with them which may mean that, in the future, I’m partnering clients not just with agencies but with all kinds of companies.