Digital Strategy Vs. Digital Transformation: What’s The Difference?
In my last article, “Time for Digital Transformation Is Now,” we looked at the accelerating pace of change, the case for digital transformation, and our evolving interactions with technology. We also asked a simple question:
In our digital age, all companies must change how they think, how they interact with customers, partners, and suppliers, and how the business works inside. Customer, partner, and supplier expectations have changed, and a gap is opening between what they expect from their interaction with companies and what those companies are currently able to deliver. Companies must immediately work to close this expectation gap, or the entire business is at risk.
There are groups of digital natives out there that are extremely capable, have greater access to capital than ever before, and are very likely to re-imagine your business and your entire industry from the ground up if you don’t start making the necessary changes in your business to eliminate the opportunity.
If they attack, they will do it with a collection of digital strategies that utilize the power of the digital mindset to more efficiently and effectively utilize the available people, tools, and technology, and to design better, more seamlessly interconnected, and automated processes that can operate with only occasional human intervention.
To defend your company’s very existence, you must start thinking like a technology company or go out of business. Part of that thinking is to fundamentally re-imagine how you structure and operate your business. You must look at your business and your industry in the same way that a digital native startup will if they seek to attack you and steal your market. To make this easier, ask yourself these five questions:
There are, of course, other questions you may want to ask, but these five should get you most of the way to where you need to go in your initial strategic planning sessions. If you have other key questions that you think I’ve missed, please add them in the comments.
How much appetite for going digital do you have?
This is where the question of digital strategy versus digital transformation comes in. The two terms are often misused, in part by being used interchangeably when they are in fact two very different things.
A digital strategy is a strategy focused on utilizing digital technologies to better serve one particular group of people (customers, employees, partners, suppliers, etc.) or to serve the needs of one particular business group (HR, finance, marketing, operations, etc.). The scope of a digital strategy can be quite narrow, such as using digital channels to market to consumers in a B2C company; or broader, such as re-imagining how marketing could be made more efficient through the use of digital tools like CRM, marketing automation, social media monitoring, etc. and hopefully become more effective at the same time.
Meanwhile, digital transformation is an intensive process that begins by effectively building an entirely new organization from scratch, utilizing:
It ends with a plan for making the transformation from the old way of running the business to the new way.
The planning of the digital transformation is, of course, all done collaboratively on paper, whiteboards, and asynchronous electronic communication (hopefully not email, but more on that later). The goal is to think like a digital native, to think like a startup, to approach the idea of designing a company to utilize all of the advances in people, process, technology, and tools to kill off your own company (at least as you know it). Because if you don’t re-invent your company now and set yourself up with a new set of capabilities that enable you to continuously reinvent yourself as a company, then some venture capitalist is going to see an opportunity, find the right team of digital natives, and give them the necessary funding to enter your market and reinvent your entire industry for you.
