The Agony of Digital Transformation

Name one large enterprise that has not put digital transformation, or something like it, on a pedestal. Now, name one company that has achieved digital transformation. Anyway, how would you know if you were transformed? 

What’s the honest metric? More zeros and ones per revenue? Sales by social net? Megabytes of email? Cloud-centric everything? New mission?

I get it. Transformation means progress, but “make me digital” is a delegation that puts tools above outcomes. Fix my house, but only if you do it with a hammer? And once a company achieves it, you would think they would brag about it, but we hear nothing. 

Given that the so-called digital revolution is 60 years old, wouldn’t someone have announced a major transformation by now? Or maybe it’s like the Rapture. When a company transforms, they disappear into the Singularity, leaving us analog luddites behind. Elon Musk starring as God! 



Is transformation even tenable? Is there substance beyond buzzword bingo and impassioned consultants?  Indeed, how did transformation get tangled up with digital to begin with?

My guess is that the tools digital tech brings to the table are so powerful they comprise a threat to everyone, like a binary bogeyman. Look at the carnage of those who failed to transform: Kodak, Sears, Blockbuster, Paine Webber, etc.  

On the bright side, the flip side of fear is opportunity, or hope, and “digital” is overflowing with that. Digital tools have all the hallmarks of hope: youthfulness, creativity, the future, etc. So what’s not to like? 

The problem is always that the scope of transformation is an enterprise boundary, but it should be an end-to-end system. There are major elements outside the control of every enterprise that must change in sync, or transformation falls flat. This is the price of efficiency.  You control the airframe, but somebody else controls the wings. Oops. 

Done right, digital changes the connective tissue in a complex system. Technology can transform a company, by changing the relationships among its parts and across its external boundaries. 

But corporate boundaries ruin everything. Changing yourself is hard enough, but changing others is near-impossible. In fact, if technology does not upset somebody’s apple cart, it’s likely that nothing transformative has occurred. We have a more sinister name for upsetting the apple cart: disruption.  

The fact that “disruption” is perceived as evidence of change has created a universally abused false premise that disruption is evidence of innovation.

But it's much easier to disrupt than to innovate. Trust me, anyone who could achieve transformation without disruption would do it. Only poseurs sell disruption. 

Failure of Imagination, Meet the Innovator’s Dilemma

Google recognizes about three hundred million references to the term “digital transformation.” The first few listings attempt to define it. Most of them state the obvious: that digital transformation is about solving problems using digital ways and means. 

But wait. The digital winners (Google, etc.) did not have to transform, they started out that way, and the losers could not transform. 

If you look at digital uber-species versus digital downtrodden, the difference is not the fervor of the founders. The best way to be a digital winner is to start that way, and the best way to be a loser is to have started as something else, and try to transform. Ergo, any attempt to transform is a long shot. 

Could AOL have been Google? Could GM have been Tesla? You know they all thought about it. What stopped their transformation from happening?

My guess is that these companies’ boards could not, would not, make a bet big enough. It’s not as if the writing was not on the wall, but getting there was plausibly suicidal. Could GM betray dealerships?  Would Kodak invest in the very technology that was killing it? Done right, the stakes are existential. 

So, real transformation may be endemically impossible for an enterprise in any case. The innovator’s dilemma alludes to a kind of conservatism that is entirely appropriate when the goals of a board are to maximize next quarter. There is no shame in that. Any shame should derive from hubris, from aspiring to win a game you were not qualified to play. 

Yet, so many of us are caught up in the desire to be digital. That’s not bad, it’s just hard. Those of you called upon to cause digital transformation should pick up your weapons and go to battle — but always be prepared to bleed.

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